Budget Basics: What You Need to Know Before the HISD Budget Workshop
The Houston ISD school board will host their budget workshop on May 16, 2024. This will be the public’s first opportunity to see the financial plan for the 2024-2025 school year. Here’s what we know already:
The District, like most districts across the state and country, is facing a steep financial cliff due to the end of federal pandemic relief funding, declining enrollment, and historically inefficient financial practices.
Next year, we can expect some cuts to central office, limited impacts to non-NES campus budgets, and continued financial support for teacher salaries, NES campuses, and high-quality instruction.
At the budget workshop, We hope to see a clear focus on the strategy behind the budget, aligned to the Board’s student outcome goals.
A TOUGH FINANCIAL LANDSCAPE
Houston ISD has a history of inefficient financial practices and deficit budgets. In 2019, the HISD elected school board sought a performance review from the state’s Legislative Budget Board (LBB). The LBB found nearly 100 areas in need of improvement, including significant financial and operational inefficiencies.
“Houston ISD’s spending practices and monitoring of its financial activities are not efficient or effective in multiple areas. The district regularly adopts an annual budget in which projected revenue is inadequate to pay for planned expenditures. . . As a result, the district must use its fund balance to cover the excess spending. Efficient spending of limited resources is critical for Houston ISD’s ongoing, sustainable success.”
Relief came in 2020 with an infusion of federal funding. To address COVID-19 learning loss, the federal government allocated nearly $190 billion dollars of emergency education funding called the Elementary and Secondary School Emergency Relief (ESSER) Fund. Houston ISD alone received almost $1.25 billion in one-time ESSER funding.
HISD used this funding to pay for tutors, teacher stipends, wraparound services, and even employee salaries. Salaries are expenses that must be paid every year, meaning once funding ends the District must either find a new source of funding or cut positions. A full spending list can be found on the Houston ISD website. After four years of federal aid, these grants are ending in Sept. 2024.
This year, HISD again revisited efficiency. An internal efficiency report detailed ineffective financial practices including excessive overtime payments and transportation costs. It also revealed troubling budgeting choices that do not center the classroom with a ballooning central office payroll and over reliance on contract services.
Compounding this financial strain, almost all school districts in Houston have seen a decline in student enrollment since 2017. Since school funding is tied to student attendance, lower enrollment puts districts like HISD in a greater financial bind. At least two school districts, Aldine ISD and Spring Branch ISD, are undergoing school closures.
Ultimately, this landscape creates the perfect financial storm moving into this year’s budget and beyond. With the Texas Legislature failing to provide additional funding, school districts are facing tough financial decisions. At least two nearby school districts, Aldine ISD and Spring Branch ISD, are undergoing school closures. In HISD, Superintendent Miles has been clear that he is not considering closures next school year, but without new revenue spending will need to be cut.
FIRST LOOK AT THE 2024-2025 BUDGET
At a press conference on March 19, 2024, Superintendent Miles laid out some high-level features of his upcoming budget presentation. During the budgeting process, the District rooted any changes in the following core principals:
- Keeping budget cuts as far away from classrooms as possible
- Investing in teachers and school leaders
- Prioritizing actions and initiatives outlined in HISD’s District Action Plan
- Cutting waste and inefficiencies at the central office
- Tempering cuts to schools that have control over their budget
The budget was also built around assumptions about revenue and district needs. Although the state set aside an additional $4 billion dollars for education over the next biennium, the legislature did not allocate that funding to schools. HISD is anticipating no additional state funding. Considering enrollment loss and the end of ESSER, the District will be facing a decrease in revenue. It is recommended that districts maintain three months operating expenses for emergency spending. HISD will maintain a fund balance of between $800 and $850 million for this purpose.
Moving into next year, Superintendent Miles outlined the following budget expectations:
- The District is committed to a balanced and fiscally responsible budget that is sufficient to progress the District Action Plan.
- The District will not close campuses for the 2024-2025 school year.
- Teachers should see an increase in salary.
- Central office will continue to fund instructional materials for campuses that use district-approved curricula.
- The NES model will be funded on 130 campuses but staff will be “right sized” to reflect the actual enrollment of the campus. This means some campuses may lose staff members.
- During the COVID-19 pandemic, campuses were held harmless for enrollment loss. This means the district continued to provide the same level of funding to campuses as before the pandemic, even if they had fewer students. This year, the district will end the harmless policy for non-NES schools, but will limit any funding loss to 12% of a campuses revenue.
- All other subsidies, including for high schools and magnet programs will stay the same, even with enrollment loss.
- Central office will face more cuts to purchased services and staff. Some ESSER-funded positions will be eliminated.
These are just some of the high-level budget changes Superintendent Miles has highlighted. We are starting to see some of these cuts already, with ESSER-funded wraparound service and custodial positions being discontinued. With more tough decisions on the horizon, we do want to recognize the district for prioritizing the student classroom experience.
The District is scheduled for a full budget workshop on May 16, 2024, where Superintendent Miles will provide additional details about his recommended budget. We hope to see a clear focus on the strategy behind the budget, aligned to the Board’s student outcome goals.