CISD juggles rising costs, funding cuts
$439.3 million budget preview shows $28.3 million cut for ‘Robin Hood’ tax
The Conroe Independent School District is juggling salary increases, rising health care costs, and a major slash in state financing in order to keep afloat for the 2016-17 school year.
The largest hole in the budget is an expected $28.3 million drop in funding from the state, said CISD Chief Financial Officer Darrin Rice at a recent budget workshop in early April. The decrease is due to the “Robin Hood” tax, where Texas “recaptures” funds from school districts deemed property wealthy and redistributes the money to struggling districts across the state.
The decrease in state funding for CISD matches dollar-for-dollar the property value increase in the district in the 2015-16 school year over the payback threshold. A funding formula to determine each district’s threshold is provided in Chapter 41 of the Texas Education Code.
“This did occur last year, but was offset slightly by the state when they added money to the school funding program during the legislative session,” Rice said.
Payment can be wired to the state comptroller’s office. Though $28.3 million is a lot for CISD to pay out to the state — that’s equal to about 6.4 percent of its budget for the coming school year — the school district is offsetting the revenue decrease in two ways.
First, CISD expects an additional $7.3 million in state funding for its projected student enrollment growth of about 1,400 kids for the 2016-17 school year. That puts the net state revenue decrease at $21 million.
CISD also expects to defray the revenue drop through a projected 6 percent property valuation
growth within its boundaries, which would rake in $18.6 million and bring the total net revenue loss to $2.4 million. A 6 percent growth in property values for residential and commercial real estate is a conservative projection, Rice said. If property valuations are higher, the district could potentially be in the black.
“We expect revenue to actually exceed projected amounts once our property values are certified. We are using very conservative numbers for our property value increase,” Rice said.
The total expected expenditure for the 2016-17 school year is expected to be $439.3 million, considering the slash in state funding and rising personnel and student enrollment costs. This represents a $22.7 million overall budget increase over the previous school year. With conservative projections of revenues, the district is expected to break even with expenditures, coming in at $439.3 million in revenues.
“Having been associated with CISD since November 2010, I have seen the district always has a balanced budget, which has been able to provide the district with sufficient funds to meet the needs (of students),” said CISD trustee Ray Sanders, who is also the president and chief credit officer at Woodforest National Bank in The Woodlands.
While revenues have grown year-over-year, the tax rate for the 2016-17 academic calendar is not expected to change even while CISD has sold $135 million in bonds. The tax rate for the 2015-16 school year was $1.28 per $100 of a home or property’s appraised value. The median value of single-family homes in The Woodlands during the first quarter of 2016 was $318,500 and was $249,000 for all homes within the CISD boundaries, according to the Houston Association of Realtors Multiple List Service. Bond projects
Voters approved a $487 million bond during the Nov. 3 elections that included two elementary schools, an intermediate and a high school in the Oak Ridge feeder zone. Other planned construction includes a junior high school in Conroe, major renovations to Conroe High School and Austin Elementary, expansion at Knox Junior High and robotics labs at The Woodlands College Park and Caney Creek high schools among other projects.
CISD isn’t the only school district in the area impacted by the Robin Hood funding system. Houston ISD, the largest school district in the state, anticipates a $107 million gap due to the state funding system. HISD trustees have considered dissolving a teacher bonus program, reallocating program funds, cuts to per-pupil funding and more to close the gap. Other districts in the Houston-area that have paid back to the state under this system include Spring Branch and La Porte ISDs. Rising costs
State funding cuts at CISD come at a time when the district is mulling over ways to close a $6.15 million gap in its employee health care coverage, increase salaries to meet market rates and add personnel to its fast-growing schools.
Though a budget isn’t expected to be finalized before August, the district is considering a $750,000 increase to its health care plan to meet the shortfall.
Trustees approved a new benefits plan that would have tightened the gap by $1 million but would increase co-pays, deductibles and prescription costs among other actuarial changes to employee health care plans.
An additional $4.5 million to close the $6.15 million health care funding gap will come from increased employee contributions to plans, according to a 2016-17 benefit plan recommendation presented by Terry Brown, a consultant from T. Ross Brown & Associates. The plan was approved during the April 19 board meeting without changes.
Even with an increase in employee contribution, CISD is expected to pay $25.4 million to its employees $18.6 million for the 2016-17 school year if the board of trustees approves the recommendations.
The district may consider an administrative change, meaning it would not require board approval, to ensure working spouses of CISD employees pay for health care coverage through their own employer rather than be covered under a CISD plan if such coverage is available to them.
CISD is also considering a $12 million salary increase for existing personnel to match current market rates, but the board has yet to deliberate on increases. Overall, annual teacher salaries at the district range from $1,000 to $2,000 below what other local school districts pay their employees, particularly among veteran teachers who have been at CISD for 10 or more years.
“Providing competitive compensation for our district employees helps ensure we have quality for our students. As a trustee, I will continue to monitor and provide input into the budget to assure our taxpayers get the best education possible at the most efficient cost,” Sanders said.
Other recommended increases for the 2016-17 school year budget include an $7.4 million for additional personnel and $2.6 million for continuing education, supplies and a new K-2 reading test system.