“As far as cash flow, we have the cash flow funding to cover that deficit should that be what we end up with,” Ross said.
The estimated $206 million budget accounts for a 7.01% increase in expenses over the prior fiscal year, which is driven by inflation, keeping salaries competitive and adding 90 employees to accommodate enrollment growth, Ross said. Revenue is projected to total $203 million.
Ross said the consumer price index—a measure of the average change over time in prices—increased 5.3% from December 2021 to December 2022 for the Houston metro area. Although the inflation rate has trended downward from its peak in June 2022, prices saw a 6.6% jump the prior year from December 2020 to December 2021 as well, per the index.
“In December 2021, that had very high inflation relative to December 2020,” board Secretary Justin Unser said during the workshop. “The inflation is now compounding; we have inflation on top of inflation.”
Ross said the district is not alone in experiencing state funding challenges.
“There’s a lot of discussion with every district out there that there’s not enough funding,” Ross said. “This is a public service; it has to be funded in some way.”
Ross said the basic allotment for schools—the amount per student a district receives based on daily attendance—has not increased since 2019, despite rising expenses for school districts, such as combatting learning loss from the COVID-19 pandemic and inflation.
“We’re all living on the basic allotment, which is a per-pupil allotment that was established and set in 2019. That’s before COVID[-19],” Ross said. “The last time we experienced this was in 2015-16, when we went six years without changing the basic allotment, and we ran a deficit that year. We’re at that point now because we’ve had way too much pressure as far as with expenses to be sitting on the same revenue per pupil provided by the state as back in 2019.”
Although local property tax revenue is projected to rise in TISD, Ross said the current state funding formula for public schools requires the district to compress its tax rate to ease the burden on taxpayers but does not bring any new money to the growing school district.
The district is projecting about 4% growth in enrollment for the upcoming 2023-24 school year and has new facilities under construction, such as the Early Excellence Academy anticipated to open in August.
As such, the budget includes $5.56 million to add 90 employees to accommodate growth. Funds are allocated for 43 new teaching positions, 10 teaching positions reserved for enrollment growth throughout the year, 37 new paraprofessional and aide roles, four professional support positions, and three ancillary positions. Ross said the professional support positions will be added for special education, and the ancillary positions are necessary for the new Early Excellence Academy.
“We staff up on enrollment, but we only get paid for the average daily attendance,” Ross said. “If we’ve got to staff on enrollment, how do we cover it?”
Further, Ross said salary increases are a focus of the upcoming budget. He said salary increases were not yet able to be discussed publicly March 6, but he anticipates significant raises for the upcoming year as the budget committee continues discussions. More than 86% of the draft budget goes to payroll, according to Ross’ presentation.
Despite the budget challenges, Ross said TISD anticipates maintaining or lowering the property tax rate of $1.23 per $100 valuation. The tax rate for FY 2023-24 will not be voted on until the board’s Sept. 12 meeting, when further guidance from the state and property appraisal districts is available, he said.
“I appreciate that our starting point is a tax rate that’s flat,” Trustee Michael Pratt said during the workshop. “I really don’t like that it’s a deficit budget, but I also appreciate that we’re early in this, and we’ve got a lot of these factors to kind of work through.”
Additional budget workshops are slated for April 10 and May 8 to continue refining the budget before a budget hearing June 12 and vote on the budget June 13, Ross said. TISD’s fiscal year begins July 1.
“That’s what I see written all over this: We’re waiting on the Legislature; we’re kind of wondering about the Legislature,” board President Lee McLeod said during the workshop.