San Angelo ISD Seeks Voter Approval for Tax Hike

SAN ANGELO, TX — The complex world of Texas school finance law is offering San Angelo ISD a way to increase its operations funding by about $6 million annually—if voters approve a tax adjustment in November that officials say isn’t really a tax rate hike.

Known as the "Three Golden Pennies," Texas law allows school districts, with voter approval, to raise property taxes by 3 cents per $100 of property valuation. The state then matches a portion of the revenue generated, based on the amount raised locally. For San Angelo ISD, the additional 3 cents in taxes will generate about $2.1 million. The state will match this with approximately $4.4 million, making up 65% of the total $6 million that district officials expect to receive from the adjustment.

Despite the 3-cent increase, officials argue it won’t result in a true tax rate hike. The district has reduced the Interest and Sinking (I&S) portion of the tax rate—used for debt payments on old bonds—by 3 cents to offset the operations (M&O) tax rate portion.

School districts and other local taxing entities have both an operations rate and a debt rate. Combined, these rates determine what property owners pay in taxes on residential, commercial, industrial, and other properties on the rolls of the Tom Green County Appraisal District.

The significant revenue match from the state is expected to make the plan appealing to taxpayers, particularly since it doesn't raise the overall tax rate.

Since 2019, Texas school districts have struggled due to stagnant funding from the state legislature. A substantial portion of state funding comes from the "basic allotment"—the amount districts receive per enrolled student. This amount has remained unchanged since 2019. A proposed increase in public school funding was derailed in the last legislative session during debates over private school vouchers.

San Angelo ISD currently receives a basic allotment of $6,160 per student, the same amount it has since 2019. During that period, the district said inflation has risen by 27%, and the basic allotment should now be $7,697 just to keep up. In addition, rising health insurance costs for district employees have pushed local school finances — and ISD individual contributions for health care insurance — to a critical point.

The district’s annual budget shows that 85% of the M&O tax rate goes toward salaries, leaving little room for meaningful spending cuts without affecting teacher and staff pay.

If voters approve the 3-cent tax increase—officially known as the Voter-Approved Tax Rate Election (VATRE), or Proposition A — the Board of Trustees plans to allocate the majority of the $6 million to employee compensation. The funds will specifically support teachers, librarians, nurses, athletic trainers, behavioral support staff, and other related roles. This group accounts for about 1,000 district employees. The Board pledges the funds will go toward:

• Raising the minimum starting teacher salary to $50,000
• Providing a $2,500 pay increase for each employee in the teacher category
• Adjusting pay for other job categories based on market rates
• Offering all employees outside the teacher category either a market adjustment or a 4% raise, whichever is higher

The district’s current tax rate of $0.81231 — which includes both the M&O and I&S portions — will remain unchanged for fiscal year 2025 if Prop A passes. However, due to likely increases in property valuations compared to 2024, some taxpayers may still see a slight rise in their tax bills.

Voters will need to weigh whether the state's matching funds — boosting revenue from $2.1 million to $6 million — and the district's commitment to its staff are worth the additional cost.