Identifying savings while sustaining student programs and opportunities, and giving raises, were two priorities for district leaders as they set out to create the FY 2024-25 budget, said Kimberly Smith, FISD chief finance and strategy officer.
The district has the funds to make it through another year or two of budget restraints, Deputy Superintendent Todd Fouche said during a May 8 budget workshop.
“I do not think the legislature is a savior for us,” he said. “The biggest mistake would be to do these giant, draconian cuts to balance a budget one year and then the legislature comes through with some funding and we start adding things back the next year.”
The big picture
Without additional state funding, FISD officials are expecting to use rainy day funds to mitigate the size of the district’s potential $30.81 million shortfall in fiscal year 2024-25.
Rainy day funds are part of FISD’s reserve fund balance, which is similar to a savings account the district has set aside. It is the money remaining after FISD officials assign funds to their budget purposes. Those funds are used to cover unexpected expenses, such as catastrophes or other emergencies, said Kimberly Smith, FISD’s chief finance and strategy officer.
A shortfall of $10 million or less will usually balance itself by the end of a fiscal year and not diminish a rainy day fund, but larger shortfalls can put a strain on the district’s ability to balance future budgets, district officials said.
Officials are expecting to pull $7 million out of FISD’s total $77 million reserves for FY 2023-24. An additional $23 million is expected to be pulled from the fund for the FY 2024-25 budget as of the April 18 budget workshop.
The district’s general fund budget pays for the daily operation of schools and includes salaries, classroom equipment, technology and transportation costs, among other expenditures. The current proposal for the general fund budget has:
- $721.69 million in revenue
- $752.51 million in expenditures
- $30.81 million shortfall
The fiscal year 2024-25 budget also includes $179.26 million for the debt service budget, which pays principal and interest incurred through bond sales. The proposed child nutrition budget is $32.02 million, which covers the school lunch and breakfast program.
District officials plan to approve the budget one month sooner than a typical year because of the May election. Staff want to use the existing board members’ knowledge base before two trustees, who are not running for re-election, are replaced.
FY 2024-25 is considered the first normal funding year since the COVID-19 pandemic, Superintendent Mike Waldrip said.
Diving deeper
The district has identified $16.9 million to be saved after eliminating positions through attrition, turnover and restructuring central office staff, per the board’s budget workshops.
If the districts dips too far into rainy day funds and the legislature does not provide more funding, then additional cuts to balance the budget could include eliminating teacher wellness days or raising secondary class sizes by an average of four students, among other possibilities, Smith said in the April 18 budget workshop.
These options were for informational purposes only and are not currently being proposed for action.
“Our student opportunity model makes us a destination district,” Smith said. “We know that the programs and support we offer make a difference for our students.”
A closer look
FISD is not alone in facing a budget shortfall in fiscal year 2024-25.
According to a survey by the Texas Association of School Business Officials, an association that provides resources for public school leaders, 57% of school districts in the state are anticipating budget cuts and using its reserve fund balance to balance budgets for fiscal year 2024-25.
Of the 313 school districts who responded to the survey, 10% are expecting a balanced budget in FY 2024-25.
“We cannot sustain a deficit budget in the long-term,” Smith said.
Consistently since FY 2022-23, FISD’s expenses for its operating budget have surpassed its revenue amount.
Smith presented revenue generating options for FY 2024-25 during an April 18 board workshop. One option is a campaign to increase daily attendance by 1%, which could generate $3.5 million for the district.
Zooming in
Funding for a district is based on average daily attendance. The basic allotment for students is $6,160, which has not changed since 2019.
Costs per student include expenses for instruction, food services, health services, curriculum and staff development, among other expenditures, according to district officials.
A projected drop in enrollment for the 2024-25 school year could be due to an enrollment dip seen this school year, Smith said. Demographer projections for 2024-25 range from a decline of around 100 students to an increase in enrollment by several hundred students, she said.
“We’ve been able to use this year’s dip in enrollment to rebalance our staffing models and ensure we’re planning appropriately for whatever might happen next year,” Smith said.
Also of note
Raises are always a top priority, Smith said.
Providing teachers with annual raises encourages retention and recruits new talent, said Pamela Linton, FISD’s chief of human resources.
“When teachers are fairly compensated for their dedication and hard work, they feel valued and are more likely to remain at Frisco ISD and in education,” Linton said.
District raises cost about $5 million for every 1% increase, she said. A 3% raise is being proposed in FY 2024-25, which would cost $15 million.
Staff raises, which are part of the district’s instruction costs, are often the first thing officials consider in the budget process, Smith said.
“Being in a deficit budget position makes that priority more of a challenge,” she said.
Looking forward
District leaders are considering the use of a tax rate election to cover operational expenses. A tax rate election is planned for 2024, but the board will not vote on it until August, said an FISD spokesperson.
If approved, the election would raise $12 million of the $15 million needed for staff raises. FISD officials will review further cost-saving measures that may include program cuts if the state does not provide additional funding in its next legislative session starting in January.
The board of trustees will hold a public hearing on the fiscal year 2024-25 budget May 13. A special meeting will be held May 15 for trustees to consider approving the budget and the district’s 2024-25 compensation plan.
Editor's note: This story has been updated. Frisco ISD officials expect to pull $23 million from the district’s rainy day funds for fiscal year 2024-25. The district will operate on an accelerated timeline for adopting the budget.
