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Chapter 3
Focus on School Taxes

In 2005, 1,029 Texas independent school districts (ISDs) reported their property tax rates, levies and values to the Comptroller. The ISDs reported an average adopted tax rate of $1.568 and more than $20.2 billion in tax levies on a total property value of $1.2 trillion. That average tax rate increased slightly more than 1 cent since 2004 while the levy increased almost $1.7 billion (9.0 percent), and taxable property values increased by more than $93.5 billion, or 8.3 percent.

The ISD reports do not include local school taxes by special county equalization districts and South Texas ISD, a school district that operates tuition free magnet schools for students in a three-county area. Tax rates reported are per $100 of property value.

School Tax Rates

The 2005 average statewide tax rate increased 1 cent above the 2004 average rate. Some 26.0 percent of Texas school districts reduced their local adopted tax rates, 41.6 percent kept the same rate and the remaining 32.4 percent of the districts increased their rates.

The 2005 simple average statewide tax rate was $1.568 per $100 of value. The 2004 simple average statewide tax rate was $1.558 per $100. This simple average rate calculation uses the adopted tax rates divided by the number of school districts reporting.

Table 16 provides rate change information for school districts, showing that more and more school districts were reaching their full tax rate capacity of $1.50 for maintenance and operations (M&O) and $0.50 for interest and sinking (I&S). The M&O rate covers general operating costs such as teacher salaries and maintenance of school buildings. The I&S rate, which is usually called the “debt” rate, is used to repay a school district’s debt for voter-approved bonds to build instructional facilities.

Table 16: Changes in ISD Tax Rates Between 2004 and 2005

Increased tax rate

  Number of School Districts Percent of All School Districts
Increase of $0.15 or more34 3.3%
Increase of $0.10 to $.1499 33 3.2%
Increase of $0.05 to $0.0999 70 6.8%
Increase of $0.01 to $0.0499 197 19.1%
Total ISDs Increasing Tax Rates 334 32.4%

Did not change tax rate

  Number of School Districts Percent of All School Districts
No Change 428 41.6%

Decreased tax rate

  Number of School Districts Percent of All School Districts
Decrease of $0.01 to $0.0499 204 19.8%
Decrease of $0.05 to $0.0999 41 4.0%
Decrease of $0.10 to $0.1499 11 1.1%
Decrease of $0.15 or more 11 1.1%
Total ISDs Decreasing Tax Rates 267 26.0%

Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.


Table 17 reflects the range of tax rates adopted by ISDs. The rates ranged from a low of $0.9664 per $100 of value in Red Lick ISD to a high of $2.00 in Katy and McKinney ISDs.

Table 17: Range of 2005 School District Tax Rates

Total School District Rate Number of School Districts Percent of All School Districts
Less than $1.00 4 0.4%
$1.00 to $1.20 9 0.9%
More than $1.20 to $1.40 85 8.3%
More than $1.40 to $1.50 290 28.2%
More than $1.50 to $1.60 264 25.6%
More than $1.60 377 36.6%
Total 1,029 100.0%

Rates are based on $100 of property value.
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.

Only four districts had adopted tax rates of less than $1.00, the same number as in 2004.

About 37.3 percent of the districts—or 384—had combined rates between $1.00 and $1.50 per $100 of value. The remaining 641 districts, or 62.3 percent, had rates range from above $1.50 to the high of $2.00.

The state’s 2005 simple average M&O rate for ISDs was $1.457, while ISDs’ debt rates averaged $0.112.

As indicated above, state law caps the M&O rate for most ISDs at $1.50. School boards in 548 ISDs—about 53.3 percent—adopted an M&O rate at the rate cap, compared to 506 ISDs, or about 49.1 percent in 2004. Another 31.2 percent—or 321 districts—have M&O rates of at least $1.40 but less than $1.50, compared to 2004 when 330 districts, or 32 percent, had M&O rates in that range.

Six school districts in Harris County with authority to adopt tax rates above the $1.50 cap have done so. Prior to the enactment of the $1.50 cap, the voters in these districts authorized M&O rates above $1.50. The six districts were Aldine, Deer Park, Galena Park, Pasadena, Spring Branch and Katy ISDs. Katy ISD is located in both Harris and Waller counties.

