This comes as legislators consider a potential increase to the basic allotment, and other factors that are currently undecided, said Dennis Covington, RRISD's Chief Financial Officer.
In a nutshell
Covington and other administrators shared an initial budget scenario based on total enrollment of 47,000 students and a 92% attendance rate, in addition to a 2% increase in property values for the district's tax base.
To fund operations, the proposal shared includes plans for $461 million in revenues and $477.5 million in expenditures, without additional funds budgeted for compensation increases.
This leaves the district with a $16.5 million shortfall projected for the 2025-26 financial year, unless something changes, Covington said.
A closer look
There are several factors in flux that Covington said could change the projected budget, including legislation that would raise the basic allotment, a per-student funding amount factored into the tiered equation determining how much funding a school district can receive in Texas, by $220 from $6,160 to $6,380. As previously reported by Community Impact, the proposal is part of House Bill 2. The bill would also:
- Increase the required amount of any increase to the basic allotment to be spent on compensation for non-administrative staff from 30% to 40%
- Fund special education services based on individual need, rather than where students receive services
- Prohibit school districts from employing uncertified educators to teach English, mathematics, science and social studies
Covington said current proposals, if not adjusted, to increase the homestead exemption could see the district lose an additional $19 million in funding. The proposal, he said, includes combining the changes to the homestead exemption into one singular hold harmless. In a hold harmless scenario, the state makes up the difference for property tax revenue lost through an increase to the exemption. Presently, the state calculates holds harmless individually for the adjustments to the homestead exemption.
The homestead exemption increased from $40,000 to $100,000 in the last legislative session, with an increase from $100,000 to $140,000 proposed in the current legislative session, he said.
"What they're proposing is that they're going to combine all three of those into one and then they're going to start with what your increase has been since [the 2021-22 budget year]," he said. "If your increase covers what you would have gotten for those hold harmless exemptions, you won't get those funds. That's going to be detrimental not to just Round Rock, it's going to be detrimental to most districts in this state.
What they're saying
Covington said administrators identified multiple areas in which to reduce expenditures, including reducing all service calendars by one day, reducing central office administration and support positions as well as school level support positions. Reductions to travel, funding for each department, elimination of phone stipends altogether and increasing the class size formula are also on the table.
Despite including a proposed increase to the basic allotment, Board Secretary Amber Landrum highlighted that this early version of the district's operating budget for the 2025-26 school year comes with a $16 million shortfall even before a compensation increase for employees. The school district has called on legislators to increase the basic allotment for the last several budget cycles, and say the $220 increase proposed will likely not be enough to meet current needs.
She encouraged administrators to prepare for a worse-case scenario, and take a "harder look" at the budget.
"It's catastrophic what's happening to public education in terms of funding, but I can no longer budget on hopes because it's not fair to our community," Landrum said. "It's depressing."
RRISD is not alone in facing difficult budget decisions, as Georgetown and Leander ISDs have had similar conversations about budget outlooks for next year.
When it comes to campus closures and staffing cuts implemented by districts across the state to make up the difference in projected shortfalls, Texas Education Agency Commissioner Mike Morath said in a Feb. 25 Texas House Public Education Committee hearing that it is more a consequence of planning for a level of enrollment growth that is no longer happening than a true need for additional funds.
"There is no magic number that makes [funding] enough," Morath said.
What's next?
As part of the budgetary process, Covington said RRISD's human resources team would present its own compensation plan in the coming months. The compensation plan will outline any potential changes, he said.
RRISD has a July 1 start for its financial year, and must approve a budget for the next fiscal year by the end of June by law, Covington said.
