The district posted a notice for a public meeting Aug. 18 to adopt a proposed tax rate of $1.2389 per $100 valuation for fiscal year 2025-26.
Additionally, the LHISD board of trustees approved the final portion of the district’s 2025-26 compensation plan, including raises for support staff, central office employees and substitutes, at an Aug. 4 special meeting.
What’s happening
LHISD could generate an additional $9.8 million in property tax collections if voters approve adding 12 pennies to the district’s tax rate, Chief Financial Officer Rosanna Guerrero said at an Aug. 4 meeting.
This would raise LHISD’s proposed tax rate to $1.2389 per $100 valuation, which is around a $0.07 increase from the FY 2024-25 tax rate. The state is expected to increase the district’s FY 2024-25 tax rate of $1.1669 per $100 valuation by around $0.05 in FY 2025-26 Guerrero said.
Under the proposed tax rate, LHISD could adopt a $10.5 million surplus for its FY 2025-26 budget after making a $1.5 million recapture payment to the state. LHISD officials could then decide where to allocate these additional funds, Guerrero said.
"We have teachers that can't pay their bills," trustee Kristi Hargrove said at a July 21 meeting. "We have to make sure that we're taking care of the people that are taking care of our kids. ... My taxes could possibly go up, but our kids are worth it."
Without calling a VATRE, the district is projected to face a nearly $400,000 budget shortfall in FY 2025-26, Guerrero said.
“We are 100% going out for a VATRE,” trustee Kendall Carter said July 21. “It's just a matter of how much we ask for.”
The impact
In November, voters will decide whether to approve increasing the statewide homestead exemption from $100,000 to $140,000. If approved, a homeowner with a median home value of $469,557 would pay $237 less in property taxes in FY 2025-26 despite the tax rate increasing to nearly $1.24.
If property values increase by 10%, homeowners with a median home value of $516,513 would pay an additional $345 in property taxes under the same tax rate, according to LHISD information.
“The school district cannot control what the value of those properties are,” Guerrero said. “Even though the tax rate historically has been decreased by $0.37 [since 2018], the community may not see it or feel it because their values are going up so much.”
What else?
At the Aug. 4 meeting, the board approved providing 2% raises for nearly 500 support staff and central office employees totaling $392,209. Those costs will be offset by $384,463 in new state funding through House Bill 2’s support staff retention allotment.
The district will spend $54,811 in local funding to provide raises for central office staff and $55,000 to raise the daily pay rate for substitutes by $5.
Under HB 2, LHISD teachers with three to four years of experience will receive a $2,500 raise, and teachers with five or more years of experience will receive a $5,000 raise.
In July, the board approved raises for new and beginner certified teachers and other certified employees.
The background
LHISD has faced mounting budget shortfalls and a dwindling fund balance amid rising operating expenses and a lack of state funding, district officials said. Despite the district receiving additional funding under HB 2, Guerrero said state funding does not fully cover many of the district’s expenses, Guerrero said.
In 2024, voters failed to approve a nearly $0.06 increase to the district’s tax rate. Since 2018, the district's M&O tax rate has decreased by $0.375 due to compression from the state as property values grow, according to district information.
Earlier this year, the board of trustees approved making around $6.4 million in budget cuts, including 78 positions, to reduce the district’s budget shortfall.
“We have a hole of $10 million from what we've cut from our budget the last two years,” Guerrero told Community Impact. “Right when school starts, that's when we'll start seeing it and feeling it, because we've cut so much support for teachers. We've increased class sizes.”
The district’s fund balance is projected to be around $13 million for FY 2025-26. The TEA recommends districts have at least three months of operating expenditures on hand, which would be $25 million for LHISD, Guerrero said. Falling below this threshold could negatively impact the district’s credit rating and ability to sell bonds, she said.
Next steps
The board is expected to adopt the district’s FY 2025-26 budget and potentially call a VATRE at its Aug. 18 meeting.
