Midlothian ISD will not be facing as large a budget deficit going into the current school year as was projected in August, trustees were told at Monday night’s regular monthly meeting.
Certified public accountant Steve Lacy from the district’s audit firm of Hankins, Eastup, Deaton, Tonn and Seay, PC presented the audit report for the 2023-2024 school year. The ultimate conclusion of the report, Lacy said, was that the district received the highest rating from the firm.
“This is what you call in our modified report a clean audit,” Lacy said. “No changes are needed. The highest level of a positive report you can get.”
The general fund revenue as of June 30 was about $126 million, up from $118 million a year ago. Expenses were about $126.8 million, leaving a deficit of $823,000. As a result, the district’s fund balance dipped slightly to about $32.8 million, which Lacy called “healthy” despite the deficit.
Helping the numbers was about $2 million in unanticipated funds from the Texas Education Agency as well as successful appeals of real estate values, Lacy told the board. He added that cost reduction measures saved the district an additional $1 million.
The district received $6.1 million in federal funds in 2023-2024. Because the district receives more than $750,000 from the federal government, a separate audit had to be performed covering these funds, and Lacy said that the district received top marks in this report as well.
“It’s a testament to everything we’ve experienced,” he said. “Everything is handled well … There were no negative findings in the handling of those funds.”
The district’s capital assets at the end of June totaled $396 million. The total debt stood at $405.8 million but started the fiscal year with $437 million, signifying a substantial paydown in a year’s time.
The bottom-line number is the district’s statement of net position, and Lacy said the deficit at the end of the fiscal year was $2.8 million. However, he added that the change in that number during the year was a positive $13 million, plus $5 million from the previous period.
Lacy thanked superintendent Dr. David Belding and the district administration for their cooperation in the audit.
The board voted 6-0 to accept the audit report, with trustee Richard Peña not present.
The audit report addressed the previous school year only and not the current year, where the district expected stagnant state-provided revenue and increased expenses based on inflation and increased safety and security measures.
In August, the board approved a voter-approved tax rate election, or VATRE, to address an expected shortfall in the budget. Early voting is underway on the referendum for the Nov. 5 general election.
The measure would move three cents per $100 taxable valuation from the Interest and Sinking fund to the Maintenance and Operations fund, with no change to the current tax rate for property owners. The three “golden pennies” would provide an additional $4.7 million in additional state and local funding.
The district has outlined key funding priorities as teacher and staff compensation; maintaining lower class sizes; student programming and experiences; and safety and security.
