The update comes after the district has applied millions of dollars in current and planned budget cuts amid growing financial concerns.
Going forward, the district is seeking to raise its fund balance, increase employee pay, and reinstate positions that were cut if state lawmakers approve additional school funding this year, Chief Financial Officer Rosanna Guerrero said at a May 5 special meeting.
Current situation
In November, the district adopted a revised budget with a $7.5 million shortfall for FY 2024-25 after voters failed to approve a nearly $0.06 increase to the district’s tax rate. LHISD is now projecting a $2.1 million shortfall for this fiscal year after reducing its deficit through:
- Land and infrastructure reimbursements
- Freezing positions for central administration and departments
- Reductions in campus and department budgets
- Limiting travel for professional development
- An increased average daily attendance of 95%
The district would need to have at least $25 million in its fund balance to cover three months of their operating expenses. Dropping below that amount can negatively impact the district’s credit rating for bond sales, Guerrero said.
“It's very, very bad,” Guerrero said. “One of the things they recommended on how to improve our credit is to add back to fund balance. We've got to get back to that three-month operating expenditure.”
Guerrero said the district is already feeling the effects of budget reductions, including field trips being cancelled, with more challenges expected for next school year.
“Getting the deficit down as low as it was is incredible,” school board President Megan Parsons said. “I know it's coming at a cost and it's going to be tough for everybody.”
Looking ahead
For FY 2025-26, the district is close to adopting a balanced budget with a nearly $48,500 budget shortfall. In March, the board of trustees approved $6.4 million in budget cuts, including 78 staff positions.
Additionally, the district is expecting a $2 million increase in revenue due to property value growth and higher student attendance. Property values in the area are estimated to have increased by 16%, which is 5% higher than what the district anticipated, Guerrero said.
Other changes to the budget include additional special education positions and costs related to opting into the Teacher Incentive Allotment next school year. The state program awards additional compensation to high-performing teachers.
Following the adoption of a hybrid calendar, the district will see increased expenses to provide free child care for staff on Fridays through its Panther Care program. The district may also assume costs from its new maintenance and operations facility as well as portables for students.
Also of note
District officials have discussed calling another tax-rate election in November following a failed VATRE in 2024.
LHISD is projecting its tax rate will be compressed by $0.0479 per $100 valuation for FY 2025-26. The district could ask voters to approve a $0.04 tax rate increase without rising above its current tax rate, Guerrero said.
Stay tuned
With the 2025 legislative session underway, LHISD’s budget could be further impacted by the potential passage of proposed legislation, Guerrero said.
House Bill 2—passed by the Texas House in April—would raise the state’s basic allotment of funding per student by $395.
The Texas Senate has since proposed a revised version of HB 2 that would lower the basic allotment increase to $55. The updated $8 billion proposal would increase educator pay, special education funding and invest in educator preparation programs, according to previous Community Impact reporting.
Guerrero said the basic allotment would need to increase by over $1,000 per student to account for inflation since 2019 when it was last raised.
In early May, Gov. Greg Abbott signed Senate Bill 2 into law. The law will allocate $1 billion in public dollars for education savings accounts that families may use to cover private school tuition beginning in the 2026-27 school year.
LHISD could lose some funding if students leave to attend private school but is expected to see enrollment growth overall, Guerrero said.
The Texas Legislature is set to adjourn June 2 with June 22 being the last day Abbott can sign or veto approved bills.
