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Chapter 5
Focus on School District Taxes

Amendments made to Tax Code §6.02 by the Legislature resulted in the Comptroller's office conducting 1,562 property value studies for school districts. Prior to this change, school districts that overlapped more than one county had the option to choose which CAD would appraise property in the school district. Most school districts chose the appraisal district that included the majority of the school district's property. Sixteen chose to have the CAD in which the property was located appraise the property. These were referred to as split districts because their property was split between CADs. The change to Tax Code §6.02, however, limits CAD boundaries and its appraisal activities to a county's boundary limits. CADs can now only appraise property within their boundaries, which resulted in 398 split districts. For the purposes of this report, data regarding property tax rates, levies and values are reported by school districts as a whole. Interested parties will find data of split districts included in the raw data.

School Tax Rates

In 2005, the Legislature mandated reductions in school districts' maintenance and operations (M&O) tax rates in 2006 and again in 2007. Because of this legislative mandate, the average tax rate decreased by 40.3 cents between 2005 and 2007. In 2008, tax rates returned to an upward trend line as indicated in Exhibit 26. The Comptroller's office does not collect information on debt service (I&S) and maintenance and operations (M&O) tax levies. The I&S and M&O tax rates reflected in Exhibit 26 are statewide simple averages. Application of these simple averages to the statewide reported taxable values will not result in accurate I&S and M&O tax levies. A complete listing of school district taxable values, M&O rates and I&S rates, are available online at http://www.window.state.tx.us/taxinfo/proptax/08taxrates/.

Exhibit 26
School District Tax Levies, 2005-08

Year Average I&S
Rate
Average M&O
Rate
Total Reported
Tax Rate
Reported Taxable
Value
Total Reported
Levy
2005 $0.112912 $1.478997 $1.591909 $1,204,537,308,089 $20,194,915,813
2006 $0.118623 $1.332629 $1.451252 $1,355,215,124,865 $20,918,122,059
2007 $0.145630 $1.042804 $1.188434 $1,505,447,475,660 $18,874,239,532
2008 $0.157313 $1.052194 $1.209507 $1,668,932,870,502 $21,233,517,226
Increases,
2005-2008
39.3% (28.9%) (24.0%) 38.6% 5.1%

Source: Texas Comptroller of Public Accounts.

M&O and the total tax rates declined considerably since 2005 because of the legislative mandate, but the I&S rate for school districts has increased 39.3 percent over the same period. Similarly, the total levy decreased from 2006 to 2007, but then began an upward trend in 2008. The levy for 2008 is 5.1 percent more than in 2005, the year before the Legislature limited the M&O rate. School districts reported an average adopted tax rate of $1.21 per $100 of appraised value in 2008, an increase of 1.9 percent from the 2007 average rate of $1.19.

While tax rates rose, they did so at a lower rate than the increase in taxable values, which increased by more than $163.5 billion in 2008, or 10.9 percent, to $1.7 trillion. In 2007, the school tax levy also decreased because of the lower tax rates required by the Legislature, but they also returned to an upward trend in 2008. School districts raised $21.2 billion from local property taxes, $2.4 billion more than in 2007. The average school district tax levy increased by 12.5 percent.

In 2007, 98.8 percent of Texas school districts reduced local adopted tax rates; in 2008, only 25.2 percent lowered tax rates. In 2007, less than 1 percent increased their tax rate or kept it at the same rate as in 2006, but in 2008, 39.7 percent adopted a higher tax rate while 36.1 kept the same tax rate (Exhibit 27).