About 28.5 percent—or 293 districts—do not have a 2005 debt rate for repaying debt obligations. Of the 736 ISDs with debt rates, eight districts have a debt rate of $0.40 or more. McKinney ISD in Collin County set the highest debt rate at $0.50. With its M&O rate of $1.50, the district’s total rate was $2.00.

School Tax by Property Type

The Comptroller uses data submitted electronically by CADs to estimate the distribution of exemptions across property value categories and to reclassify some of the categories according to type of property value. Residential inventory is now included in “Business Properties.” Manufactured homes as well as farm and ranch improvements are now included with the residential properties section. Due to these changes, the report no longer includes comparisons between the groups of property.

The category that includes residential property, including single-family homes, multi-family units, farm and ranch improvements, and mobile homes continues to bear the greatest share of the school tax burden. Texas residential properties represent the largest category of property at almost 53 percent of school taxes. In 2005, owners of single-family residences paid 45 percent of local school taxes. Their school property taxes grew by $920 million.

Business properties accounted for 43 percent of local 2005 school taxes. Texas businesses paid about $9 billion in 2005 local school taxes. Commercial real estate bore the largest burden of all the business properties, paying more than $3 billion, or 16 percent of the total tax burden. Taxes on commercial personal property were about half as much as taxes on commercial real estate, almost $1.5 billion. The next largest tax burden was on oil and gas properties at more than $1 billion, followed by industrial real property at almost $1 billion, industrial personal property at $920 million, utilities $670 million, residential inventory at $100 million and special inventory, which paid $70 million.

Vacant lots and rural acreage generated just under 5 percent of local school taxes with about $950 million in school property taxes.

Table 18 shows Texas properties grouped into four main property types: residential, business, acreage/lots/farm and ranch improvements and other personal property. The fourth type—other personal property—includes privately owned vehicles taxed in school districts. It represented less than one-quarter of 1 percent of total school taxes at $4 million.

Table 18: School Property Tax Burden (in billions) – 2004 and 2005

Residential properties

Property Category 2004 School Taxes[1] Percent of Total 2005 School Taxes Percent of Total Dollar Value Change
2004 to 2005
Single-Family Homes $8.2 44.1% $9.1 45.0% $0.9
Multi-Family Residential $1.0 5.1% $1.0 5.1% $0.1
Mobile Homes and Other Personal $0.1 0.4% $0.1 0.3% $0.0
Farm and Ranch Improvements $0.4 2.3% $0.5 2.3% $0.0

Acreage/Lots

Property Category 2004 School Taxes[1] Percent of Total 2005 School Taxes Percent of Total Dollar Value Change
2004 to 2005
Vacant Lots $0.5 2.6% $0.5 2.5% $0.0
Acreage $0.4 2.3% $0.4 2.2% $0.0

Business Properties

Property Category 2004 School Taxes[1] Percent of Total 2005 School Taxes Percent of Total Dollar Value Change
2004 to 2005
Commercial Real Estate $3.0 16.0% $3.2 15.9% $0.2
Commercial Personal $1.5 5.5% $1.5 7.4% $0.0
Industrial Real Estate $1.0 8.0% $1.0 5.0% $0.0
Industrial Personal $0.8 4.6% $0.9 4.6% $0.1
Oil and Gas $0.9 4.8% $1.1 5.6% $0.3
Utilities $0.7 3.6% $0.7 3.3% $0.0
Special Inventory $0.1 0.3% $0.1 0.3% $0.0
Residential Inventory $0.1 0.5% $0.1 0.5% $0.0

Other properties

Property Category 2004 School Taxes [1] Percent of Total 2005 School Taxes Percent of Total Dollar Value Change
2004 to 2005
Vehicles[2} $0.0 0.0% $0.0 0.0% $0.0

Total for all properties

Property Category 2004 School Taxes [1] Percent of Total 2005 School Taxes Percent of Total Dollar Value Change
2004 to 2005
Total[3] $18.5 100% $20.2 100.0% $1.7

Totals may not add due to rounding.
[1]Allocation of tax estimates to property categories based on values, exemptions and tax levies (not collections) reported by school districts.
[2]Vehicles represent less than one quarter of one percent of total taxes paid.
[3]Does not include taxes collected for County Equalization or South Texas ISD.
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.

