The change in the district’s budget follows a projected 5.5% decline in property values in the area, resulting in a $3.5 million loss in revenue, said Pam Sanchez, assistant superintendent for business services and acting superintendent for LTISD, at a Feb. 19 board of trustees meeting.
What’s happening
In late January, the district received new projections from the Travis Central Appraisal District that property values could decrease by 5.5% instead of increasing by 5.5% as in previous projections, Sanchez said. This is anticipated to result in a $3.5 million net loss in revenue for LTISD next fiscal year, after accounting for a $13.5 million decrease to the district’s recapture payment.
Declining property values have been impacted by more housing inventory in the area whereby existing homes are sitting on the market longer, Sanchez said. There has also been a slowing in housing development due to the price of construction materials and high mortgage rates, she said.
LTISD is now expecting its expenditures to exceed its revenues by around $7.47 million in fiscal year 2025-26 if it continues to operate with the same number of staff and students, according to district documents.
The district will receive its preliminary certified property values from TCAD in April followed by the certified values in July ahead of adopting its budget in August.
The impact
The district’s Budget Advisory Committee of staff, parents and students will work on developing budget reduction strategies at its next meeting in February. Potential budget cuts may be further discussed at the board’s first budget workshop April 2.
“We’ll bring back hopefully some proposals to reduce our operating budget in different areas that hopefully do not impact necessarily students and their programs,” Sanchez said.
LTISD’s budget does not have as many unfilled positions remaining after the district cut $2.15 million in vacant positions for FY 2024-25. The district has not yet determined whether it will need to cut positions that are currently filled but does not plan to lay off staff, Sanchez said.
“It’s going to be true cuts that we will have to do through hopefully attrition or a change in department budgets,” Sanchez said.
The district may consider adjusting its master scheduling to require secondary teachers to teach seven of eight periods instead of six of eight, she said. This would allow the district to employ less staff.
Taking a step back
In January, the district projected a $5 million budget surplus for FY 2025-26 upon changing its fiscal year start date from Sept. 1 to July 1. The move will bring LTISD $10 million in new revenue as the district will receive 12 months of revenue for 10 months of expenditures, Sanchez said.
More recently, the district has adjusted its budget to reflect the $10 million payment as an addition to its fund balance instead of its revenues, reflecting in a $7.5 million shortfall for FY 2025-26. While these dollars will add to the district's fund balance, it will not make up for recurring costs, Sanchez said.
Without an increase in state funding, the district’s fund balance is expected to drop to $25.5 million by FY 2027-28, which is below the district’s minimum fund balance as recommended by the Texas Education Agency.
Sanchez said she’s concerned about the district’s dwindling fund balance. LTISD relies on its fund balance to pay staff before receiving property tax collections in December, she said. Dropping below the recommended fund balance amount could impact the district’s bond ratings.
What they’re saying
At the Feb. 18 meeting, Place 5 board member Kim Flasch urged community members to join district officials in advocating for more school funding at the Texas Legislature. Sanchez said district officials have met with state lawmakers multiple times but that legislators would rather hear from parents over associations and district staff members.
“Changes are already underway,” Place 2 board member Lauren White said about the budget cuts. “Those changes might come as a surprise because the state is doing well financially otherwise. There’s a [budget] surplus.”
Zooming out
The district’s priorities for the 2025 legislative session include raising the state’s basic allotment of funding per student by $1,000 and funding districts based on enrollment instead of attendance.
Both the Texas House and Senate have drafted budgets that would raise school funding by about $4.9 billion. Gov. Greg Abbott announced raising teacher salaries as one of his emergency items at the State of the State address Feb. 2.
On Feb. 5, the Texas Senate passed a $1 billion voucher-like proposal that would allocate public dollars for private school tuition and is now headed to the Texas House. LTISD is opposing the implementation of a school voucher program, according to its legislative priorities.
LTISD's enrollment projections are accounting for a potential loss of students to private schools if education savings accounts were to go into effect, Sanchez said.
