DAN MORALES 

ATTORNEY cwEML 

QBffice of tfje flttornep @eneral 

Mate of ;PCexag 

Honorable Robert A Eckels 

chairman 

committee on county Affairs 

Texas House of Representatives 

P. 0. Box 2910 

Austin Texas 78768-2910 

February 28,199l 

Opinion No. DM-8 

Re: Duty of Teacher Retirement System 

to compute the adjusted statewide average 

maintenance and operations tax rate pursuant to section 825.405(h) of the Government 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 

Acting Chabmaq Opiion Committee 

Prepared by Celeste A. Baker 

Assistant Attorney General 

p. 43