After adopting an $18 million deficit budget in fiscal year 2017-18, Cy-Fair ISD could face an even larger deficit in FY 2018-19 as state revenue declines year over year, Chief Financial Officer Stuart Snow said Monday night at the district’s board work session.
“There are a number of factors that are influencing the budget process this year … [including] our state revenue declining every year due to increases in our taxable property values,” he said.
As property values rise and state revenue for the district declines, local property tax revenue is not able to offset this decrease, Snow said. He is projecting about $52 billion in taxable value in FY 2018-19—a 4.16 percent increase over the previous year.
The state will fund about 37.7 percent of the district’s operating revenues in FY 2018-19, so the local taxpayers will make up the other 62.3 percent, he said. These numbers have changed from 48.6 percent and 51.4 percent, respectively, since FY 2014-15, according to district data.
Student enrollment—which also plays a part in determining the amount of revenue the state contributes—is slated to grow to 117,723 in the 2018-19 school year. Snow said the district will receive about $7,043 per student in operating expenses next year. This number has dropped by $123 in the past four years.
While revenue declines, Snow said the district desires to maintain the quality of instruction and services, offer competitive compensation plans and prioritize student and staff safety. Preliminary plans for the FY 2018-19 budget include:
- providing starting teacher salaries of $54,000—up from $53,000 in the 2017-18 school year;
- providing $13.8 million for a 3 percent salary increase for all classroom teachers and $7.4 million for a 3 percent salary increase for all other employees;
- providing an increase of $2 in the daily rate for substitute teachers and paraprofessionals;
- providing $500,000 to the district’s police department for six additional officers, two dispatchers among other personnel and two drug and weapon canines.
- providing $600,000 to fund additional expenses as a result of the UIL realignment; and
- providing funding to accommodate additional grade levels coming in at Bridgeland and Cypress Park high schools.
Snow said $21.7 million of budget cuts were identified during the budget process, but total budget additions will add up to about $32.1 million—resulting in a net budget increase of $10.4 million.
With a total of $931 million in expenditures and only $891 million in projected revenue, next year’s budget deficit is estimated at nearly $40 million. Last year, the district’s budget had an $18 million deficit, as only $902 million was available to cover $920 million in expenditures.
The district has few options to bridge this gap in funding next year, Snow said. Those options include holding a tax ratification election to increase the district’s maintenance and operations tax rate, eliminating the optional 20 percent homestead exemption after 2019, making additional budget cuts, draining the operating fund balance or implementing a 2 cent tax rate swap.
CFISD’s current $1.04 M&O tax rate is as high as it can be without holding a tax ratification election.
“However, the
Texas Tax Code Section 26.08 provides an exception to this [tax ratification election] requirement when a district is negatively impacted by a natural disaster … and the governor has requested federal financial aid in connection with that disaster,” Snow said.
When taking advantage of this exception in response to Hurricane Harvey, CFISD can increase its M&O tax rate to $1.06 without holding a tax ratification election only in the tax year immediately following the disaster. This would not negatively affect taxpayers because the interest and sinking rate would be lowered by 2 cents to 38 cents, Snow said.
This change would bring in an additional $28 million of operating revenue—$9.9 million of which would be transferred from the fund balance to the debt service fund to make up for the I&S tax revenue loss. After the transfer, the district would be left with a $21.5 million deficit rather than a $39.8 million deficit.
Officials plan to present the final proposed budget at the June 14 regular board meeting, where the board will consider these recommendations.
