State funding woes and declining enrollments have the North East Independent School District getting creative with its 2018-2019 budget, allowing it to give employees a slight pay raise while adjusting taxes.
“I am very happy that a 1 percent pay raise and a 1 percent retention supplement is being approved by our trustees. Our employees deserve it,” said Superintendent Brian Gottardy in a prepared release.
The school board OK’d the wage hike and retention incentive June 18.
Three days later, trustees approved raising the maintenance and operation part of the property-tax rate from $1.04 per $100 valuation to $1.06, and lowering the debt service portion from 32 cents per $100 valuation to 30 cents.
The new tax rate is expected to raise the district’s general fund income by $16.4 million, a figure based on rising appraisals.
“I want to stress that even with this lower (interest and sinking) rate, NEISD will still be able to pay its debt in a timely and fiscally responsible manner,” Gottardy said in a blog posted to the NEISD website.
The state’s current education financing formula offers “enrichment” funding for every penny over $1 in M&O taxation, but that enrichment match ends at $1.06.
Revenue from taxes over that rate is subject to recapture by the state.
District officials have been worried they would see another school year with no raises.
“Our ability to give our hard-working employees a raise is almost nonexistent given the limited funding we receive from the state,” Gottardy said.
NEISD will spend $8 million to support the increases, thanks to two factors.
The state is boosting funding for school districts that expect to lose property-tax revenue from lowered local appraisals. Also, NEISD has received payments as part of an insurance settlement.
NEISD leaders hope that nearly $15 million in projected cost savings will help further boost the district’s finances.
At a May 29 board meeting, administrators painted a stark financial picture. Without the new M&O tax increase, the district had anticipated significant reductions in its fund balance over the next few years.
District officials had said further drops in the fund balance could pose a risk to NEISD’s credit rating and cash flow.
But now with the tax adjustment, district officials are optimistic. The projected beginning fund balance was $115.6 million on July 1.
There are other challenges. NEISD’s student enrollment for 2017-2018 was actually lower than the figure projected at the start of the year (66,446-65,475), and the enrollment for 2018-2019 is projected to drop to 64,192.
Lowered enrollment poses a risk to the amount of property-tax revenue the district gets to keep.
As part of planned budget cuts, NEISD projects having nearly 110 fewer full-time teaching positions, mostly in elementary schools — a savings of $7 million.
Officials have said no layoffs are needed because there have been enough retirements and resignations.
“I’ve heard some concerns expressed from the principals, but they understand that the lower enrollment is the cause (in position reductions),” said Associate Superintendent Donna Newman.
The district, however, has a contingency fund of $2 million to add kindergarten through fourth-grade teaching positions to ensure a 22-to-1 student-teacher ratio per classroom in elementary campuses.