In workshop session Monday night, Lewisville ISD trustees took a first look at the budget situation for next year and what an unexpected decline in student enrollment means for staffing and funding. They also looked at LISD’s looming forced participation in the state’s “Robin Hood” recapture scheme. Under recapture, the district will have to start sending property tax dollars to the state.
Enrollment and Staffing
A couple weeks after school started, district leadership realized that enrollment was down by 782 students compared to the prior year. The district had expected a smaller decline of around 200. The latest worst-case estimates are for a net decline of 1,766 students over the next three years.
A loss of students means a loss of funding. Regardless of local property tax collections, which have been on the rise due to rising property values, districts can only keep a set amount per student. The State of Texas reduces its funding to the district in proportion.
According to charts prepared by district chief financial officer Michael Ball, the district could see a financial impact from the enrollment drop of about $5.3 million — about 1.2 percent of the district’s $456.9 million in budgeted operations revenue for the current year.
But because the current year’s budget and staffing levels were developed based on what the district’s demographers thought enrollment would be, LISD is over-staffed by about 50 employees. That means the district will shed some staff, according to assistant superintendent of employee services Buddy Bonner.
Bonner was careful to emphasize that the “right-sizing” of staff would not require any layoffs. In the prior three years, Bonner said, an average of 429 teachers and staff have retired or quit each year. He said the reduction would come through attrition, and just not rehiring all of the vacated positions.
LISD has a general fund balance of $169.3 million banked, part of which is used to buffer for unexpected revenue shortfalls like this. District staff noted in the presentation that the balance provides time to adjust while minimizing disruption.
In response to trustee questions, the superintendent and staff were not able to specifically quantify where the missing students went, or why the demographers got the numbers so wrong.
“That’s a great question. Why would those numbers be 50, 80 students off?” Rogers said. “There’s parts of our district that have lower rent areas there’s been a lot of instances with the upturn in the economy to renovate those facilities, and because of that the price range then kicks some folks out. There’s also some talk about the dreamers act that that’s causing folks to not stay and return to their home country. But those are the kinds of things we’re trying to get the pulse of. I think it’s a multitude of factors.”
There was also some discussion of the impact of charter schools.
Rogers said that the district was beginning to try to track student withdrawals, which he said can be difficult, since parents can do that without even coming in. Chief schools officer Joseph Coburn said that front office staff at the schools have been trained to ask why students leave.
Ball presented the board with charts showing the likely impacts of the recapture payments that LISD would have to make beginning with the 2018/19 fiscal year. The state’s share of funding for Lewisville schools had already been on the decline.
Ball emphasized the numbers are dependant on a variety of factors and would almost certainly change. The charts show a recapture payment to the state of $29 million to $34 million next fiscal year, with payments possibly rising as high as $97 million in in 2020/2021.
Ball said the recapture was not unexpected, and not a reason to panic.
Triggering LISD’s first-time entry into recapture is a rising property tax wealth level compared to the weighted average daily attendance of students. With enrollment in decline and property values on the increase, LISD will soon be considered a property rich district.
“There are a lot of moving parts, and all of those parts are moving,” Ball said. “Any one of them could have a significant impact on what the outcome might look like, so please understand that these numbers are going to change”
Ball said the district’s current wealth per weighted average daily attendance this year is $496,454, and that the threshold for having to pay the state is at $514,000 this year. Numbers could change if either enrollment or the threshold change.
The combined effect of recapture and an enrollment decline could see the district lose $3.2 million to $7.9 million in revenue compared to this year’s budget.
The district should respond to the recapture payments in two ways, according to Ball. First, with budget development, focusing on the factors generating the revenue the district has available after recapture — primarily driven by student enrollment and attendance. Secondly, Ball thinks the district has an opportunity for new legislative advocacy and transparency with the taxpayers that their local tax dollars are going to subsidize the state’s budget.
Rogers told the board there were numerous “arrows in the quiver” for dealing with funding cuts.
Presenting the board with a list of possibilities for cuts, such as increased class size targets, expansion or reduction of certain programs and adjustments to staffing levels in and out of the classroom, Rogers wanted the board to provide feedback.
According to the presentation, staffing changes would have to be complete prior to spring break.
The board took turns questioning Rogers and his staff over the situation. Though some expressed a preference that class size increases be a last option, the board did not come to any consensus about removing anything from consideration.
Trustee Tracy Miller was outspoken in the meeting about using fund balance if needed to expand the AVID program in the district and to better market the district.
“I don’t know cutting back is the right thing,” Miller said. “You’ve got to spend money to fix it. We’ve got the money; let’s do it!”
Miller also criticized the district for a lack of transparency in the prior budget development process — a point that Rogers disputed.
“We knew coming into this year we had an attendance issue,” he said. “We probably spent more last year on these fliers that went out than we ever have, and yet we lost against our plans 720 students, and I think that needs some attention. We live in the fastest growing county in the nation, we’re the largest employer and school district in this county, and yet we’re losing kids.”
Rogers said of the marketing that it wasn’t normal for ISDs, but that it would have to change.
“We’re gonna have to spend money to make money, I think,” he said. “In other words, we’re going to have to amp up marketing. That’s going to cost some money, but to me, we’ve got to play that game.”
The next regular board meeting is set for 7 p.m., Monday, Dec. 11, 2017 at the Bolin Administrative Center, 1565 W. Main St. An agenda will be posted online by Friday, Dec. 8.