In a nutshell
The major avenue for funding discussed in both the Oct. 22 meeting and the Oct. 16 NISD Board Finance Committee meeting centered around accessing an additional three golden pennies on top of the five golden pennies the district uses to provide additional funding for basic operating expenses.
Rene Barajas, NISD deputy superintendent for business and finance, said golden pennies are a source of tax revenue that is not subject to recapture by the state and allows for greater local control over revenue streams. Known as Tier 2, Level 1 funding, these pennies give the district a guaranteed yield per weighted average daily attendance.
Using the 2023-24 school year as an example, Barajas said that each of these golden pennies accesses approximately $126 per weighted average daily attendance, which multiplied by five, gives the district approximately $617 per WADA.
Tier 2 level funding guarantees approximately $77.8 million in general operating funds. During the 2023-24 school year, Northside ISD earned $41.6 million in Tier 2, and the state funded the difference.
To access the additional three golden pennies, the district would need to hold a voter-approval tax rate election, or VATRE, in November 2026, Barajas said.
NISD board trustee Karen Freeman emphasized that the district is still discussing potential avenues and has not planned to hold a VATRE.
“I appreciate the conversation about educating the public on school finance, but I think we have to be very careful. We're going to talk about a timeline later, but [currently] we are not calling for a VATRE,” Freeman said.
The conditions
Texas school districts produce and acquire funding for maintenance and operations through a two-tiered system, with the maintenance and operating tax rate comprising the majority. Tier 1 maintenance and operating funding is determined by a series of formulas, and shares the cost with the state. The maximum rate a district can raise without voter approval is called the maximum compressed tax rate, or MCR.
Tier 2 funding allows the district to generate additional funding by raising property taxes beyond the MCR.
The context
Superintendent John Craft said the exploration of additional funding is important because the district may not be able to rely on the state to provide adequate funds for the district.
“As hopeful and cautiously optimistic as I am, leading into the 89th legislative session, I just don't know that we can solely rely on state funding to meet our educational revenue needs, particularly as we look out towards 2026 and beyond,” Craft said.
Craft said the district has a $93.8 million shortfall budget going into next fiscal year, and unless they see significant improvements on the district’s finances from the legislative session, then this is something the community needs to consider.
