How does school funding work in Texas?

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Texas school districts are funded by three major sources: Federal, State, and Local. Two factors drive school finance in Texas: enrollment, and local property values. A school district tax rate has two distinct components which, added together, make up the annual school tax rate. 


Maintenance and Operations (M&O) funds are used to fund the day-to-day operations of a school district, including teacher and staff salaries; utilities; student services and curriculum; professional development; and facility maintenance and management.


Interest and Sinking (I&S) funds are generated from the sale of voter-approved bonds. These funds are restricted to use only for projects such as the construction of new facilities; additions and renovations to existing facilities; safety and security projects; and purchase of capital expense items such as buses and large technology expenses.


School property taxes are set by an annual M&O plus I&S tax rate approved by the district’s Board of Trustees.