DAN MORALES

ATTORNEY cwEML 

## QBffice of tfjeflttornep @eneral Mate of;PCexag

Honorable Robert A Eckels chairman committee on county Affairs Texas House ofRepresentatives P.0. Box2910 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 ofthe 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 125percent for the purpose of determining a local school district’s,liabiity for the state contribution to the teachers’ retirement fund. The specific question raised waswhether the Teachers Retirement System (hereinafter TRS) isauthorized to compute the adjustment of the statewide average tax rate to the fourth decimal place for the.purpose of determining that liability instead ofto the second decimal place. The retirement system is supported by contiiiutions from the state in addition to payments by its members. Gov’t Code 89825.402, 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 ofthe salary ofcertain 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 ‘andoperation revenues for that taxyear. For a tax year, the statewide average tax rate for school district maintenance and operation revenues is the tax rate that, ifapplied to the statewide total appraised value oftaxable property for every school district in the state according to the appraisal roll certified for each district

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for the taxyear asprovided by Section 26.01 Tax Code, would produce an amount equal to the statewide total amount ofmaintenance and operation taxes imposed inthe taxyear for every school district in the state. Gov’tCode 0825.405(h). In other words, school districts whosemaintenance 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 ofthe state contribution. The section has the dual purpose ofequalizing financial pressures on local school districts and putting “acap on the state’s obligation to contribute on behalf ofcertain 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 alocal district’staxrate 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 ofdecimal 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 inviolation ofsubsection (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 ofthe adjusted statewide average is 1.093 for the school year, the school district’s tax rate would be less than 125 percent of the

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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 ofthat 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’smaintenance and operations taxrate.

DAN MORALES Attorney General ofTexas MflLLPRYOR Fi Assistant Attorney General MARYKBILER Executive Assistant Attorney General
JUDGEZOLLIE STEAKLm 0 Special Assistant Attorney General RENEAx-ncKs SpecialAssistant Attorney General SUSAN GARRISON Acting Chabmaq Opiion Committee Prepared byCeleste A.Baker Assistant Attorney General

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