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New bills impacting taxpayers, South Texas ISD funding

School districts across Hidalgo, Cameron and Willacy counties banded together in an attempt to change legislation that affects taxes and South Texas ISD funding. State Rep. Sergio Muñoz (D-Palmview) recently introduced two bills that could set those changes into motion. 

In January, Mission CISD and Sharyland ISD joined about 20 RGV districts in passing a resolution to avoid what they call a tax duplication. The resolution refers to an extra tax (a maximum of 5 cents) residents pay to South Texas ISD, regardless if they enrolled a child in the district. Hidalgo, Cameron and Willacy counties are the only three counties in the state to have this type of tax authority, which has been in place since the 1960s. 

Critics say STISD overtaxes and collects an excess of funds. But STISD Superintendent Dr. Marco Antonio Lara Jr. and the school board vehemently oppose reforming the tax authority and any changes that compromise the magnet district’s funding. 

“I’m not sure why we have to reform. Because we’re in it with our sister districts for more funding. We want everybody to have the funding that they need to serve their special populations, to build their schools, to educate children. We’re all for that,” Lara said. “But we aren’t in favor of the elimination of our tax base, which is 44% of our funding, when we don’t have the same access to funding they do. So I’m not sure what compromise would look like or why we would need to compromise.” 

Despite the regular districts passing resolutions to abolish STISD’s tax authority, only the state legislature can enact change. Earlier this month Muñoz filed House Bills 5294 and 5296 to address the issue.  

HB 5294 calls for an election in the three counties and asks the voters to decide whether to do away with the extra tax to South Texas ISD. If constituents approve abolishing the tax, STISD would begin the process of becoming a charter school. 

HB 5296 calls for a gradual yearly reduction until residents no longer pay a tax to the magnet district, which would take about four years. 

Both bills were assigned to the education committee, where they await a lengthy process before possibly becoming law. 


The main concern for those in favor of abolishing STISD’s tax authority is equitable funding. 

School funding in Texas is complicated. Every school district is different depending on population and student demographic. But ultimately, funding is based on average daily attendance (state funding) and property taxes (local funding), with a smaller portion coming from federal sources. 

School systems receive a basic allotment (BA) of $6,160 per student per average daily attendance (ADA). From there, the schools receive additional funding for each student based on individual characteristics and how the district categorizes or labels them (e.g., dual language, special needs). 

The South Texas Association of Schools (STAS) calculated that STISD earns, on average, $5,000 more per student than regular school districts. Those fighting to dissolve the tax authority argue that everyone should be equal. 

“[STISD] has very few kids but all the property value from those three counties, that’s why it’s a richer district. Not the richest, but a richer district,” STAS Executive Director Jesus Chavez said

For example, in the 2021-2022 school year, Mission CISD received a maximum of $11,500 per student from state aid and property taxes, whereas South Texas ISD received about $12,600 per student. MCISD also has more than twice the student population as STISD. 

When regular school districts learned about the disparity, they took the issue to the South Texas Association of Schools — a membership advocate org for school districts in the region, specifically for finances. STAS members voted to pursue fair and equitable funding on behalf of the regular districts, except the STISD superintendent, who voted against it. 

“We have never been about eliminating South Texas ISD because they claim we want to do away with them. No, we’ve never said we want to do away with them,” Chavez said. “We want them to be fairly and equitably funded like everybody else. And if we can, eliminate the second tax for the citizens.” 


For South Texas ISD, about 44% of their funding comes from the property tax. If the state legislature were to do away with South Texas ISD’s tax authority, district leaders worry they would cease operation, leaving children without a choice in their education. 

The magnet district cannot tax Hidalgo, Cameron and Willacy county residents more than 5 cents — compared to the $1.1 Mission residents pay to Mission CISD. The 5 cents to STISD averages to just under $64 a year per property. 

But the South Texas ISD superintendent said the $64 is a worthy investment for taxpayers. 

“Can you imagine if you were to do away with our tax base? What that would mean to the 4,300 students? They would no longer have that alternative education that they’re looking for. They would no longer have a choice,” Lara said to the public at the March 1 press conference. “So it’s important that we maintain that tax base that helps us provide all the educational needs.” 

Chavez agreed that it would be difficult for the magnet school district to maintain operations if the state did away with its tax authority from one day to the next. But STISD would still receive state aid, and the legislators could edit the proposed house bills to include a facilities allotment taxing authority, which is how regular districts operate. 

The STAS executive director and other association members also believe South Texas ISD has been overtaxing its citizens, judging by the number of yearly unused revenue funds. 

Last year $17 million of the magnet district’s revenue went unused, totaling their general fund balance to $98.2 million. For comparison, the twice-as-large Mission CISD has a $107.6 million fund balance. 

“Right now they have $98 million in the bank. That’s way more than they should have,” Chavez said. “Usually [the Texas Education Agency] recommends you have at least three months worth of funding, but this is closer to 14 months of funding they have in the bank.” 

With South Texas ISD’s tax authority only contributing more to the fund balance each year and the funding disparity, Chavez continued to stress equity for all. 

“I think if you were to ask the average person, ‘Is fair funding something that should exist for all school districts?’ I think they would say ‘yes,’ he said. “And then ask, ‘Well, what if it means reducing your taxes?’ I think they would be elated. Fair funding, and then I get to reduce my tax rate, which is the two things we want to address.”


A misconception about South Texas ISD is there is an application process for enrolling in the district. STISD has open enrollment and welcomes students on a first-come, first-served basis. However, there is a limit. 

Superintendent Lara said the district has never turned away any student thus far, but physical space limits how many students the magnet district can take in. Regular school districts cannot turn away students if a school reaches a specific capacity. They must make room for all children that enter their community. 

Critics have argued that residents in Hidalgo, Cameron and Willacy counties should not have to pay a tax to a school district that cannot guarantee enrollment for all children. STISD’s superintendent countered this argument by reminding the public of the magnet district’s virtual school option. 

Regardless of the opposition, the South Texas ISD superintendent said students deserve to choose their education, and the magnetic district provides them with just that. 

“We’re an alternative for those students who might not be able to access the type of programs they want in their home districts,” Lara said. “We invite them to come to us. We’re not trying to compete with our sister districts. We’re trying to be of service. And I think in this day and age, kids have a choice.” 

State lawmakers will discuss House Bills 5294 and 5296 in the 88th Texas Legislative Session, which ends May 29.

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