A number of Bexar County school districts, including North East, Harlandale, and San Antonio independent school districts, approved budgets for the 2018-19 school year last week.
In their final budget presentations, each district’s financial officer cautioned their boards of trustees of tight financial times, necessary cuts to staff, and uncertainty that could follow the 2019 legislative session.
The proposed budgets reflect decreased revenue, brought on by declining enrollment, and exacerbated by an uncertain future for school finance.
The Texas Legislature will meet in Austin in January, in a session that districts hope will result in changes to the school funding formula. Save for a few additional sources of income, public schools are funded primarily through two main sources: local property taxes and the State.
Districts like NEISD that have higher property values, often called “property rich,” rely on property taxes for more of their funding. Districts with lower property values, like SAISD and Harlandale, rely more heavily on state dollars.
Historically, the State has funded about 50 percent of the overall cost of public education, but experts project that Texas will fund only 38 percent of the cost in 2019.
“The hope is that the state will provide more funding for public education,” said Richard Hernandez, Harlandale ISD assistant superintendent for business.
But if recent legislative sessions are any indication of the next, local districts could be on their own to mitigate budget shortfalls.
Personnel cuts
The majority of most school district budgets is devoted to personnel. In NEISD, approximately 87 percent of its general fund pays for employee salaries and benefits. Other districts are similar: SAISD and Harlandale each devote more than 80 percent of their general fund budgets to the same cost.
That means to make significant cuts to the overall budget, districts must either eliminate positions or alter salaries and benefits. Decreased enrollment allows districts to focus staff cuts on grades or subjects with a dwindling population of students. Cuts can be made through attrition, by eliminating positions when vacancies arise, or via staff layoffs.
NEISD’s board cut 122.5 positions that were vacant at the campus level, and eliminated 21 positions at central office through attrition.
“We had a lot of vacancies that [Superintendent Brian] Gottardy was very good in taking his time in filling and as we sat on those, a lot of people found ways to work around not having that staff,” NEISD Director of Budget and Financial Analysis Susan Lackorn said. “These are not people, these are vacancies that we have decided we are not going to have these positions anymore.”
These central office cuts will save NEISD roughly $920,000.
NEISD will also continue to “live without” several central office positions that are currently vacant for the duration of the 2018-19 school year. These position freezes account for savings of about $122,800.
Harlandale also cut positions by attrition, eliminating 32 elementary teacher positions, three instructional aides, and one generalist teacher at the secondary level. Hernandez said these cuts would save the district about $2.58 million.
SAISD also eliminated positions, although not strictly through attrition. In May, Superintendent Pedro Martinez said due to enrollment decline, the district was overstaffed by 255 teachers, primarily in Pre-K, at the elementary level, and in core subjects in grades 6-8.
The district’s trustees voted to layoff 132 teachers and 31 administrators at the campus and central office levels to help close a $31 million budget deficit. Martinez said that after the layoffs, the district would still be overstaffed by 108 teachers, but would not continue to layoff teachers. In total, layoffs created cost savings amounting to $11.3 million. Cuts from attrition saved the district an additional $6.7 million.
Salary considerations
Salary increases can also have a big impact on a district’s bottom line. On Monday, Harlandale ISD trustees voted to offer employees a 1.5 percent general pay increase in addition to some salary adjustments, costing the district a little more than $2 million.
NEISD also approved a pay increase of about 1 percent. The district boosted its starting salary for teachers and librarians with no previous experience to $51,652.
Both districts said these increases would help their schools remain competitive in recruiting the best teachers and employees.
Pay increases have also come up in SAISD, where community members in 2016 advocated trustees raise the minimum wage to $15 an hour as part of a three-year plan.
The minimum wage level is currently set at $13 an hour, and on Monday, trustees approved an increase for eligible employees to $13.25 an hour for next year.
“In a year where we are very challenged with the budget, we still do not want to not give evidence that we want to move in that direction so that’s why there is the request to at least put in the 25-cents to show we have not forgotten and we are committed, but it is certainly a year of struggle here,” SAISD Board President Patti Radle said.
During the public comment portion of SAISD’s Monday night meeting, some asked for a greater commitment to higher wages, not just for those making minimum wage, but also for teachers and salaried staff.
“With the [layoffs] having scared off many teachers and no salary increase, how will the district attract and retain experienced teachers and support personnel?” San Antonio Alliance of Teachers and Support Personnel President Shelley Potter asked. “SAISD salaries must keep pace.”
Drawing from the Fund Balance
When a district’s budget is not balanced, because of costs brought on through pay increases or other initiatives, it can withdraw money from its fund balance. A fund balance is similar to a savings account, containing savings that a district can draw on during financial hardships.
Most district’s financial managers follow a two or two-and-a-half month rule: maintain a balance that would allow the district to continue operating for two months or two-and-a-half months with no outside funding.
“Generically it is because you don’t really want to go below two, and keeping two-and-a-half means that you are not approaching the really scary, breaking the two-month level, and [it] seems to work really well with our bond rating agencies,” NEISD Executive Director of Finance and Accounting Brian Moy said.
To grapple with its deficit, NEISD plans to draw from its fund balance in the coming years, while still maintaining more than 2 months of operating revenue in the account.
Lackorn told trustees Monday that the district expects to take less from the fund balance than initially projected, because NEISD will likely lose additional positions by attrition and likely won’t fill every vacancy right away, creating greater district savings.
Harlandale also plans to take from its fund balance to mitigate its own deficit, drawing $7.1 million from the account.
Harlandale will protect $25 million from the fund balance to sustain two-and-a-half months of operations. It will still have roughly $12 million remaining, as of July 2018. Throughout the next school year, Harlandale will draw from the account to cope with the district deficit, left in part by a decrease in student enrollment.
Officials said SAISD will not draw from its fund balance, which contains roughly $100 million, or two-and-a-half months of operating funds.
