Enrollment, funding questions leave school budgets in limbo
Districts must make hiring, financial decisions for fall despite unknowns
As the 2021 legislative session begins in Austin, school districts across Texas are waiting to see if they will have the dollars they need to help millions of Texas children catch up from learning losses this year and beyond.
At stake are millions of dollars tied to enrollment, which has declined statewide since COVID-19 forced campuses to close last March, as well as $5 billion in federal relief dollars approved in December that are geared toward schools that serve predominantly lower-income students.
Districts also face uncertainty at home. Hundreds of thousands of students, many in prekindergarten through third grade, have vanished from their schools’ rolls. Counselors and other school-based staff have canvassed neighborhoods and knocked on doors where students were last known to have lived, hoping to find them and coax them back to classes. Still, enrollments statewide remain down by about 3 percent, or more than 156,500 students.
What state and local leaders do not know is when — or whether — those students will come back.
Districts were spared financial consequences tied to lower enrollments in the fall through a hold-harmless guarantee instituted by the Texas Education Agency. The agency agreed to fund districts based on the enrollments they had projected rather than the actual number of students taking classes. That agreement expired in January. Without it during the second semester, districts with larger enrollment dips could lose out on millions of dollars.
In Alief ISD, where offi
cials have seen enrollment drop by more than 3,000 students from last year, Deputy Superintendent of Business Services Charles Woods said the district could lose about $30 million without the hold-harmless extension. He and his staff are starting to work on a budget for the coming school year, a process made more difficult by not knowing if the district will be on the hook for tens of millions of dollars in lost attendance funding.
“Now is critical timing for staffing allocations and for budgeting for next year,” Woods said. “It’s a race of time to get the numbers as accurate as we can from now until our fiscal year’s end.”
TEA Commissioner Mike Morath told the State Board of Education that he hopes lawmakers will decide whether to extend the hold harmless guarantee this month.
State Sen. Paul Bettencourt, a Cypress Republican who sits on the Senate’s Public Education Committee, told the Houston Chronicle in December that he would expect some districts to dip into their fund balances, which are similar to rainy day funds, if they expect the state to pay more. State Sen. Larry Taylor, a League City Republican who chairs the Senate Education Committee, told the Texas Tribune in January that he worries that extending the full hold harmless could take away the incentive for districts to find missing students.
Dax Gonzalez, a spokesman for the Texas Association of School Boards, said some districts already have dipped into fund balances to cover COVID-19 costs. As far as finding students is concerned, he said districts have exhausted nearly all options for trying to locate missing students, short of breaking into their last known addresses and forcing them back.
“It’s very irksome to hear folks saying districts aren’t doing enough to find students and that they need an incentive,” Gonzalez said.
“They know they need to find these kids. They’re not taking hold harmless as a pass.”
Hiring season
What happens with the missing students, and the possible extension of the hold-harmless guarantee, will impact districts’ finances past the 2020-21 school year.
District officials in December had to estimate for legislators how many students will be enrolled during the next couple of school years.
Goose Creek CISD Chief Financial Officer Margie Grimes said she tried to be conservative in her guess, projecting virtually flat enrollment for 2021-22 and a modest 1 percent growth the following year. In normal times, the district’s enrollment grows by about 1.5 to 2 percent a year.
This year, enrollment is down about 3.5 percent, or about 700 students. It is the first time in Grimes’ nine years with Goose Creek that enrollment has declined.
About half of those missing students are in prekindergarten through third grade. Grimes said that may be the result of parents opting to hold their younger children back and waiting to enroll them until the pandemic is more under control.
There is no single theory, however, for where older students may have gone. Some may have moved, others may have enrolled in private schools or online-only schools.
Knowing how many students will be enrolled next year will take on extra importance later this month and in March, when school districts begin to decide how many teachers they will be able to hire or keep on staff.
If districts overestimate how many students will return to their classrooms this fall, they could be left with more teachers than they can afford; underestimating
could leave districts stuck trying to hire teachers in the fall, well after most committed to jobs in the spring.
For now, Grimes said administrators in the Baytown district are just planning to fill vacancies and staff several key positions at the district’s new junior high.
Woods in Alief likened it to playing blackjack.
“Are we going to be conservative and say none are going to come back? A lot of that has to do with the state of the pandemic, where we are with vaccines and how back to normal can we get,” he said. “It’s the perfect storm of conditions to cause this amount of chaos.”
More federal relief ?
At the same time, there are billions in federal funds that could be a boon for local districts. The most recent stimulus bill passed by Congress in December allocated $5 billion for Texas schools, most of it earmarked to help districts that serve a large number of students from lower-income households.
TEA officials and state lawmakers have yet to dictate how that funding will be allocated. If the first round of COVID-19 relief is any indication, districts may not receive direct checks.
TEA officials kept the first round of federal relief aid — $1.27 billion — within the agency, using about 90 percent of it to create grants to reimburse school districts for such things as personal protective equipment and technology purchases to facilitate remote learning. The agency kept about 10 percent to create a statewide voluntary testing program and to help with internet connectivity issues, among other things.
Kristin McGuire, director of government relations for Texas Council of Administrators of Special Education, said districts are better positioned to spend the federal dollars on their unique needs.
“I don’t know if you can generalize them to say ‘This is an issue that the state can solve because everyone is going through this,’” McGuire said. “I think that each district should be able to prioritize what their own needs are and use the funds accordingly.”
TEA officials said the Legislature will have to decide how the $5 billion will be distributed, but federal rules dictate it be spent by Dec. 31, 2021.
Houston ISD Chief Financial Officer Glenn Reed said last month that coronavirus-related expenses and the potential loss of the hold harmless guarantee could cost the district $140 million. If TEA distributes the new federal funds directly to districts, however, HISD could be eligible for as much as $400 million.
Districts could receive millions more if the U.S. Congress passes a third round of pandemic-related stimulus funding, which remains under debate. The current plan proposed by the Biden administration would allocate a total of $130 billion for schools, more than twice as much as was approved in December. It is unclear how much would be allocated specifically to Texas.
In the meantime, finance officials still are plotting their next steps in another year marked by uncertainty.
“I don’t know how many districts are going to adequately budget for this next year, and I don’t know how many students are going to return,” Woods, with Alief ISD, said. “Next year is right around the corner at this point, and there’s still quite a bit we don’t know.”