What will the Midlothian ISD budget look like for 2020-21? The short answer coming out of an hour-long presentation at last week’s monthly board of trustees meeting was this: The virus is in the details.
Assistant Superintendent for Finance Jim Norris said he hoped to have a finalized budget ready by June 15 so that the board could set the district’s tax rate in August. Norris presented three options that address staff raises, insurance premiums, pre-payment of future bonds, bus purchases and the reduction in district tax rate to either 6.13 or 7.13 cents.
The board heard a detailed presentation from Norris on next year’s budget, which still projects an increase in revenues across the board because of increasing enrollment, in spite of the COVID-19 pandemic.
However, Norris also warned of changes that could be wrought by the pandemic, which continues in spite of opening measures to Texas’ economy. One of those could be a slowed rate of growth due to the pandemic, which would reduce revenues. Norris said 60 fewer students would translate to about $400,000 in lost revenue.
“Nobody knows the effect of that, so we have to plan for that,” Norris told the board. “We’re doing the best we can knowing there will be changes every day.”
A public hearing on the projected budget will be held at the June 15 monthly board meeting.
The pandemic could also add expenses in the fall, such as sanitizing costs and Plexiglas shields between seats on school buses, Norris said.
On the plus side, valuation of property is up by more than 11% in the district, he said. That would move the district’s minimum salary for teachers to $53,000 per year, with steps in the salary structure up to about $73,000, Norris added.
He alluded to the concept of the “golden penny,” of which he has spoken before. Under House Bill 3, which was approved by last year’s Texas Legislature, school boards can vote to approve a 1-cent enrichment tax per dollar valuation without a district referendum.
“Golden pennies,” or enrichment revenues, have nothing to do with the base tax rate, Norris explained. MISD chose a 4-cent enrichment rate when 8 cents were available when the state originally introduced this concept. But under HB3, a district-wide tax election is now required to raise additional revenues in excess of 1 cent.
Norris said the first four pennies that MISD generates in enrichment revenue equals more than $26 million in state funding, with another $618,000 brought in by levying the extra penny.
Each cent of property tax generates about $480,000 of tax revenue in MISD at today’s valuations, but the “golden penny” would generate $138,000 in additional revenue because of tax equalizations performed by the TEA, Norris said.
“Our budget is up,” he said. “But we have new revenues in taxes, we have new revenues in state funds, more so than anything to help us offset that.”
Norris said no new buildings will be needed for the next three to five years beyond what has already been budgeted, based on current projections. Dieterich Middle School will open in August and the district’s ninth elementary school was recently sited on South 14th Street, which will equalize feeder patterns for the district’s three middle schools.
However, Norris said the district’s new MILE career studies campus, which will open in August, will not qualify for additional funds because its attendees will still be considered students of Midlothian and Heritage high schools.
Trustee Andrea Walton pressed Norris on fund balances that should be dedicated for student transportation as well as teacher salaries.
“I don’t want to spend $10 million out of there,” Walton said. “But if we have a shortfall here, our teachers and our buses are priority …. Nothing I’ve heard out of this presentation or any of the past four has talked about the fund balance except for what we would add into it and the desire to prepay debt.”
Board vice president Carl Smith said as long as the board answers what is best for the kids and then what is best for the staff, it has answered what is best for the district.
“I would like to see us take advantage of the fund balance, because it belongs to the taxpayers,” Smith said.