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Tax Rate for 2021-22 Approved

September 28, 2021


The annual tax rate was approved at the Sept. 27, 2021 Board of Trustees meeting, following extensive discussion, by a vote of 6-1. The adopted rate is $1.3103 ($0.9603 Maintenance and Operations/$0.35 Interest and Sinking) per $100 of certified property value. The Maintenance and Operations (M&O) portion covers district operating costs such as salaries and benefits, utility bills, student transportation, and supplies. The Interest and Sinking (I&S) rate generates revenue that is used to pay off bond indebtedness for facilities. 


During Monday’s meeting, Dr. Amanda Brownson of TASBO (Texas Association of School Business Officials) provided a school finance update and explanation of how school district tax rates are structured. (To listen to Dr. Brownson’s presentation, go to the videostream recording starting at 1:08). She provided definitions of the Voter-Approval Tax Rate and the No New Revenue Tax Rate. Dr. Brownson explained that the Voter-Approval Tax Rate is comprised of:  1) Maximum Compressed Tax Rate (MCR) as provided by TEA; 2) enrichment pennies (golden pennies and copper pennies); and 3) current debt rate. In DSISD over the past four years, the MCR and the enrichment pennies both have dropped. Dr. Brownson explained that the No New Revenue Tax Rate is a calculated rate of what would produce no additional tax revenue; this amount considers only local tax revenue, not state aid or recapture. She explained the implications that would be associated with the No New Revenue Tax Rate, which would result in reducing local tax collections, reducing state aid, loss of Formula Transition Grant funding from the state, and reducing the overall budget. Dr. Brownson also clarified that the No New Revenue tax rate does not provide revenue for student enrollment growth.


The adopted rate represents a 2.29-cent decrease from the 2020-21 rate, due to a compression of the Maintenance and Operations tax rate that resulted from House Bill 3, which modified the statewide school funding formula/system.


Property tax bills are a product of the tax rate and the property value. If an individual’s property value increases at a higher percentage than the rate decreases, the actual bill will be higher even though the adopted rate is declining (with the exception of those 65 and older who have filed an exemption application and whose taxes are frozen). 


Because of the way that public schools are funded, school districts that are classified as having revenue in excess of entitlement (under Chapter 48 of the Texas Education Code) do not receive the increased revenue associated with higher property values; state funding formulas are recalculated so that the district must send more money back to the state. For 2020-21, the district will send $5,630,603 back to the state in recapture. For 2021-22, the recapture payment is estimated to be nearly $7 million, which will represent an increase of approximately 24 percent. 


This will mark the third consecutive year that DSISD is decreasing its tax rate. Between 2018-19 and 2019-20, the DSISD tax rate decreased more than 10 cents ($1.52 to $1.4183). Then, between 2019-20 and 2020-21, it dropped another 8.5 cents ($1.4183 to $1.3332). Combined with this year’s additional two-cent decrease, over a three-year period, DSISD’s property tax rate will have decreased by 20.97 cents, or 13.8 percent. However, during that same timeframe, property values in Dripping Springs have risen significantly.


Dripping Springs ISD is a fast-growth district, having doubled in size in the last 10 years. Current enrollment is 8,004, which represents an increase of 9.9 percent from the district’s official annual reporting date in October 2020.