Facing its first-ever recapture payment and an $8.53 million budget deficit this fiscal year, Lewisville ISD is looking for ways to cut its expenditures down moving forward as the recapture payments are only expected to grow.

Recapture, also informally called “Robin Hood,” is the term for the money the state collects from property-rich districts for redistribution to property-poor districts.

“Becoming a recapture district is changing the way we look at the budget,” LISD Superintendent Kevin Rogers said. “This year we have to send back $34.5 million to the state, which means we had to cut some department funds to various departments and staffing in general.”

On Aug. 27 the district adopted a $498.51 million general fund budget that included teacher and department cuts but also additions, such as new school resource officers.

LISD Chief Financial Officer Mike Ball said the district’s recapture payment requirement was triggered by a rise in property values and a decline in district enrollment.

The district lost more than 700 students in the 2017-18 school year when compared to the previous year. The losses are projected to continue as enrollment is expected to drop from last year’s 52,473 students to 51,737 students this school year.

At the same time enrollment is declining, residents’ property tax bills are increasing. According to district documents, the average increase in taxes this fiscal year will be $326.65, which equates to an additional $32.3 million to the general fund budget.

“Our budget would look really good if we could keep that $34 million,” Rogers said. “And that’s probably the biggest shock to taxpayers—when they find out their property taxes don’t stay local.”

Impact on budget

Rogers said more than 80 percent of the budget goes toward payroll, so some teacher cuts were unavoidable.

“These cuts are through attrition,” he said. “When your enrollment levels off, you need less people. One of the positives for a school district like Lewisville ISD is there is enough turnover [through] people retiring or people moving that you can do that.”

In a budget workshop Ball said there would be a net reduction of 51.5 teacher positions for a savings of $927,000.

The district also decided to give teachers a lower percent increase in salary than it has in the past. LISD has adopted a 3 percentage increase in three of the last four years. However, in June, board of trustees approved a 2 percent compensation increase based on the midpoint for all eligible employees for the 2018-19 school year.

Staffing additions

Although the district chose to not fill some open teacher positions, it did invest in extra counselors and school resource officers for middle schools in the district.

“We increased our security budget by over $700,000 [to pay] for our part of more school resource officers,” Rogers said. “We spent more even though our budget is tighter than ever because we believe this is critical.”

Last December the board approved a new class-ranking policy that will allow students, beginning with the class of 2019, who are not in the top 10 percent of their class a choice to opt in or opt out of having his or her class rank on their transcript.

Due to this, the district has decided to add extra student assistance counselors so that every high school student can meet with a counselor to decide on whether to list their rank.

“[The district also] added a couple of social workers to aid in providing support to our students,” board President Angie Cox said. “At this date we have not cut funding to any programs or services directly tied to students.”

Going forward

To help pay for its $8.5 million deficit, LISD will use money from its fund balance, which basically functions as a rainy day fund or an emergency fund.

“Is [using fund balance money] alarming?” Rogers said. “I don’t think so, but the question is, [is the district] having to dip into [the fund balance] every year or not? If [we are] having to reach into it every year then we’ve got to change some things.”

Ball said there are no guidelines as to how much a school district must have in its fund balance, but a healthy fund balance for LISD is about three months of day-to-day operations, which is about $120 million.

“We aren’t anywhere close to that three-month level, so there’s certainly no cause for alarm,” he said. “We are in great shape financially thanks to our board and those who came before us.”

In order for the fund balance to grow, the district must spend less money than what was budgeted.

“We are not projecting to put any money in the fund balance this fiscal year,” Rogers said. “We will be spending more than what we get, which is a shift for us, which is why we have to make course corrections. We’ve got time to do it. We don’t have to take drastic measures just yet, but we know we need to certainly look at it.”

In August the district approved the members for a new community budget advisory committee that has been charged with looking at future budgets and making recommendations on where the district can save money.

The committee consists of 38 community members who are local chief financial officers, bankers, certified public accountants, financial advisers, board of trustee members, legislative staff members, LISD administrators and teachers.

“We need to have a sounding board of community members on some ideas,” Rogers said. “We can’t just arbitrarily cut teachers or people who work in facilities without understanding the repercussions it would have, so that’s what we are hoping this group will help with. Ultimately our board—our seven elected board members—will have to make those decisions.”

Rogers said one of things the board will be looking at is the possibility of doing a tax swap in which the district holds a tax ratification election to ask voters to increase the maintenance and operations tax rate by 2 cents while at the same time lowering the interest and sinking rate by 2 cents.

“It does not increase the taxpayers’ rate because you are just moving those two pennies over to the general fund, but it would create some additional state funding for us—about $6 million or $7 million,” Ball said.

Ultimately, Rogers said he is confident the committee and board will find solutions to balance future budgets.

“I feel good about the future, and I feel good about our financial status,” he said. “We are fortunate to have a healthy fund balance, and we just want to make sure we take measures [so that it] stays that way and that’s our plan.”