A financial outlook for McKinney ISD's fiscal year 2026-27 shows a potential $7.5 million budget shortfall, district officials said.
Budget discussions began ahead of the upcoming fiscal year, with McKinney ISD’s Chief Financial Officer Marlene Harbeson giving a presentation at a March 23 meeting. The budget shortfall is a projection and could change, she said.
The details
As of late March, district officials are predicting to end the 2025-26 fiscal year with a fund balance of about $93.4 million, which would result in just over $321,000 in surplus funds, according to district documents.
Various factors could change that number by the time the fiscal year ends, Harbeson said
“As far as this year is concerned, it’s definitely a moving target,” she said. “I’m pretty confident in saying it will change again before we get to the end of this year.”
In predicting the 2026-27 budget, the district predicted a 96% average daily attendance rate with about 24,000 students, Harbeson said, as the average daily attendance rate will determine a portion of the district's funding. Officials also factored in a 4% increase in property tax values and a 3% of mid-point pay increase for staff, Harbeson said.
The projected budget predicts the district will generate about $261.7 million in revenue from sources including property taxes, state revenue and federal revenue, per district documents. It shows that expenses will total about $269.2 million, which includes costs for staffing, transportation, recapture and more.
As a result of estimated expenses exceeding projected revenue totals, district officials are estimating a $7.5 million shortfall next fiscal year, per district documents.
The context
Local property taxes are a significant source of revenue for the district, according to district documents.
The tax rate in the adopted 2025-26 budget is set at $1.1043 per $100 assessed valuation with the average single-family home in the district being valued at $575,734, per district documents.
The district’s tax rate is made up of two parts, maintenance and operations, or M&O, and interest and sinking, or I&S. MISD’s total tax rate has been decreasing over the past five years, per district documents.
“The reduction from the state continues to reduce the M&O tax rate,” Harbeson said. “That’s going to continue to happen each year.”
In addition to a compressed tax rate, the district is predicting a $500,000 increase in recapture, Harbeson said. McKinney ISD’s bond issuance is complete, and the district is expecting to do a refunding in August, which will increase interest savings, Harbeson said.
“Right now our preliminary projections for refunding [bonds] will end up saving us anywhere from $3 [million] to $4.5 million in interest,” Harbeson said.
Looking ahead
The district will receive certified property value estimates April 7 and can more accurately project the next year’s budget, Harbeson said.
