Following months of discussions, workshops and town hall-style meetings, CCISD’s board of trustees at its Aug. 21 meeting unanimously approved its first-ever voter-approval tax rate election, or VATRE, for Nov. 7. The results could be the difference between the district’s budget breaking even or being in a shortfall.
With a $17.4 million shortfall in its fiscal year 2023-24 budget, which could grow larger in the following years, CCISD is one of many school districts across Texas facing budgetary issues tied to inflation and lack of funding from the state.
As a result, some districts are calling VATREs while they wait to see if the state will pass legislation that funds public education.
“We waited all spring for the state,” CCISD Superintendent Karen Engle said. “But we realized ... we need to go ahead and take action to take care of our district.”
Earlier this year, the state entered the 88th legislative session with nearly $33 billion in reserves and a list of funding plans for public schooling.
However, beyond a few small examples, larger funding bills have yet to materialize, said Bob Popinski, senior director of policy for Raise Your Hand Texas, a nonprofit education advocacy group.
“It was a session out of balance,” Popinski said. “It was absolutely surprising. ... All the recommendations ended up failing.”
Local effects
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With the recent passing of Senate Bill 2, homeowners in CCISD with a home valued at $350,000 will see a savings of about $750 on their 2024 property tax bills, assuming a 10% increase in home value to $385,000, Engle said.
If the VATRE were to pass, it would mean a balanced budget for CCISD but about $80 less in savings for residents, Engle said.
CCISD is proposing a total tax rate of $0.9746 for every $100 valuation of a property, which is $0.03 higher than the $0.9446 maximum rate the state will allow, Engle said.
Last year’s rate sat at $1.1146 and has declined each year since the 2019-20 school year, CCISD documents show.
For the FY 2023-24 budget, the district expects about $364.1 million in revenue without the VATRE and $381.5 million in expenses—creating the $17.4 million shortfall, according to district documents.
The shortfall, officials have said, is due to inflation; lack of action from the state; and declining enrollment, which could decrease for the second year in a row from a peak of 40,865 in 2021-22 to 40,450 this upcoming year.
CCISD also added $5 million more in expenses after approving a new compensation plan in July. The board opted against tying raises to the VATRE, which was different from other districts, such as Pearland, Friendswood and Fort Bend ISDs.
“I just never want to approach it with the mentality of, ‘If we get all this extra revenue we can start giving out more money,’” Trustee Scott Bowen said at a July 10 workshop.
The district has already made about $4.5 million in cuts for the FY 2023-24 budget, CCISD Chief Communications Officer Elaina Polsen said. Those cuts include 70 staff positions not being rehired, reduced energy costs, cutting out-of-state travel for staff and reduced professional memberships.
However, district officials said they can dip into reserves to help cover this year’s shortfall if the VATRE doesn’t pass.
“We’re getting more efficient with everything we do, but we’re kind of squeezed a bit right now,” Polsen said.
Future budgets
Looking ahead, revenues in FY 2024-25 are expected to decline while expenses are projected to climb, which could result in a $31.7 million shortfall, according to district documents.
A gap that size would be something that would “most certainly” affect student programs and class sizes, Polsen said.
The majority of CCISD’s budget—about 90%—funds staffing within the district, while the other 10% goes to programming, Engle said. While some items, such as transportation programming, can be reduced, that will go only so far.
The resulting cuts could lead to less teaching positions being rehired, which would increase class sizes, Engle said.
“Reducing $31.7 million out of our budget would have a significant impact,” Polsen said. “It’s not something we could easily do.”
If the district were to pass its VATRE, officials expect the shortfall to be about $14.3 million in the fiscal year 2024-25 budget, Engle said.
Bridging that gap could be done through new enrollment methods, such as expanding open enrollment to grandparents who pay taxes into the district but have grandchildren in a neighboring district, Polsen said. Expanded tuition-based preschool is an option, too.
All told, the district expects these methods to help increase enrollment by about 300 students, Engle said.
“We still have work to do,” Engle said. “We would still need to do some creative things ourselves. But that VATRE is pretty critical.”
Zooming out
Multiple school districts across the state are either proposing or approving budget shortfalls for the 2023-24 school year. This is due to a number of economic factors—such as inflation, which has driven up operating costs—as well as state and federal money tied to the COVID-19 pandemic drying up, Popinski said.
Nearly all proposals aimed at increasing school funding in the legislative session ended up on the cutting-room floor, Popinski said. Among those proposals included an increase to teacher pay and the per-student allotment funding given to school districts.
The per-student allotment sits at $6,160 and has not been increased since House Bill 3 passed in 2019, Popinski said. The state would need to add roughly $1,000 this year to the allotment to match inflation that’s happened since the last increase.
Due to high rates of inflation in recent years—totaling about 18.5% from April 2019 to April 2023, according to the Texas comptroller’s office—school districts have had trouble keeping up with rising costs of their operations. Houston ISD, which is in the middle of a takeover from the state, approved a $2.2 billion budget June 22 with a $168.5 million shortfall.
The story rings much the same at Cy-Fair ISD—the state’s third-largest school district—which passed in June a $1.21 billion budget with a roughly $138.6 million shortfall.
CFISD Superintendent Mark Henry said his district’s newest budget was the most difficult to prepare in his 32-year career.
“It’s irresponsible and insidious what the state is doing to public education right now,” Henry said at the district’s June 20 meeting.
On the state side, many funding bills failed because of efforts to tie them to a private school voucher program as part of Gov. Greg Abbott’s goal to make private institutions more affordable to families in Texas. The program lacked support from both the House and Senate, blocking many bills from passing that otherwise might have had the needed votes, Popinski said.
What happens next?
Andrew Mahaleris, a spokesperson for Abbott, said in a July 6 emailed statement to Community Impact that more money will be available to districts when legislators pass the school choice legislation, adding it’s an effort to “empower parents.”
“Gov. Abbott has prioritized public education funding and support for our hardworking teachers throughout his time in office,” Mahaleris said in the statement.
The House and Senate came to an agreement in July on property tax legislation that would spend $12.6 billion of the state’s surplus on buying down school district tax rates by about 10.7 cents. School districts are typically the highest-taxing local entities compared to cities and counties.
Engle said the district views the VATRE as moving forward without the expectation that the state will assist.
“We’re confident the Legislature will meet again at some point but not confident we will get any funding for this year,” Engle said. “We’ve waited on that and feel like we’ve got to go ahead and take some action.”
There is still time for the state Legislature to pass something. The state is working through special sessions right now, which could include some school funding bills, Popinski said.In the meantime, with shortfalls and a growing need to increase teacher compensation, many districts will likely be dipping into their reserves to make ends meet, Popinski said.
“School districts are in a pretty tough position going forward,” he said.
