In the Missouri school finance system, the total tax rate is primarily divided into two main components: the operating levy and the debt service levy.
School Operation Levy
The school operation levy, often referred to as the Adjusted Tax Rate for Operations, is the levy used to generate revenue for the district’s daily functional needs and capital outlay.
- Included Funds: It comprises the tax rates levied for three specific funds: the General (Incidental) Fund, the Special Revenue (Teachers) Fund, and the Capital Projects Fund. The sum of the rates for the General and Teachers funds is specifically referred to as the Operating Levy For School Purposes.
- Purpose: Revenue from this levy supports the district’s operating budget, which includes salaries, current programs, supplies, and utilities .
- Calculation and Adjustments:
- Unadjusted Tax Rate for Operations: This is the base amount of the tax levy in the operating funds before specific rollbacks are applied.
- Voluntary Rollback: A school board may choose to levy a rate lower than the maximum authorized ceiling; this reduction is subtracted from the operating ceiling.
- Proposition C Rollback: This is a calculated reduction (stated in pennies) required by law to be subtracted from the unadjusted tax levy for school purposes. This reduction is based on 50% of the previous fiscal year’s sales tax receipts, unless voters have approved a waiver to forego this reduction .
- Adjusted Tax Rate: The final rate extended on tax books for the current year after all rollbacks are applied.
Debt Service Levy
The Debt Service Levy is a dedicated tax rate used exclusively for the Debt Service Fund, which is maintained in a separate bank account from operating funds.
- Purpose: This levy is strictly for the retirement of bonds (principal) and the payment of interest on those bonds.
- Bond Issues: Districts use bond issues to borrow money for major capital projects that are too expensive for the regular operating budget . When voters approve a bond issue, the district sells bonds and uses the tax revenue from the debt service levy to pay them back over time, similar to a home mortgage .
- Restrictions on Use: By law, money generated for debt service cannot be used for operations such as salaries, supplies, or utilities .
- Adjustments:
- Voluntary Rollback for Debt Service: The district’s board of education determines if they intend to levy less than the maximum allowed for debt service. This voluntary rollback is subtracted from the “Current State Auditors Office Debt Service Maximum” to determine the Unadjusted Debt Service Fund Levy .
- “No Tax Increase” Extension: In some cases, a district may propose a “no tax increase” bond issue. This does not change the tax rate but rather extends the existing debt service levy past its original end date to pay for new capital projects as old debt is retired .
The preceding discussion is state statue applying to all Missouri public school districts. However, each district has unique circumstances that affect various levy components. For a more comprehensive understanding of your District you may contact the local Superintendent and Board of Education.
Finally, this discussion is current as of February 2026 and all components of tax levies and public school finance may be adjusted by Missouri legislative action.