Voter Approval Tax Rate Elections: What They Are & Why Your School District May Pursue One 

We meant it at the start of the 88th Legislature, and we mean it as we stare down the 89th Legislature: respect for educators starts with fully funded public schools.  

As we wrote about in last week’s Hotline, school districts across Texas find themselves grappling with severe budget deficits that threaten their ability to provide high-quality education to the state’s 5.5 million public school students. Faced with inadequate state funding, a growing list of unfunded mandates, and the expiration of temporary COVID-19 federal relief funding this fall, an increasing number of districts are turning to Voter Approval Tax Rate Elections (VATREs) as a potential solution.  

But what exactly are VATREs, and how do they work within the context of Texas’ complex school finance system? 

School Finance 201: Tier I vs. Tier II Funding – What Are VATREs? 

In Texas, school districts generate and receive funding for maintenance and operations (M&O) through a two-tiered system. The M&O tax rate comprises the majority of a district’s operating revenue. 

Tier I M&O funding is determined by a series of formulas based on student attendance and the specific needs of each district’s student population. The state and local school district share the cost of its Tier I “entitlement,” with the state covering the portion that exceeds the district’s share as calculated under the state’s school finance formula — known as the “local fund assignment.” The maximum Tier I M&O tax rate a district can levy without voter approval is called the maximum compressed tax rate (MCR), which is calculated annually by the Texas Education Agency (TEA). 

Tier II M&O funding allows school districts to generate supplemental “enrichment” revenue by levying property taxes beyond the MCR. These additional tax effort pennies are split into two categories: “golden” pennies (Tier II, Level 1) and “copper” pennies (Tier II, Level 2), each with different implications for state funding, recapture, and voter approval. 

School districts can levy up to eight “golden” pennies per $100 of taxable property value for Tier II Level 1 enrichment funding, which is not subject to recapture by the state. These “golden” pennies generate a guaranteed yield of $98.56 per penny per weighted student. In other words, in districts with a tax base that does not generate this amount of funding, the state “equalizes” the yield by providing additional state funding to the school district up to the guaranteed yield.  

The first five of the eight “golden” pennies can be accessed at the school board’s discretion without voter approval. However, the remaining three “golden” pennies require voter authorization through a VATRE. 

After tapping into the eight “golden” pennies, districts can levy up to nine “copper” pennies for Tier II Level 2 enrichment funding. These “copper” pennies generate a lower guaranteed yield of $49.28 per penny per weighted student; they are called “copper” pennies because the guaranteed yield is much lower. Unlike “golden” pennies, the “copper” penny revenue is subject to recapture if it exceeds the district’s Tier II entitlement. Accessing any of the nine “copper” pennies also requires voter approval through a VATRE. 

In short, a VATRE allows a school district to ask voters for permission to adopt a tax rate that exceeds the district’s state-calculated MCR plus the greater of five “golden” pennies or the number of Tier II voter-authorized enrichment pennies set in the prior year to generate additional revenue for operational expenses. This additional M&O revenue can be used to fund critical needs, like providing competitive salaries to attract and retain high-quality educators and investing in essential educational programs and resources. 

You can find a breakdown of your school district’s MCR, adopted M&O tax rate, state v. local share, and more information related to funding and expenditures at the following state websites: 

Budget, Tax Rate, & VATRE Timeline 

The decision to pursue a VATRE requires careful planning and extensive community engagement. School districts must follow a statutory timeline that involves proposing and adopting a budget, holding public meetings to discuss the proposed budget and tax rate, and potentially calling a VATRE election, which takes place on the November uniform election date (Nov. 5 in 2024). This process ensures transparency and allows community members to have a voice in the decision-making process. 

It is crucial for educators, school employees, parents, and community members to engage in these discussions now, as districts are currently in the process of proposing budgets and holding public hearings for the 2024-2025 school year. The following timeline applies to school districts with a fiscal year start date of July 1. 

June 19, 2024

District Deadline to Propose a Budget

By June 19, 2024, school district administrations must prepare and propose a budget, which may include expenditures contingent on the success of a VATRE. No later than June 20, 2024, districts are required to publish notice for a public meeting to discuss the proposed budget and initial tax rate at least 10 days before the meeting but not more than 30 days before. A summary of the proposed budget must be posted at least 72 hours before the meeting. The district’s MCR will not be known at this time. 

June 19, 2024
June 30, 2024

School Board Deadline to Adopt a Budget

School boards must adopt their budgets by June 30, 2024 prior to the beginning of the fiscal year on July 1. They may choose to assume success of a VATRE and include provisions contingent on the resulting increased funding, like salary raises, or prepare a conservative budget that can be amended if the VATRE passes.  

After adoption, districts must file the adopted budget with TEA through the Public Education Information Management System (PEIMS) and ensure these documents are posted on the district’s website, where they must be maintained for at least three years. 

June 30, 2024
July 25, 2024

Maximum Compressed Tax Rate Calculated & Appeal Window Opens

By July 25, 2024, the chief appraiser will certify each school district’s appraisal roll. School districts must submit all required data to TEA, including certified property values and local exemption totals, by this deadline. This timely submission is crucial for ensuring accurate preliminary MCR calculations by TEA. TEA will then approve and provide each district with its preliminary MCR by late July or early August. These preliminary MCR rates from TEA guide the initial tax rate discussions and adoption process for school districts. 
Districts then have 10 days to appeal their preliminary MCR to TEA, if desired. If no appeal is received within that window, then the preliminary MCR automatically becomes the district’s final MCR. Districts must review the final MCR against their initially proposed tax rate. If the final MCR necessitates a tax rate that exceeds the initially noticed rate or the voter-approval tax rate (VATR), districts must republish notice for a revised public meeting to discuss and potentially readopt or adjust the tax rate at least 10 days before the meeting to ensure compliance with state guidelines and maintain transparency.

