Local Property Tax
Local tax dollars make up the majority of the district’s revenue sources. The school district’s board of trustees sets the local property tax rate each year while the county appraisal district determines the market value of property within the county or district.
In an area like Cedar Hill ISD where home values are rapidly increasing, even when the tax rate stays the same or is lowered, homeowners will likely see an increase in the total amount of taxes owed due to the higher property values. HB3 requires a lowering of the M&O tax rate in an effort to offset the impact of rising property values; however, the lowered M&O tax rate does not fully accomplish this objective.
The amount of state revenue earned each year is determined by the Tier 1 Entitlement calculation and in Tier 2 by the guaranteed yields on the golden and copper penny portions of the tax rate.
When local property tax collections do not fully fund the Tier 1 entitlement, state revenues are earned. When local property tax collections result in more revenues than are necessary to cover the Tier 1 Entitlement, the district sends those excess tax collections to the state through a mechanism called recapture.
In Tier 2, if the golden pennies and copper pennies do not produce the required revenue per student, then additional state revenues are earned. There is no recapture on the tax collections generated by the golden penny portion of the tax rate; however, the copper penny revenue is subject to recapture.
As local tax collections increase, state funds for a school district decrease.
Federal funding for Texas school districts varies from district to district based on various federal grants and formulas. For the operations of Cedar Hill ISD, federal funds in the General Fund equate to about 1 percent of total revenues and are generated from indirect costs charged to federal grants and programs related to special education services. ESSER funds have increased that percentage in recent years to as much as 4.5%, but the funds will be exhausted in the 2022-23 school year.
Most federal revenues received by a school district are accounted for in Special Revenue Fund groups and not the General Fund.