2005 School District Property Value Study

The Comptroller assigned more than $1.2 trillion worth of taxable property value to Texas school districts in 2005 for funding schools, an increase of 8.3 percent, or roughly $93.5 billion more taxable value than in 2004. According to the Comptroller’s property value study (PVS), school district property values were up for the 13th year in a row. School property values have risen every year since the 1992 study findings.

The Comptroller certified the final determination of school property values—based on the appraisal date of January 1, 2005—to the Commissioner of the Texas Education Agency by July 1, 2006.

The Texas Education Code requires the Texas Education Agency to use the Comptroller’s annual estimates of individual school district taxable wealth to determine state aid payments. Interested parties may obtain the Comptroller’s findings in Table 19 by ordering the agency’s School and Appraisal Districts’ Property Value Study – 2005 Final Report. Individual school and appraisal district findings are also available on the Comptroller’s Web site at http://www.window.state.tx.us/taxinfo/proptax/pvs05f/.

Table 19: Statewide School District Assigned Taxable Values (in billions) – 2004 and 2005

Property by Category

  2004 Final Value 2005 Final Value Percent Change Value Change
A. Single-family Residences $638.13 $688.2 7.8% $50.1
B. Multi-family Residences 56.62 $61.6 8.8% $5.0
C. Vacant Lots 28.34 $30.5 7.6% $2.2
D. Rural Real 56.08 $59.2 5.6% $3.1
F1. Commercial Real 178.59 $193.5 8.3% $14.9
F2. Industrial Real 67.10 $68.4 1.9% $1.3
G. Oil, Gas, Minerals 51.89 $67.4 29.9% $15.5
J. Utilities 39.77 $39.9 0.3% $0.1
L1. Commercial Personal 92.22 $95.9 4.0% $3.7
L2. Industrial Personal 58.74 $64.9 10.5% $6.2
M. Other Personal 5.43 $5.6 3.1% $0.2
N. Intangible Personal and Uncertified 0.46 $0.1 -78.3% $(0.4)
O. Residential Inventory 5.34 $6.2 16.1% $0.9
S. Special Inventory 3.39 $4.0 18.0% $0.6
Subtotals $1,282.10 $1,385.4 8.1% $103.3

Exemptions and other deductions

  2004 Final Value 2005 Final Value Percent Change Value Change
Homestead $15,000 67.2 $68.6 2.1% $1.4
Homestead $10,000 11.7 $12.2 4.3% $0.5
Disabled Veteran 1.4 $1.5 8.7% $0.1
10% Capped Homesteads 9.3 $9.7 4.9% $0.4
65+ Tax Ceiling Loss Value 43.4 $46.4 -22.3% $(9.7)
Abatements 0.0 $0.0 -75.0% $(0.0)
Tax Increment Financing 5.9 $0.1 -98.0% $(5.8)
Freeport Exemption 13.2 $15.4 17.1% $2.3
Pollution Control 5.6 $6.1 9.1% $0.5
Deferred Payment 0.7 $0.0 -98.6% $(0.7)
Other Exemptions 0.23 $0.5 117.4% $0.3
Less Exemptions $(158.5) $(147.8) (6.7%) $(10.6)

Total Taxable Value

Property Category 2004 Final Value 2005 Final Value Percent Change Value Change
Total Taxable Value $1,123.6 $1,217.2 10.1% $113.9

Totals may not add because numbers are rounded.
Source: Carole Keeton Strayhorn, Texas Comptroller of Public Accounts, Property Tax Division.

While there are 1,029 school districts, the Comptroller’s certification is for 1,046 districts because in some instances more than one appraisal district includes school districts’ values.

The Comptroller certified the school district’s local tax roll values in 1,029 studied school districts. They accounted for about $1.22 trillion in taxable value, or more than 99 percent of the total taxable value in Texas.

