For a school district, which is funded primarily through property tax collections—$1.4141 per $100 valuation in SMCISD for fiscal year 2016-17—and a state allocation based on student enrollment, the all-time highs in both categories would seem to be good news.
But on Aug. 22 the SMCISD board voted 5-2 to approve an FY 2016-17 budget in which anticipated expenses outpace anticipated revenue by $3.9 million.
“It’s not a smart way to do things,” trustee Miguel Arredondo said of the district’s budget shortfall. “This would end my trusteeship. It ends [Michael] Cardona’s reign as superintendent if we don’t figure this out in a year or two. At the same time, I’m asking [Cardona] to fix things that have been in the making for 4 1/2 years.”
How we got here
Previous board direction, such as the 2015 decision to replace the district’s bus fleet at a cost of $600,000 per year, also hit the bottom line on a recurring basis. Last year’s decision to increase the district’s contribution to employee’s insurance costs totaled more than $700,000 to the district’s annual salary costs.
Trustee John McGlothlin, who, along with trustee Kathy Hansen, voted against the deficit budget, pointed to the “block schedule” at the high school as one of the major drivers of the deficit budget.
The block scheduling system—in which students attend some classes Monday, Wednesday and Friday, and others on Tuesdays and Thursdays— requires more teachers, which increases the district’s payroll. The district has estimated the block schedule costs as much as $1.8 million more than a traditional class schedule. The board will likely vote whether to keep the block scheduling system later this school year.
Operating the Bonham Prekindergarten campus as a full-day pre-k is another cost driver identified by McGlothlin. Assistant Superintendent Karen Griffith estimated it costs about $1.1 million more per fiscal year than what a half-day program would cost.
“We’ve all got to be able to identify with clear eyes that [operating Bonham as a full-day pre-K program] is a significant investment we’re making, and if we don’t see data to support continuing it over the long term, then it has to be re-evaluated,” McGlothlin said.
Aside from decisions made by the board of trustees, the district’s budget has also been affected by Texas’ school finance system.
If a district’s property tax revenue outpaces its student enrollment by a certain amount in a given period, the district becomes subject to Chapter 41 of the Texas Education Code, which dictates that “property-rich” districts—those with large property tax bases relative to their student enrollment—give a portion of their revenue to “property-poor” ISDs with small property tax bases relative to enrollment.
Property values in SMCISD increased 12 percent in 2015, but student enrollment only increased 3 percent in the 2015-16 school year. As a result, the state decreased its contribution to the district for FY 2016-17 by $1.8 million.
That could have long-term consequences for the district, Superintendent Michael Cardona said.
For example, Kissing Tree, planned to be a 3,000-home community once fully built, may add as much as $1 billion to the property tax rolls, officials said.
Under the district’s current tax rate, that $1 billion would equate to $14,141,000 of new property tax revenue for the school district annually. But the state’s school finance system, which Texas Supreme Court Justice Don Willett called a “scheme for which the word ‘Byzantine’ seems generous,” is not that simple.
If the district’s property tax base continues increasing in value at a faster rate than student enrollment, some of SMCISD’s property tax revenue could be taken by the state.
Part of the complex calculation that determines how much property tax revenue a district can keep is determined by the Cost of Education Index, a formula using base cost figures, which the Legislature has not updated since 1991.
“[The Legislature] tells us that we’ve got to do all these different interventions, we’ve got to pay teachers for all these different interventions, with no [additional] money. So actually the cost to educate a child is much more than what we get and what they allocate.”
—Karen Griffith, San Marcos CISD assistant superintendent
The average annual salary of a teacher has doubled in the 25 years since the CEI was last updated, Griffith said, but the index does not reflect the growing financial burden districts have to shoulder. The district plans to push for the Texas Legislature to update the CEI when it convenes for the 85th legislative session on Jan. 10, she said.
“[The Legislature] tells us that we’ve got to do all these different interventions, we’ve got to pay teachers for all these different interventions, with no [additional] money,” Griffith said. “So actually the cost to educate a child is much more than what we get and what they allocate.”
State Rep. Jason Isaac, R-Dripping Springs, said he wants to provide school districts financial relief. His focus has been on driving down costs through standardized testing reform, he said. He said he believes legislators will address the school finance system in the next legislative session.
“We’re going to make some adjustments and make some changes,” he said. “How significant or overreaching they’re going to be, I don’t know. I do know that the House and Senate are working on that issue and looking at solutions so we can help our school districts.”
The way out
The solution to the district’s budget challenges may begin in the classroom, Cardona said.
Increasing average daily attendance by 2 percentage points could net the district an additional $400,000 annually, Griffith said.
The district is also missing out on $800,000-$1 million each year because as many 200 students who live within the SMCISD boundaries have opted to enroll at Wimberley ISD.
“Eventually we want to get our kids back and probably open our doors to more kids,” Griffith said. “But we’ve got to get ourselves positioned where we can handle the influx of kids.”
The district’s ability to grow its student enrollment is limited because of space constraints at elementary schools.
The district is considering a May bond referendum that, if approved, could fund the construction of one or two new elementary campuses, among other projects. Cardona, who joined the district as superintendent in June, said he understands voters who point to Rattler Stadium, which was built using $38 million of voter-approved funds from a 2013 bond election, as reason to be skeptical of yet another bond.
“I hear when they say, ‘You just built a $38 million Taj Mahal out there [at Rattler Stadium],’” Cardona said. “‘That was not me. I am not asking to build that. I’m not asking to build another central office. I’m asking to build schools for kids so we can have space.”
