Round Rock ISD is anticipating a larger-than-expected gap between revenues and expenses for the 2025-26 financial year as administrators work to close the books.
In a nutshell
Higher insurance costs, legislative impacts and property tax protests are behind a jump in the expected shortfall, RRISD’s new Chief Financial Officer Ludivina Cansino said in an Aug. 20 update.
The district is expecting a $23.6 million shortfall that will reduce its fund balance to $43.2 million, Cansino shared in her presentation.
She said the district could anticipate a hit to its financial ratings, as the Texas Education Agency factors unassigned fund balance into its annual Financial Integrity Rating System of Texas assessment of school districts’ financial practices. Generally, the system rewards districts that have a fund balance equal to around 60 to 90 days of expenditures.
At $43.2 million, this fund balance is equal to about 30 days of the approved $486.1 million in expenditures for the 2026-27 budget.
The details
Cansino said the main drivers behind the increased shortfall were:
- $12 million to transfer from the general fund to the self-funded health insurance fund to cover claims, which was originally budgeted for $6 million
- $11 million overage in payroll from overtime, stipends and vacancies
- $5.5 million in lost property tax revenue due to protests
How we got here
For the last six fiscal years, the district has either projected or ended the year with a budget shortfall, documents show.
Place 2 trustee Melissa Ross asked why the district consistently finds that its revenues do not track with realized expenses.
Cansino said the shortfalls are part of a bigger trend, with many school districts in the region having deficits, as operating costs continue to outpace school funding.
The district is also frequently subject to recapture, in which the state determines a school district has received more property tax revenue than it should be allocated under a funding formula.
“It is a very hard conversation to have with taxpayers, right?” Cansino said. “A lot of times when they think, ‘Well, my tax bill is increasing,’ we don’t get to keep all that money.”
What’s next?
Superintendent Hafedh Azaiez said the district will approach its budget going forward with no buffer to be expected from its fund balance.
Cansino also said administrators are in the process of identifying further efficiencies on a campus-by-campus basis to combat potential shortfalls in the 2026-27 budget year.
The district passed a balanced budget for this year in June, and called a tax rate election to fund teacher raises.