Grace Period

Property Tax Code 5.102 directs the Comptroller to conduct appraisal standards reviews (ASRs) of CADs if the Comptroller finds in its annual Property Value Study (PVS) that the appraisal district has one or more eligible school districts. Eligible school districts are those that meet all of the following conditions:

  • the district’s values are invalid in the most recent property value study;
  • the district’s values were valid in the two studies preceding the most recent study; and
  • the district’s local value is above 90 percent of the lower threshold of the margin of error.

Districts falling within this definition have two years in which to remedy the situation before the affected school district loses state funding. This two-year period is commonly referred to as the grace period. The final 2004 PVS findings resulted in the eligibility of 34 school districts for the grace period. These 34 districts are located in 25 CADs and represent about $33.7 billion in taxable value. Eleven previously reviewed districts were in their second and final year of the grace period.

The final 2005 PVS findings resulted in the review of 19 appraisal districts that perform appraisals for 26 of the eligible ISDs.

Property Value Trends

For tax year 2005, taxable values as certified to the Texas Education Agency increased in 979 school districts, with an average increase in value of 11.4 percent. In comparison, 933 school districts had an average increase in value of more than 7 percent in tax year 2004.

Values declined in 67 districts by an average of 4.5 percent from 2004 to 2005. In the preceding study, values declined by an average of more than 2 percent in 115 school districts. Fewer districts declined in value this year than in previous years.

The final 2005 study, before exemptions, revealed an increase of 7.9 percent in the value of single-family residences, following an increase of more that 7 percent in 2004 and almost 11 percent in 2003. This category is the largest in appraised value, representing 49.7 percent of the total school district appraised values.

Multi-family residence values increased 8.8 percent in 2005, following a more than 2 percent increase in 2004.

Changes in business properties’ values varied, depending on the type. Commercial real property increased 8.4 percent, following an increase of about 2 percent from last year. Industrial real property saw appraised values decrease 1.2 percent, following a less than 1 percent decrease in 2004.

Industrial personal property gained 10.5 percent, compared to an almost 6 percent increase in 2004. Commercial personal grew by 4.0 percent following an increase of almost 7 percent in 2004.

Utilities increased 0.4 percent in value from 2004 to 2005, after an increase of more than 2 percent in 2004.

After dropping for two years in a row, oil, gas and mineral properties grew by more than 31 percent in 2004 and 29.9 percent in 2005.

Residential inventory, which is residential property held for sale by the developer, experienced a fifth year of increase in value, increasing 15.9 percent. Special inventory, which is inventory value of motor vehicle, boat, heavy equipment and manufactured housing that dealers are required to report to appraisal districts and county tax offices, increased 17.1 percent.

Exemptions

The final 2005 PVS findings also demonstrated that school districts’ exemptions and abatements increased 6.1 percent from the final 2004 study. The $168.1 billion in 2005 was more than $9.6 billion than in 2004.

Homestead exemptions accounted for 82.7 percent of all exemptions. Those exemptions included the state mandated $15,000 exemption for general homeowners, the state-mandated $10,000 exemption for disabled or elderly homeowners, the school tax ceiling (or freeze) for homeowners 65 and older or disabled and the capped value on homesteads and deferred homestead payments.

Government Code Section 403.302 specifies the exemptions and productivity value loss for special appraisals that the Comptroller deducts from market value to determine the taxable value of property in school districts.

School Districts Local Self Report Data – 2005

Tax Code Section 5.09 requires the Comptroller’s annual report to include for each school district the total appraised value by property class, the total taxable value and the tax rate. Table 20 shows that statewide, school districts had appraised values of nearly $1.4 trillion. Taxable value, after deducting exemptions, was $1.2 trillion. The combined school tax levy was nearly $20.2 billion.

