On May 5, the Magnolia ISD board held a budget workshop, during which it reviewed the proposed fiscal year 2026-27 budget and expenses. The board also reviewed new ways to support teacher retention, including a new 401(a) plan and a teacher pay raise described as “aggressive” by Assistant Superintendent of Operations Erich Morris.
Breaking it down
A 401(a) program is an employer-sponsored retirement account that holds employee contributions similarly to a standard 401(k), Morris said. The employer would set certain parameters to qualify and contribute money to the program. This, in turn, helps motivate employees to prepare for retirement and stay loyal to their position in the organization, Morris said.
Morris said once an MISD teacher reaches 10 years of employment with the district, they would automatically be inserted into the district's 401(a) program. The reasoning behind targeting veteran teachers was to reward teacher “loyalty over retention,” Morris said.
“We’re focused more on loyalty, and by focusing only on those that have been with the district for 10 or more years, it also creates a cushion, if you will, from a budget perspective. So we can be more aggressive in terms of the employer match,” Morris said.
Currently, 35%-40% of the teachers in the district would qualify for the proposed plan. The proposed implementation of the plan is for a trial run for FY 2026-27 to test not only its popularity among teachers but also its effect on the budget, Morris said. If desired, the district can open up the 401(a) plan to possibly include newer but experienced teachers in the district as well.
“If you were looking at being closer to retirement, you might stick around a few more years for this; I mean, it's substantial,” MISD Superintendent Jason Bullock said. “If the district is giving a 3% raise in theory, you could take that raise that you're getting and put it all into this account, and the district would match, and that's a pretty great program to keep some of our veterans and people who know what they're doing with kids and get them to stick around.”
Contributions to the plan would be made semiannually from Sept. 1 to Aug. 31, according to Gordon Taylor, a representative of Trusted Capital Group. Employees who are on the 401(a) plan must be employed Aug. 31 each year to receive or keep that year's contribution. The only exceptions to this rule include death, disability or retirement.
Also on the agenda
Morris said the district, going into FY 2026-27, anticipates a balanced budget. In addition, the district was able to conduct a property value audit and will receive a one-time payment of around $3.4 million.
Next year's district tax rate is estimated to decrease by around $0.042, to a total tax rate of $0.9163 per $100 valuation, Morris said. The approved tax rate for FY 2025-26 was $0.9583 per $100 valuation. This new tax rate, Morris said, makes MISD's the “lowest tax rate in Montgomery County.”
The district created its upcoming 2026-27 revenue projections on a conservative student growth estimate of around 450 students, Morris said. Based on the student and program growth, the district is projecting a fund balance of $4.5 million for FY 2026-27.
Morris recommended that the funds be prioritized for employee pay, specifically for closing the gap on veteran teacher pay in the district. MISD is “woefully behind in pay” for custodians compared to other schools in the area, and recommends increasing their pay by around $2 per hour, Morris said.
Items worth mentioning
Alongside the new proposed 401(a) plan, the district has also recommended a minimum 3% salary raise for all district employees and veteran teachers.
The district received a one-time payment of $3.4 million due to a property value audit. Morris recommended that a portion of the funds be used for a one-time $500 retention payment for all district employees on the Sept. 1 payroll.
The budget and 401(a) retirement plan will be under consideration for approval at the MISD May 12 regular board meeting.
