One year after the North East Independent School District joined others in the region providing historic pay increases, a new board of trustees is grappling with how to retain employees while also managing a ballooning $38 million budget deficit due in part to those raises.
They are mulling a district proposal that would provide a one-time, 1% retention bonus in lieu of a raise. The proposal would cost less than a raise, but would not contribute to employee retirement accounts, rankling some trustees.
The discussion comes as federal pandemic relief dollars that funded some of last year’s compensation package are set to expire.
With no action to curb expenses, the district projects that the general fund will fall to less than two months of operating expenses by the 2026-2027 school year, the minimum amount recommended by the state as measured in the Financial Integrity Rating System (FIRST).
Trustee Diane Sciba Villarreal said during a budget workshop this week that she was in a “waking nightmare” reviewing the possibility of falling below that threshold, risking intervention by the state and more severe cuts.
“If we don’t start getting real … and actually looking at going line item by line item by line item and really figuring out what we can live with and what we can’t, we are going to drive this bus over the cliff,” she said. “And I also don’t want to be the cause of having to have massive layoffs because we all feel so sorry for everybody.”
The district has already been making cuts to reckon with declining enrollment and the lack of additional funding from the state since 2019.
Shortly after approving the raises last year, NEISD district officials said the increase would need to be offset by “cost savings throughout the district over the next several years.”
The district committed to finding ways to save $10 million each year for the next three years in order to offset the deficit estimated to be more than $39 million generated as a result of the raise, Maika told board members last year.
Some of those savings have been realized through reductions in both classroom and central office staff, although further increases in pay could eat into those savings.
Since 2020, 68 positions worth $4.8 million have been cut from central office and other non-campus positions, and 140 campus-level positions have been cut, translating to $8 million in savings. The district which serves around 59,400 students, is left with 1,375 central office and other non-campus staff, and 6,970 teachers and other campus-level staff.
And with a deficit of around $38 million remaining, the need for savings is still pressing, district officials said.
The proposed 1% retention bonus would cost around $4 million, while a 1% raise would cost $4.3 million. The bonus would translate to around $600 a year, or $50 a month. The district also recommended absorbing increasing health insurance premiums to not cut into employees’ pay, costing an additional $1.5 million.
Despite the higher cost of the raise proposal, some of the trustees on the board, including newcomers Terri Chidgey and Tracie Shelton, advocated for the district to provide raises instead of retention bonuses.
“Our teachers put in a lot of [their] life and then they retire and their salary gets stagnant,” Chidgey said, adding that a bonus doesn’t benefit the funding formula for their retirement plans.
Some form of raise or retention bonus has been given every year since 2013, except for the 2017-2018 school year, when the district faced a similar financial situation.
“The legislature hadn’t provided any additional funding during the legislative session, and we were looking at a declining fund balance in our projections,” district spokeswoman Aubrey Chancellor said.
The most recent discussion comes days after the Northside Independent School District board of trustees approved a 2% mid-point raise as well as a retention stipend.
Superintendent Sean Maika said the discussion shouldn’t come as a surprise after last year’s raise, referencing a conversation he had with a community member who thanked him for recommending the raises at the time.
“I said I’m hopeful you’re grateful next year when we start making the cuts because that’s what it’s going to take because we don’t have more revenue,” he said. “We just wish we did.”
With another legislative session coming in 2025, there is some possibility of more funding coming from the state, but Maika and the trustees agreed they couldn’t count on that happening.
The superintendent said he would carry out whatever the board was comfortable with, but pointed at the forecast as a warning for the consequence of inaction.
“At some point … the chickens have to come back to roost,” he said. “Next year it is not bad, but 2026-27, folks, if you don’t keep your eye on that, that is real bad.”