Exhibit 27
Changes in ISD Tax Rates, 2007-08


School Districts Increasing Tax Rates

Increased Tax Rate Number of
School Districts
Percent of All School Districts
Increase of $0.15 or more 47 4.6%
Increase of $0.10 to $.1499 64 6.2%
Increase of $0.05 to $0.0999 74 7.2%
Increase of $0.01 to $0.0499 222 21.7%
Total ISDs Increasing
Tax Rates
407 39.7%

School Districts Keeping Same Tax Rates

Did Not Change Tax Rate Number of School Districts Percent of All School Districts
No Change 360 35.1%

School Districts Decreasing Tax Rates

Decreased Tax Rate Number of
School Districts
Percent of All School Districts
Decrease of $0.01 to $0.0499 213 20.8%
Decrease of $0.05 to $0.0999 33 3.2%
Decrease of $0.10 to $0.1499 10 1.0%
Decrease of $0.15 or more 2 0.2%
Total ISDs Decreasing
Tax Rates
258 25.2%

Source: Texas Comptroller of Public Accounts.

Exhibit 28 reflects the range of tax rates, based on $100 of property value, which range from a low of $0.73 per $100 of value in Walcott ISD in Deaf Smith County, to a high of $1.67 in Collin County's Prosper ISD.

Exhibit 28
Range of 2008 School District Tax Rates

Total School District Rate Number of
School Districts
Percent of All School Districts
Less than $1 31 3.0%
More than $1 to $1.20 499 48.7%
More than $1.20 to $1.40 377 36.8%
More than $1.41 to $1.50 90 8.8%
More than $1.50 to $1.60 25 2.4%
More than $1.60 3 0.3%
Total 1,025 100.0%

Source: Texas Comptroller of Public Accounts.

In 2008, 31 school districts adopted tax rates of less than $1 per $100 of assessed value, 19 fewer than in 2007. About 94.3 percent of the school districts (966) had combined rates more than $1 to $1.50 per $100 of value, an increase of eight school districts. The remaining 28 districts, or 2.7 percent, had rates from more than $1.50 to $1.67.

The state's 2008 average M&O rate for school districts was $1.05, while debt rates averaged $0.16. About 22.3 percent of school districts (229) did not have a 2008 I&S rate for repaying debt obligations. Of the 796 school districts with debt rates, 60 school districts had a debt rate of more than $0.40. Five school districts, including Celina, Melissa, Spring Hill, Anna and Prosper ISDs, had a debt rate of $0.50, the highest of the 1,025 school districts. With an M&O rate of $1.17, Prosper ISD continues to have the highest total tax rate at $1.67.

Every one of the top 10 school districts in Texas has a property tax rate that is more than $1 per $100 of valuation (Exhibit 29).

Exhibit 29
Top 10 School Districts in Tax Levy, 2008

School District Taxable Value Total Tax Rate Reported Tax Levy
Houston ISD $105,423,622,269 $1.156700 $1,204,308,288
Dallas ISD $80,072,425,895 $1.183402 $947,578,689
Austin ISD $58,836,426,885 $1.202000 $707,213,851
Plano ISD $34,331,091,403 $1.303400 $447,932,983
Cypress-Fairbanks ISD $31,205,655,779 $1.350000 $421,333,779
Northside ISD $30,827,534,604 $1.302500 $401,524,166
North East ISD $27,575,211,874 $1.402900 $386,852,647
Fort Worth ISD $25,303,391,687 $1.257000 $318,063,633
Lewisville ISD $22,957,433,706 $1.380000 $317,632,381
Fort Bend ISD $22,715,292,563 $1.270000 $288,636,520

Source: Texas Comptroller of Public Accounts.

The top five school districts remained the same. In the bottom five of the top 10, Northside ISD moved past North East ISD into sixth place; Fort Worth ISD passed Lewisville ISD into eighth place; and Arlington ISD fell from the top 10 and was replaced by Fort Bend ISD, which saw the highest tax rate increase of the top 10, with a 19.1 percent increase.

School Tax by Property Type

The Comptroller uses data that CADs submit electronically to group property according to type of property value.

Exhibit 30 shows school district properties grouped into three main property types: residential, acreage/lots/farm and ranch improvements and business properties.

