QBfficeof tfje flttornep @eneral
Mate of ;PCexag
DAN MORALES
ATTORNEY
cwEML February 28,199l
Honorable Robert A Eckels Opinion No. DM-8
chairman
committee on county Affairs Re: Duty of Teacher Retirement System
Texas House of Representatives to compute the adjusted statewide average
P. 0. Box 2910 maintenance and operations tax rate pur-
Austin Texas 78768-2910 suant to section 825.405(h) of the Govern-
ment Code (RQ-2162)
Dear Representative Eckels:
Your predecessor as chairman of the House Committee on County Affaii asked
about. the adjustment of the statewide average school maintenance and operations tax rate
required by section 825405(h) of the Government Code. That section requires that the
statewide average maintenance. and operations tax rate for school districts be adjusted by
125 percent for the purpose of determining a local school district’s, liabiity for the state
contribution to the teachers’ retirement fund. The specific question raised was whether the
Teachers Retirement System (hereinafter TRS) is authorized to compute the adjustment of
the statewide average tax rate to the fourth decimal place for the.purpose of determining
that liability instead of to the second decimal place.
The retirement system is supported by contiiiutions from the state in addition to
payments by its members. Gov’t Code 89 825.402, 825.403, 825.404; see also -Attorney
General Opinion JM-429 (1986). Subsection (a) of section 825.405 requires that the
employing district pay the state contribution on a portion of the salary of certain members.
Subsection (h) provides an exception to that general requirement, as follows:
This section does not apply to state contributions for members
employed by a school district in a school year if the district’s tax rate for
maintenance and operation revenues for the tax year that ended in the
preceding school year equals or exceeds 125 percent of the statewide
average tax rate for school district maintenance ‘and operation revenues
for that tax year. For a tax year, the statewide average tax rate for school
district maintenance and operation revenues is the tax rate that, if applied
to the statewide total appraised value of taxable property for every school
district in the state according to the appraisal roll certified for each district
p. 41
Honorable Robert A. Eckels - Page 2 t DM-8 )
for the tax year as provided by Section 26.01 Tax Code, would produce an
amount equal to the statewide total amount of maintenance and operation
taxes imposed in the tax year for every school district in the state.
Gov’t Code 0 825.405(h).
In other words, school districts whose maintenance and operations tar rates equal or
exceed 125 percent of the statewide average are excepted from the subsection (a)
requirement that the employer pay part of the state contribution. The section has the dual
purpose of equalizing financial pressures on local school districts and putting “a cap on the
state’s obligation to contribute on behalf of certain members.” Attorney General Opinion
JM-429 (1986) at 1.
In order to qualify for. the exception set out in subsection (h), a schooi district’s
maintenance and operations tax rate for the preceding school year must be equal. to or
greater than 125 percent of the statewide average. Thus, the TRS must calculate the
adjustment of the statewide average to as many dechnal places as necessary to accurately
compare a local district’s tax rate with the adjusted statewide average in order to determine
whether the school district qualities for the exception. Of course, the TRS may use its
discretion to limit the number of decimal places in the adjusted statewide average, as long
as the comparison of the adjusted average with each local district’s rate does not
improperly deny or grant the exception in violation of subsection (h).t
The request letter offeqa as an example a situation in which a school district% tax
rati is $1.05 per $100 of taxable property value. Certainly, if the adjustment of the
statewide average were correctly calculated to be $1.05, that school district, with a tax rate
u to the adjusted average, would not be required to pay the state contribution.
However, assuming that the correct calculation of the adjusted statewide average is 1.093
for the school year, the school district’s tax rate would be less than 125 percent of the
p. 42
Honorable Robert A. Rckels - Page 3 (DM-8)
statewide average, and the local district would not qualify for the exception and would be
liable for the state contribution. That example illustrates the necessity of csnying the
calculation out far enough to meani&u@ and acatmtely compare the tax rate of a local
district witb the adjusted statewide average in order to determine whether the local district
pays the state contriiution.
SUMMARY
Section &25.405(h) of the Government Code requires the
computation of the statewide average maintenance and operations
tax rate for school districts and the adjustment of that average by 125
percent. The Teachers Retirement System must calculate the
adjustment of the statewide average to as many decimal places as
neeaary to accurately compare that adjusted average with each
school district’s maintenance and operations tax rate.
DAN MORALES
Attorney General of Texas
MflLL PRYOR
Fi Assistant Attorney General
MARYKBILER
Executive Assistant Attorney General
JUDGEZOLLIE STEAKLm 0
Special Assistant Attorney General
RENEAx-ncKs
Special Assistant Attorney General
SUSAN GARRISON
ActingChabmaq Opiion Committee
Prepared by Celeste A. Baker
Assistant Attorney General
p. 43