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Texas School Finance Guide

How Texas Public School Funding Works

Understanding how operating funds, property taxes, debt and school bonds work together.

Start here

Where does school funding come from?

Texas public schools are funded by a combination of sources. Much of the relationship between state and local dollars operates through the Texas Foundation School Program.
Local revenue
Primarily school district property taxes levied on taxable property inside the district.
State funding
State aid distributed largely through the Foundation School Program and applicable allotments.
Federal funding
Program-specific federal funds, generally restricted to the purposes Congress authorized.
Other authorized sources
Additional revenue a district is legally permitted to receive, such as certain fees, grants, and interest earnings.
CivicCentra IQ — Why this matters
Understanding the difference between operating funding and debt funding is essential to understanding a school bond.
Official SourceTexas Education Agency — Texas Public School Finance Overview
The two halves of a school tax rate

One school tax rate. Two different purposes.

A Texas school district's tax rate has two parts. They are collected together but are used for different things.
Maintenance & Operations
M&O

M&O generally supports the district's day-to-day operations.

  • Employee salaries
  • Instruction
  • Utilities
  • Supplies
  • Fuel
  • Routine operating expenses
  • Other eligible operating costs
Interest & Sinking / Debt Service
I&S

I&S is used to repay principal and interest on voter-approved debt, including school bonds. Bond proceeds may be used only for capital purposes authorized by law and by the ballot proposition — not every possible expenditure can be financed with bonds.

  • School construction
  • Major renovations
  • Facility improvements
  • Certain building systems
  • Eligible technology
  • Other legally authorized capital projects
Official SourceTexas Education Agency — Tax Rate Compliance / School District Tax Rates
Local example

Keller ISD's Current Tax Rate

One total rate, divided into two components. These figures come from CivicCentra's centralized, approved financial data.
Total adopted rate
$1.0852 per $100
per $100 taxable value
$0.7552 per $100
M&O — Operations
$0.3300 per $100
I&S — Debt Service
Verified Fact

Effective 2025–26 · Last verified 2026-07-24

What makes up the $1.0852 rate

Verified Fact
Total adopted rate

Source: Keller ISD — Keller ISD Adopted Tax Rate · Effective 2025–26 · Last verified 2026-07-24

$1.0852 /$100

M&O + I&S = the total district rate. Only the I&S portion repays voter-approved bond debt.

How bonds work

What is a school bond?

A school bond is a form of long-term financing that allows a school district, after required voter authorization, to issue debt for eligible capital purposes and repay that debt over time.
  1. 1Community Need
  2. 2District / Committee Planning
  3. 3Board Calls Bond Election
  4. 4Voters Consider Proposition
  5. 5If Approved, District May Issue Authorized Bonds
  6. 6Bond Proceeds Fund Eligible Capital Projects
  7. 7Debt Is Repaid Over Time
  8. 8I&S / Debt-Service Revenue Supports Repayment
Authorization is not the same as spending
Voter approval authorizes a district to issue bonds up to the authorized amount. It does not mean the full amount is borrowed or spent immediately. Actual issuance and spending occur over time through the district's financial and project processes.
Operating funds vs. capital funds

Why not just pay for major repairs from the regular budget?

Keller ISD's Citizens Bond Advisory Committee materials state that M&O supports day-to-day district operations while I&S supports bond debt. The district has also explained that when aging infrastructure requires repairs paid from M&O, those expenses draw on the same operating fund that supports salaries and student programming.

Major capital needs can compete with operating priorities when paid directly from the operating fund. Bond financing provides a separate mechanism for eligible long-term capital investments, subject to voter authorization.

Bond financing is not free money. Bonds create debt that must be repaid with interest over time, using debt-service (I&S) resources.

Official SourceKeller ISD — Citizens Bond Advisory Committee materials
Texas law

What can Texas school bonds fund?

Local example

Why are there five propositions?

Because Texas law requires certain bond purposes to be voted on separately, the Keller ISD 2026 package appears on the ballot as five propositions that voters decide independently.
Proposition A
Maintenance Repairs & Renovations
View Proposition
Proposition B
Technology
View Proposition
Proposition C
Natatorium
View Proposition
Proposition D
Athletic Complex & Field House
View Proposition
Proposition E
Districtwide Turf
View Proposition
Debt capacity

How can a district issue new bonds without necessarily raising its tax rate?