Exhibit 30
School Property Tax Values by Property Category, 2007-08


Residential

Property Category 2007 School
Appraised Values
Percent of Total 2008 School
Appraised Values
Percent of Total Percent Change
2007 to 2008
Single-family Residential $846,867,140,486 49.2% $918,396,429,743 48.3% 8.4%
Mobile Homes $5,623,492,204 0.3% $5,738,507,297 0.3% 2.0%
Total Residential $852,490,632,690 49.5% $924,134,937,040 48.6% 8.4%

Acreage/Lots

Property Category 2007 School
Appraised Values
Percent of Total 2008 School
Appraised Values
Percent of Total Percent Change
2007 to 2008
Vacant Lots $37,831,350,196 2.2% $42,852,089,257 2.3% 13.3%
Rural Land and Improvements $70,270,053,648 4.1% $76,010,658,470 4.0% 8.2%
Total Acreage Lots $108,101,403,844 6.3% $118,862,747,727 6.2% 10.0%

Business Properties

Property Category 2007 School
Appraised Values
Percent of Total 2008 School
Appraised Values
Percent of Total Percent Change
2007 to 2008
Commercial Real Estate $251,123,759,490 14.6% $282,974,430,757 14.9% 12.7%
Commercial Personal $111,147,718,494 6.5% $122,495,483,861 6.4% 10.2%
Multi-family Residential $76,765,812,366 4.5% $84,904,324,066 4.5% 10.6%
Industrial Real Estate $85,939,853,314 5.0% $91,827,807,497 4.8% 6.9%
Industrial Personal $82,831,198,842 4.8% $94,954,890,235 5.0% 14.6%
Oil and Gas $95,220,532,650 5.5% $121,120,530,036 6.4% 27.2%
Utilities $44,722,839,741 2.6% $47,133,703,833 2.5% 5.4%
Vehicles $225,377,514 0.0% $159,514,559 0.0% -29.2%
Special Inventory $4,606,641,507 0.3% $4,806,280,264 0.3% 4.3%
Residential Inventory $9,416,544,667 0.5% $9,993,344,736 0.5% 6.1%
Intangible Personal $28,820 0.0% $118,580 0.0% 311.5%
Total Business Properties $762,000,307,405 44.2% $860,370,428,424 45.2% 12.9%
Total All Properties $1,722,592,343,939 100% $1,903,368,113,191 100% 10.5%

Source: Texas Comptroller of Public Accounts.

Business properties saw the largest increase, 12.9 percent, in property value from 2007 to 2008. While residential properties still contribute the largest share of the school taxes in terms of property value, accounting for 48.6 percent of local 2008 school value, or about $924.1 billion, it is gradually decreasing as a percentage of total value while business properties are increasing.

Commercial real estate represents the largest share of all business properties, at 14.9 percent of the total property value, or $283 billion. Commercial personal property and oil and gas property values followed at $122.5 and $121.1 billion, respectively, each accounting for 6.4 percent of the total value. Industrial personal and real property followed at $95 and $91.8 billion each, respectively; apartments at $84.9, or 4.5 percent; utilities at $47.1 billion, 2.5 percent; and residential inventory at $10 billion, or 0.5 percent.

Vacant lots and rural acreage accounted for 6.2 percent of school property value, with about $118.9 billion in property value. Vacant lots accounted for $42.9 billion and rural acreage and improvements for the balance of $76 billion.

Property Value Trends

For tax year 2008, taxable local values rose in 977 school districts, with an average increase of 15.9 percent. By contrast, 926 school districts experienced an average increase in value of more than 11.8 percent in tax year 2007. Values declined in 48 districts by an average of 4.2 percent in 2008. In the 2007 tax year, values declined by an average of more than 5.9 percent in 100 school districts.

Property values of single-family residences, before exemptions, rose by 8.4 percent in 2008, following increases of more than 11.6 percent in 2007 and 10.3 percent in 2006. This category is the largest in appraised value, representing 48.3 percent of all school district appraised values.

Multi-family residence values rose by almost 10.6 percent in 2008, following a 13.4 percent increase in 2007.

Commercial real property increased 12.7 percent in 2008, following an increase of 14.5 percent in 2007. Industrial real property appraised values rose by 6.9 percent, following a 10.9 percent increase in 2007.