Table 20: Total School Districts Appraised Value

Category Value
A. Single-Family Residential $688,166,719,005
B. Multi-Family Residential 61,592,594,311
C. Vacant Lots 30,490,273,996
D. Acreage (Land Only) 26,095,419,001
E. Farm & Ranch Improvements 33,100,349,871
F1. Commercial Real 193,511,586,389
F2. Industrial Real 68,363,613,951
G. Oil, Gas & Minerals 67,412,630,466
H. Vehicles 251,398,907
J. Utilities 39,941,946,875
L1. Commercial Personal 95,932,476,597
L2. Industrial Personal 64,903,211,948
M. Other Personal 5,570,003,463
N. Intangible Personal 11,095,432
O. Real Property, Inventory 6,184,563,645
S. Special Property 3,969,091,569
Subtotal $1,385,496,975,426

Exemptions

Category Value
Required Homestead Exemptions $80,784,848,071
Local Percent Homestead Exempt Value 25,857,384,217
Local 65 and Over/Disabled Value 6,023,360,075
Other Deductions 24,858,668,841
Value Lost To Tax Freeze 33,707,945,350
Value Lost To 10 Percent Home Cap 9,727,460,783
Taxable Value $1,204,537,308,089

Tax Levy

Category Value
Actual Levy $20,194,915,817

Source: Texas Comptroller of Public Accounts.

Table 21 lists school districts according to a six-digit numbering system used by the Texas Education Agency. The first three digits denote the county, assigned in alphabetical order, in which a particular school district is located. The last three digits identify the particular school district. The appendix groups the school districts in each county and lists the counties in alphabetical order. To assist the reader in locating a particular school district, Table 22 provides an alphabetical index of school districts.

The table presents total appraised value in 16 property categories for each school district. Definitions for each of these categories are included in Chapter 2. Appraised value represents the market value of property on January 1, 2005. Qualified agricultural and timberlands receive productivity appraisal. Taxable value means the appraised value minus partial exemptions and other possible deductions.

Many school districts report little or no 2005 value in Category H, Vehicles. Personal property not used to produce income, such as personal vehicles, is exempt from taxation unless a school district takes official action to tax it. Category M, Other Personal, is the property value of other personal property, such as manufactured homes. Although Category N, Intangible Personal, appears in this appendix, there is little or no intangible personal property value to tax. Uncertified value also may appear in Category N.

Category S, Special Property, includes certain property inventory of businesses that provide items for sale to the public. State law requires appraisal districts to appraise these inventory items based on the business’ total annual sales in the prior tax year. The following are the four types of Category S properties: Dealer’s Motor Vehicle Inventory, Dealer’s Heavy Equipment Inventory, Dealer’s Vessel and Outboard Motor Inventory and Retail Manufactured Housing Inventory.

Following the “Total Value” for the property categories in each school district, the item labeled “State Exemptions” shows the amount of appraised value that was not taxable because of state-mandated exemptions. This figure includes the required homestead exemptions and disabled veteran’s exemptions, but does not include the amount of value exempted for tax abatements and reinvestment zones. The value exempted for tax abatements and reinvestments zones is included in “Other Deductions.”

“Local % Homestead Exempt Grant” indicates if the school district granted a local option percentage homestead exemption and the percentage granted, if any. “Local % Homestead Exempt Value” shows the total amount of value not taxed because the district offers this local option exemption. For 2005, 220 school districts granted local option percentage homestead exemptions ranging from 1 to 20 percent.

“Local 65+/Disabled Value” indicates the amount of value not taxed because of the local option exemption granted by the school district to homeowners who are over 65 years old or disabled. During 2005, 197 school districts offered this type of exemption.

“Other Deductions” represents the taxable value lost to freeport exemptions, pollution control exemptions, tax abatements, tax increment financing, exemptions for solar or wind power, low-income housing, prorations and any other value on which the school district cannot collect taxes.

“Value Lost To Tax Freeze” represents value not taxable because homeowners 65 or older or disabled had established tax ceilings to pay reduced taxes.

“Value Loss To 10% Homestead cap” is the value loss for the limited homestead value restriction on increasing a residential homestead appraised value by more than 10 percent per year since the homestead’s last reappraisal.

“Taxable Value” reflects the deductions for all exemptions and productivity appraisal for each district and for the value lost to the tax freeze for homeowners age 65 or older.

The report shows the school district’s adopted tax rates and the “Actual Levy” adopted and reported by the school district. This may be different from a calculated levy, depending on local circumstances. The school district’s Maintenance & Operations (M&O) Rate and its Interest and Sinking Fund (I&S) Rate make up its “Total Rate.”

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