July 25, 2024
September 30, 2024

School Board Deadline to Adopt the Tax Rate

By Sept. 30, 2024, or the 60th day after receiving the certified appraisal roll, whichever is later, school boards must adopt the tax rate. However, most districts adopt their tax rate by late August. If it exceeds the VATR, they must formally call for a VATRE. This action must be finalized no later than the 78th day before the election to be held on Nov. 5, 2024. 

September 30, 2024

The outcome of the VATRE determines the district’s next steps:

  • If the VATRE is unsuccessful, the school board must quickly convene to adopt a tax rate that aligns with the VATR and amend the budget accordingly.
  • If the VATRE is successful, the district can implement contingent salary increases and other enhancements as planned.

Further, the school district can continue accessing the approved enrichment pennies in future years without the need for additional VATREs, providing a stable source of funding for district operations and initiatives (unless the state increases the guaranteed yield on the “copper” pennies, which would then be subject to compression). 

Local Success Stories & Districts Considering a VATRE 

In recent years, Texas AFT’s local unions and organizing committees have successfully collaborated with their communities and school districts to help pass VATREs. For example, in 2023, Education Round Rock engaged in a comprehensive outreach campaign to educate voters about the importance of the VATRE together with Access Education RRISD. Through their efforts, the district successfully passed a VATRE, generating an additional $19 million in revenue to provide enhanced raises for all school employees, recruit bus drivers and support staff, and comply with the new state mandate to have armed security personnel on all campuses.

Even with the successful VATRE, the school district was able to significantly lower its property tax rate from the previous year due to ongoing property tax compression and reducing its Interest and Sinking (I&S) tax rate. Homeowners across the state also benefited from a large increase in the homestead exemption (from $40,000 to $100,000) after Proposition 4 passed in November 2023.  

Similarly, Fort Bend AFT supported the passage of a VATRE in Fort Bend ISD in 2023, which provided the district with $35 million in additional local and state funding to provide raises for educators and school employees and ensure armed security at all schools. Like Round Rock ISD, Fort Bend ISD lowered its tax rate from $1.13 to just under 99 cents even with the VATRE’s approval – the lowest tax rate in the district’s history. 

Brownsville Educators Stand Together (BEST AFT) – one of Texas AFT’s newly chartered local unions – also played a crucial role in the success of Brownsville ISD’s VATRE in 2023, which generated approximately $10 million in additional funding to be used for employee raises. Brownsville ISD also lowered its tax rate from $1.21 in the 2022-2023 fiscal year to $1.03 in 2023-2024. 

Across the state, numerous school districts are exploring the possibility of calling a VATRE to address their financial challenges. From large urban districts to small rural communities, the need for additional funding is widespread and urgent. Districts currently considering VATREs include:

As these districts navigate the process of potentially calling a VATRE, Texas AFT’s local unions and organizing committees stand ready to support their efforts and work together to secure the necessary resources for student success. 

Why Are School Districts Calling VATREs? 

The push for VATREs is a direct result of the Texas Legislature’s failure to adequately fund public education, despite having ample resources to do so. In the most recent legislative session, state leaders had access to a historic surplus and billions in unspent funds specifically allocated for schools. However, instead of using these resources to support public education, they chose to prioritize tax cuts and allowed Gov. Greg Abbott to hold school funding hostage in an attempt to force through an unpopular voucher scheme that would further drain resources from public schools. 

Contrary to claims made by some politicians that schools are “better funded than ever,” the reality is that per-student funding in Texas has decreased when accounting for inflation. The basic allotment, which is the primary mechanism for funding public education in the state, has not been increased since 2019, leaving districts struggling to keep up with rising costs and unfunded mandates, such as the recently passed school safety requirements, that place a significant financial burden on schools without providing adequate resources to implement them effectively. 

As the school funding crisis gains lawmakers’ attention, it is becoming increasingly clear that VATREs, while a valuable tool, are ultimately a Band-Aid solution to a much larger, systemic problem. While successful VATREs can provide much-needed relief to districts in the short term, they also place the burden on local communities to make up for the state’s shortcomings in fulfilling its constitutional obligation to provide a high-quality public education for all Texas students. 

Unfortunately, the House and Senate interim charges glaringly omit any charges related to resolving the looming school finance crisis. The charges also fail to address the need for increased compensation or improved working conditions for educators and school employees, who are leaving the profession in droves. 

Call to Action: Make Your Voice Heard Today

Texas AFT remains committed to advocating for a comprehensive, long-term solution to the school funding crisis. This includes pushing for a significant increase in the basic allotment, ensuring that all school employees receive substantial, well-deserved raises, and firmly rejecting any attempts to divert public funds to private school vouchers.

We strongly encourage our members and supporters to send a letter to Gov. Abbott demanding that he take immediate action to release the $4.5 billion in unspent public education funds appropriated by the 88th Texas Legislature and address public schools’ budget crises head-on. 

By working together, making our voices heard, and holding our elected officials accountable, we can ensure that every Texas student has access to a fully funded, high-quality public education that prepares them for success. The future of our state depends on the strength and vitality of our public schools, and it is up to all of us to fight for the resources and support they desperately need and deserve.