Industrial personal property gained 14.6 percent in value in 2008, following a 15.5 percent increase in 2007. Commercial personal property values rose by 10.2 percent, compared with an increase of 9.1 percent in 2007.

Utilities increased in value by 5.4 percent in 2008, after an increase of 8.43 percent in 2007. Oil, gas and mineral properties rose by 27.2 percent in 2008, after an increase of 2.4 percent in 2007.

Residential inventory, which is residential property held for sale by the developer, experienced its sixth year of rising average value, increasing by almost 6.1 percent in 2008. Special inventory, which is the inventory value of motor vehicles, boats, heavy equipment and manufactured housing that dealers are required to report to appraisal districts and county tax offices, rose by 4.3 percent.

School Districts: Local Self Report Data – 2008

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. Exhibit 31 shows that Texas school districts had appraised values exceeding $1.9 trillion in 2008. Their taxable value, after deducting exemptions and other deductions, was $1.7 trillion. The combined school tax levy was more than $21.2 billion.

Exhibit 31
Texas School Districts Total Appraised Value, 2008


Property Categories

Category Value Percent of Total Value
A. Single-family Residential $918,396,429,743 48.3%
B. Multi-family Residential $84,904,324,066 4.5%
C. Vacant Lots $42,852,089,257 2.3%
D. Rural Real $76,010,658,470 4.0%
F1. Commercial Real $282,974,430,757 14.9%
F2. Industrial Real $91,827,807,497 4.8%
G. Oil, Gas & Minerals $121,120,530,036 6.4%
H. Vehicles $159,514,559 0.0%
J. Utilities $47,133,703,833 2.5%
L1. Commercial Personal $122,495,483,861 6.4%
L2. Industrial Personal $94,954,890,235 5.0%
M. Other Personal $5,738,507,297 0.3%
N. Intangible Personal $118,580 0.0%
O. Real Property, Inventory $9,993,344,736 0.5%
S. Special Property $4,806,280,264 0.3%
Subtotal $1,903,368,113,191 100%

Deductions

Category Value Percent of
Total Value
Required Homestead Exemptions $88,309,546,257 4.6%
Local Optional Percent Homestead Exemption $33,247,118,967 1.7%
Local Optional Over-65 and Disabled Exemption $7,065,038,077 0.4%
Other Deductions $35,768,547,335 1.9%
Value Lost to Tax Freeze $47,184,909,561 2.5%
Value Lost to 10 Percent Homestead Cap $22,860,082,492 1.2%
Total Exemptions $234,435,242,689 12.3%
Taxable Value $1,668,932,870,502 87.7%

Tax Levy

Category Value
Actual Levy $21,233,517,226

Source: Texas Comptroller of Public Accounts, Property Tax Assistance Division

PTAD develops data on total appraised value for each school district in the 15 property categories described in Chapter 3. Appraised value represents the productivity value of qualified agricultural and timberland, as well as the market value of all other property categories as of Jan. 1, 2008. Taxable value is the appraised value minus partial exemptions and other deductions.

Many school districts report little or no 2008 value in Category H: Tangible Personal Property: Nonbusiness 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, Mobile Homes and Other Tangible Personal Property, represents the property value of other personal property.

Appraisal value deductions follow the subtotal value. These deductions include required homestead exemptions, local option exemptions value lost to the tax ceiling, value lost to the 10 percent homestead cap and other deductions.

For 2008, 218 school districts granted local option percentage homestead exemptions ranging from 1 percent to 20 percent, and 199 offered homeowners who are 65 or older or disabled a local option exemption. A homestead cap limits homestead value increases to 10 percent more than the previous year's appraised value.

School districts may grant other deductions such as freeport exemptions, pollution control exemptions, tax abatements, exemptions for solar or wind power, economic development, low-income housing and historical exemptions. Taxable value reflects the deductions for all exemptions for each ISD and for the value lost to the tax ceiling for homeowners aged 65 or older.

School district reports do not include local school taxes by special county equalization districts or for 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. Full details of school district property values are available on the Comptroller's Web site at www.window.state.tx.us/taxinfo/proptax/annual08/2008_school_district_values.xls.

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