Debt capacity is not a single number. It reflects several moving parts.
Taxable Property Base
Existing I&S Rate
Existing Debt Schedule
New Debt Structure
Available Debt-Service Capacity
Factors that can affect capacity
  • Growth or changes in the taxable property base
  • Existing debt being repaid
  • Timing and structure of new debt
  • Interest rates and refinancing
  • Debt-service schedules
  • The amount of revenue generated by the existing I&S rate

A district can sometimes issue additional bonds while maintaining its existing tax rate if its projected debt-service resources are sufficient to make the required payments.

This is not guaranteed, and it is not true of every bond. Whether a specific package requires a rate change is a district-specific financial question.

Local example

What has Keller ISD said?

Official PositionMay 19, 2026 — CBAC financial outlook

Keller ISD's May 19, 2026 Citizens Bond Advisory Committee materials state that the district's financial advisor indicated Keller ISD had the tax base to fund an approximately $800 million bond without increasing its tax rate.

The final bond package called for the ballot totals approximately $828.1 million. CivicCentra does not extrapolate the May 19 capacity statement to the final package. A newer official Keller ISD financial analysis expressly addressing the final $828.1 million package has not been located in CivicCentra's verified source set, so only what the May 19 source supports is stated here.

Official SourceKeller ISD — CBAC — May 19, 2026 financial outlook and bond capacityOfficial SourceKeller ISD — 2026 Bond — official district materials
The most common misunderstanding

Tax Rate ≠ Tax Bill

Definition
Tax rate
The amount Keller ISD applies per $100 of taxable property value — currently $1.0852 per $100, made up of $0.7552 per $100 for M&O (operations) and $0.3300 per $100 for I&S (debt repayment).
Definition
Taxable property value
Your property's value after applicable exemptions and other legally applicable adjustments, determined by the Tarrant Appraisal District.
Definition
Tax bill
The dollar amount actually owed: taxable value ÷ 100 × the applicable tax rate.
Taxable Value ÷ 100 × Tax Rate = Estimated Tax

An unchanged tax rate does not guarantee an unchanged individual tax bill. If taxable property value changes, the amount paid may change even when the tax rate stays the same. Exemptions and other applicable tax rules can also affect taxable value.

Estimate Your Keller ISD School Taxes
The state's role

How does the State of Texas fit into this?

Texas uses the Foundation School Program to determine much of the state and local funding available for school districts.
Factors in the funding framework
  • Student attendance
  • Student populations and funding weights
  • District property values
  • Local tax effort
  • State funding formulas
  • Applicable allotments
Learn More — Official SourceTexas Education Agency — State Funding / Foundation School ProgramOfficial SourceTexas Education Agency — Summary of Finances

Key takeaway

Operating Funding Is Not the Same as Bond Funding

Operating / School Finance
Supports ongoing education and operations
  • Local M&O revenue
  • State funding
  • Federal funding
  • Other operating sources
Capital / Bond Finance
Supports eligible long-term capital needs
  • Voter-authorized bond proceeds
  • Repaid through debt-service resources over time
FAQ

Common Questions

Ask CivicCentra IQ

Questions this guide can answer

How are Texas schools funded?What is the difference between M&O and I&S?How do school bonds work?Why does Keller ISD need a bond instead of using its operating budget?How can a bond be issued without increasing the tax rate?Can my tax bill increase if the tax rate stays the same?What is recapture?Why are there five propositions?
Next steps

Now Explore the Keller ISD 2026 Bond

Explore the Five PropositionsEstimate Keller ISD School TaxesAsk CivicCentra IQ
Verification

Official Sources

Official SourceTexas Education Agency — Texas Public School Finance OverviewOfficial SourceTexas Education Agency — State Funding / Foundation School ProgramOfficial SourceTexas Education Agency — Summary of FinancesOfficial SourceTexas Education Agency — Excess Local Revenue (Recapture)Official SourceTexas Education Agency — School Finance Topic GuidesOfficial SourceTexas Education Agency — Tax Rate Compliance / School District Tax RatesOfficial SourceTexas Comptroller of Public Accounts — Texas Public Education funding overviewOfficial SourceTexas Comptroller of Public Accounts — Property Tax Assistance — school district values and tax informationOfficial SourceTexas Legislature — Texas Education Code Chapter 45 — School District FundsOfficial SourceTexas Legislature — Texas Education Code Chapter 49 — Options for Local Revenue Levels in Excess of Entitlement
Official Sources

Source precedence: for statewide school-finance rules CivicCentra prefers current Texas statute, then the Texas Education Agency, then the Texas Comptroller. For Keller-specific information, current board-approved and district finance documents take precedence over committee and historical materials.