Frequently Asked Questions

A bond is similar to a home mortgage. It is a contract to repay borrowed money with interest over time. Bonds are sold by a school district to competing lenders to raise funds to pay for the costs of construction, renovations and equipment. Most school districts in Texas utilize bonds to finance renovations and new facilities.

Bond funds can be used to pay for new buildings, additions and renovations to existing facilities, land acquisition, technology infrastructure and equipment for new or existing buildings. Bonds cannot be used for salaries or operating costs such as utility bills, supplies, building maintenance, fuel and insurance.

The most recent bond election was in November 2015 which Proposition 1 was approved by 65 percent of the voters and Proposition II approved by 51 percent. The $92 million package funded  the new Magnolia 5th & 6th, new Bear Branch 5th & 6th, land, renovations, transportation, security and technology along with the Magnolia Event Center and turf on both high school football fields. 

MISD’s proposed tax rate for Maintenance & Operations (M&O) Tax Rate is $0.8546 and its Interest & Sinking (I&S) Tax Rate is $0.2926 for a total tax rate of $1.1472. If approved by the Board on August 22, 2022, this will be the lowest in over 20 years. Visit the Financial Transparency page to learn more about school taxes.

MISD is the second lowest in Montgomery County and the third lowest in the Houston area.

 

If approved, the MISD tax rate will not increase as a result of the 2022 bond election. In fact, the MISD Board of Trustees on August 22, 2022 lowered the tax rate by $0.04. This is the second year in a row. In 2021, the Board lowered the total tax by $0.09.

MISD will be able to issue bonds without an increase to the tax rate because of increased revenue from growth in the area, rising Taxable Assessed Values (set by county appraisal districts), and because the Board of Trustees has paid down existing debt through the bond defeasence plan. The district has saved over $47 million in interest and principal. 

There are two parts to the equation:

1. The Bond Payment

2. Money to pay for the bond payment

Bond payments work very similar to a fixed rate home mortgage whereas a homeowner usually has a 15 year or 30 year note, which has a consistent and constant amount to pay on a monthly basis in terms of principal and interest.  Generally, the only adjustment to a person’s principal and interest payment happens when the homeowner refinances the mortgage to lower the monthly note.

Bonds work in the same manner. 

1. The Bond Payment:  Bonds are amortized in 20, 25, or 30 year notes and principal and interest are paid back (twice a year) in fixed payment amounts.  Therefore, Districts know what the payment is going to be each year of the note.  The yearly notes may fluctuate slightly but the payment amount is “fixed”.  Similar to a home mortgage, the only reason the fixed note would change would be due to taking advantage of market conditions and refinancing the note at a lower payment amount.  Thus, the note can ONLY decrease.

2. Money to pay for the bond payment:  Revenue to pay for District bonds is generated by a portion of the District’s property tax rate known as the Debt Service Rate.  The simple equation is Property Value X Tax Rate/$100).

MISD has established what the yearly payments are going to be, that it can only go down, and MISD has established the calculation for revenue generation. 

 

So, how can the District be certain that the tax rate will not only remain constant at the present but also avoid increasing in the future as a result of the November 2022 bond? The simple answer is; (a) we know what the payment is and (b) property values in Montgomery County have always increased over time and are expected to continue to grow in the future. 

State law requires this language on all school bond referendums. If economic conditions in the district became adverse, the district would be legally required to levy an I&S tax rate sufficient to repay the bonds.

The amount of taxes paid by each taxpayer is calculated by multiplying the district tax rate by each $100 of taxable value of the property. Therefore, if your assessed taxable value goes up, the amount you pay will go up even if the tax rate remains unchanged. The assessed value is set by your county appraisal district, not the school district. 

According to state law, the dollar amount of school taxes imposed on the residence homestead of a person 65 years of age or older or disabled cannot be increased above the amount paid in the first year after the person turned 65 -- regardless of changes in tax rate or property value -- unless significant improvements are made to the home.

Any registered voter who lives within the MISD boundaries — and whose voter registration is based on their current MISD residence — is eligible to vote in this bond election.

The deadline to apply for voter registration is October 11, 2022. Click here for Montgomery County Elections information.