At a Sept. 15 board meeting, district officials presented the results of a financial efficiency audit ahead of LHISD’s voter-approval tax rate election, or VATRE, Nov. 4. The third-party audit found the district received less per-student funding and had a lower maintenance and operations, or M&O, tax rate than its peer districts and the state average.
“Your peers have a higher tax rate, generally, and so with the election you would bring your tax rate closer in line with that and then that would help offset the funding gap that you’re seeing,” said Leo Lopez, chief financial officer for independent financial auditing firm Moak Casey.
Zooming out
LHISD is asking voters to approve a M&O tax rate of $0.7389 per $100 valuation, which is about $0.07 higher than the FY 2024-25 M&O tax rate of $0.6669 per $100 valuation.
The interest and sinking, or I&S, tax rate would remain at $0.50 per $100 valuation, making for a combined tax rate of $1.2389 per $100 valuation.
Without an election, LHISD would adopt a lower M&O tax rate of $0.64 due to compression from the state as property values grow, Lopez said. Since 2018, the district's M&O tax rate has decreased by $0.375 due to state compression.
If the VATRE is approved, the higher tax rate would allow LHISD to generate $10.7 million in additional revenue that could go toward student programs, safety and security initiatives, and teacher retention and recruitment. If the VATRE fails, LHISD would realize a budget surplus of $1.4 million.
LHISD officials said the district is facing a $10 million funding hole. The district has made $8 million in budget cuts over the past two fiscal years, including cutting 78 positions, and realized a $2 million budget deficit in fiscal year 2024-25.
Zooming in
Under House Bill 3, passed in 2019, districts calling a VATRE are required to undergo an efficiency audit of their finances, Lopez said.
LHISD’s efficiency audit by Moak Casey found that the district’s M&O tax rate was lower than similarly sized districts in the area, including Dripping Springs, Georgetown and Hutto ISDs, and the state average in FY 2024-25.
In FY 2023-24, LHISD received $9,368 in revenue per student, which was lower than the peer districts average of $9,707 per student and state average of $10,628, according to the audit.
At 17.8%, the percentage of economically disadvantaged students in LHISD fell below the averages of its peer districts and the state. Additionally, LHISD had a smaller percentage of English learners, bilingual students, and students in career and technical education courses.
Also of note
LHISD spent 86% of its operating budget on payroll, which was higher than its peer districts and the state. The district’s average teacher base salary of $58,147 and average administrative base salary of $92,183 was lower than peer district and state averages.
The district’s superintendent salary of $265,210 was higher than its peers and the state in FY 2023-24.
LHISD had a larger percentage of teaching staff at 52.1% and paraprofessionals at 13.2% lower percentage of administrative staff at 3.8% compared to its peers and the state average.
“You are spending more of your dollars in the classroom,” Lopez said.
The impact
LHISD has made multi-million dollar budget cuts and called VATREs in recent years as its fund balance, or savings, has dwindled.
The district's unassigned fund balance declined from $16 million in FY 2021-22 to $12.6 million in FY 2023-24. In FY 2023-24, LHISD was $9.1 million short of its goals of maintaining three months of operating expenditures at $21.7 million, which is considered best practice, Lopez said.
Why it matters
If voters approve the proposed tax rate increase, LHISD could invest $7.2 million into student programs, including:
- Reinstating 70 campus positions for gifted and talented, English-as-a-second language, STEM, library, and behavior support positions, which were cut in FY 2025-26
- Reducing class sizes through scheduling after classes were increased this school year
- Returning to secondary teachers teaching six out of eight periods instead of seven
- Hiring 25 positions for maintenance, grounds, custodians, bus drivers, monitors and central office
- Restoring campus budgets
LHISD could put $1.3 million in new funding toward safety and security expenses. The district receives $584,000 in state funding for safety and security while it costs LHISD $1.57 million to operate its police department and $354,553 for other security upgrades.
The district could spend $2.2 million on employee pay raises, including:- Stipends of $500 for employees of less than a year, $1,000 for employees of one to five years and $1,500 for employees of more than five years
- 1% raise at midpoint for all employees
- Texas Association of School Boards audit of all positions and pay grades for the 2026-7 school year
- Not opening Legacy Ranch Middle School or Lariat Trails Elementary
- Reducing transportation routes
- Further increasing class class sizes
- Sharing campus staff between schools
- Reducing staffing
- Increasing facility rentals
- Implementing fees to participate in extracurricular activities
Something to note
House Bill 2, which passed during the 2025 legislative session, will provide $2,500-$5,000 raises for LHISD teachers with three or more years of experience along with increased pay for support staff.
This summer, the board of trustees approved $1,200 raises for new and beginner teachers as well as central office staff. Additionally, the board approved pay raises for certain transportation workers, special education interns and a paraprofessional and nurses assistant in the 18-plus special education program at the Sept. 15 meeting.
