Independent School Districts

Overview

Much of school district debt is authorized under Chapter 45 of the Texas Education Code. School districts issue four types of debt: voter-approved, maintenance and operations (M&O), lease-revenue, and revenue. Charter school debt issued by nonprofit corporations is not included in school district debt.

Over 98.4 percent of school district debt outstanding is voter-approved. The proceeds from voter-approved debt can be used for school capital projects such as buildings, renovations, technology, athletic facilities, school transportation, and performing arts, or to refund M&O debt. Voter-approved debt is subject to the 50-cent test that limits debt service (interest and sinking fund payments) to a maximum of $0.50 per $100 of valuation as described in the Texas Education Code, Section 45.0031. This debt must be approved by the voters prior to a school district issuing new debt.

M&O debt proceeds can be used for administration and operational costs of schools (teachers, buses, classrooms, etc.) but cannot be used for the new construction of school facilities. Tax rates for M&O debt are generally limited to a maximum of $1.50 per $100 valuation under Chapter 45 of the Texas Education Code. For M&O debt, only the maintenance tax is approved by the voters; once the voters approve the maintenance tax and the maximum rate, the maintenance tax debt may be issued without an election.

Lease-revenue obligations are issued by a public facility corporation created by a school district and used for acquiring, constructing, and equipping school facilities.

Proceeds from revenue debt issuances are mainly used to build and maintain sports facilities. Revenue and lease-revenue debt do not require voter approval.

Debt
Outstanding
- Fiscal Year 2020 -
Tax Supported:
$92,570,694,842
Revenue Supported:
$219,399,704
Total Outstanding:
$92,790,094,547
Debt
Issued
- Fiscal Year 2020 -
Tax Supported:
$15,504,528,503
Revenue Supported:
$30,695,000
Total Issued:
$15,535,223,503

Issuers of Texas Debt

Showing entries (filtered from total entries)

Unless otherwise stated, the data for each chart is as of the fiscal year stated above.

TIP: Click on the legend elements to focus the chart's display.

School districts owe the most capital appreciation bonds (CABs) debt service at 47.9 percent of total CAB debt-service owed among all local governments. Interest on CABs compounds semiannually and accumulates over the life of the bond, which generally results in higher interest rates than current interest bonds (CIBs). Historically, CABs have been used by school districts to enable them to remain under the 50-cent debt ceiling that limits the property taxes assessed for debt service costs to 50 cents per $100 of assessed value. Above, the chart displays the top 15 school districts with the highest CAB debt-service outstanding.

The chart above shows school districts that have an interest & sinking fund (I&S) tax rate equal to or greater than $0.35 are more likely to have capital appreciation bonds (CABs) than school districts that have an I&S tax rate under $0.35. Historically, CABs have been used by school districts to enable them to remain under the 50-cent debt ceiling that limits the property taxes assessed for debt service costs to 50 cents per $100 of assessed value.