Bi-substituted iron garnet films are extensively used in the fabrication of nonreciprocal devices in optical telecommunications. The miniaturization of these devices for on-chip integration requires the development of more efficient magneto-optic materials than presently available. Recent evidence has emerged of large near-surface enhancements in the magneto-optic response in these materials. However, their operative mechanisms at the atomic and electronic levels are not as yet understood. We report significant differences in the ionic structure between surface and bulk in bismuth-substituted iron garnet materials. It is found that the unit cell is elongated normal to the surface, thus enlarging the separation between F e 3 + ions. These ions play a central role in the magneto-optic response of this material. A marked displacement of Fe ions creates gaps at the surface that are populated in the bulk. Concomitantly, surface- and bulk-sensitive measurements of spin-polarized 3d F e 3 + states show significant differences in the magnitude of L 2 edge x-ray magnetic circular dichroism, as well as differences in L 3 edge dichroism, which, in the presence of spin-orbit coupling in 3d states, can be assigned to high-energy states. An increase in magnetic circular dichroism correlates with larger Faraday rotation. These findings provide a deeper understanding of the role of the surface in the electronic transitions to excited F e 3 + 3d states, responsible for these nonreciprocal phenomena. Together with the surface reconstruction underlying these effects reported here, they provide a useful tool for the further development of improved materials technologies to advance the integration of nonreciprocal devices in optical circuits.