In the face of a budgeted $31.7 million shortfall for fiscal year 2014, the Austin ISD board of trustees is considering a budget projecting $996.7 million in expenditures and other uses and $968.8 million in revenue and other sources, chief financial officer Nicole Conley-Abram said Aug. 12.
Conley-Abram presented the administration's budget recommendations to the board for review during the work session. The board is scheduled to hold a public hearing Aug. 27 and take action on the budget during its board meeting later that night, Superintendent Meria Carstarphen said.
"While we are forecasting the use of reserves we definitely have an out year budget pressure that is slowly catching up with us," Conley-Abram said. "Our continued use of reserves is weakening our financial position. We just had our ratings review and the ratings agency reaffirmed our high quality, high credit rating. We will have to look for a permanent revenue solution in the out years if we expect to maintain our bond rating."
For the 2014 fiscal year, Conley-Abram said the administration is proposing the same tax rate as 2013, $1.242 per $100 of property valuation.
Major expense categories
The general fund pays for the district's basic operations; at $851.5 million, the proposed 2014 fiscal year general fund covers about 74 percent of AISD's total expenditures, according to Conley-Abram.
AISD plans to spend most of that $851.5 million on instruction ($436.9 million) and contracted instructional services ($117 million).
The district has also budgeted to make payments on its debts, using nearly $104 million from its debt services fund and $488,613 in general fund money earmarked for that purpose.
More than $78 million will go toward maintaining grounds and facilities and $41.2 million will go toward food services, according to budget documents.
Texas public school financing law requires "property-rich" districts such as AISD to send some of its property tax money to the state to be used to bolster poorer districts. Roughly 12 percent of AISD's overall revenue will go back to the state in recapture payments; related costs will increase by $467,769, Conley-Abram said.
During the 2013 fiscal year, the district implemented a one-time payment to staff equivalent to a 3 percent raise. The 2014 budget's general fund includes money to maintain the raise for another year and add another 1.5 percent increase to be paid in two lump sums to regular staff, Conley-Abram said.
Unlike the 3 percent bump, the 1.5 percent adjustment would not be pensionable, she added. The budget also includes $1.6 million for annual academic and facilities recommendations.
Board documents indicate the proposed budget includes a net savings of $3.5 million "as a result of not operating an academic program at Allan Elementary School."
Using some reserves to cover shortfall
Conley-Abram said the district will draw from its reserves next year, but most likely will not take out the amount of the budgeted shortfall, she said.
"We'll probably only spend $18 to $20 million of our reserves," she explained. "While [for the purposes of developing the budget] we assume that we're going to access reserves at those levels, because of the cost containment strategies that we have in place we don't expect to pull down $31.7 million in our reserves for next year."
Trustee Robert Schneider said he agrees with the need to pull money from the district's fund balance to pay teachers, but thinks the district needs to have a conversation about how to generate substantial additional revenue for the long term.
"What I'm concerned about is the long-term trend of drawing from the fund balance," he said.
Conley-Abram said the board will begin such a discussion at a retreat next month and said she thinks that in fiscal year 2015, the board will have to consider a tax ratification election, or TRE.
For the 2014 fiscal year, Conley-Abram said the administration is proposing the same tax rate as 2013, $1.242 per $100 of property valuation. Tax rates are made up of two parts: maintenance and operations (M&O) and interest and sinking (I&S). The two rates are $1.079 and $0.163 per $100 of valuation, respectively. They combine to make up the current tax rate.
According to state law, a school district must hold a TRE to raise its M&O rate above $1.04 per $100 of property valuation. AISD held a successful TRE in 2008 and raised its M&O rate to $1.079 per $100 of valuation.
State law requires school budgets be approved by Aug. 31.