The Frisco ISD School Board heard a summary of the proposed 2017-18 budget Monday, with two changes from last month based on feedback from staff and trustees.
District leaders are now recommending a two percent raise for staff next school year. A one percent raise had been presented in April as part of a list of more than 50 budget recommendations. View the updated list of recommendations.
Staff are also recommending the implementation of an annual fee to offset electricity costs associated with employee-owned appliances such as refrigerators, microwaves and coffee makers. The previous recommendation had been to eliminate personal appliances in classrooms and offices.
The proposed 2017-18 budget includes dozens of recommendations to trim spending and generate additional revenue. It was shaped by eight months of work by employees, trustees, parents and citizens who shared ideas and input on possible solutions to address the District’s funding challenges.
About 60 percent of the budget recommendations were developed by the Priorities-Based Budget Stakeholder Committee, made up of community and staff members. The other 40 percent were initiated by an internal Working Group of department leaders and budget managers. All groups worked to maintain a sharp focus on classroom teaching and learning, student safety and competitive compensation for teachers.
“We recognize that these are not all good choices,” said Chief Financial Officer Kimberly Pickens, noting the impact on staff, families and students. “The administration team vetted all of those recommendations with a truly global view of the District and considered the impact on the District as a whole.”
A larger raise for employees is being recommended to address Board and staff concerns about the District’s ability to stay competitive with salaries across the region, which are expected to climb an average of 2.5 percent next school year. In addition, the two percent raise helps offset anticipated increases in employee health care premiums.
The larger raise results in a larger proposed deficit for the 2017-18 budget, now a projected at $5.7 million after factoring in all of the cost-saving and revenue-generating strategies. The projected deficit with a one percent raise was $1.9 million.
While District staff don’t want to count on the Texas Legislature at this time, they are also relatively confident that FISD will receive approximately $9.5 million in additional funding next school year from lawmakers. Both the House and Senate versions of the biennial budget include an adjustment to catch Texas school districts up to what is known as the “Austin yield,” or the amount of property wealth per student in Austin ISD. This calculation is part of the state’s equalized funding formula. If these additional funds are received, FISD would be able to maintain its fund balance at targeted levels next year.
District staff will work with trustees to finalize the 2017-18 budget between now and adoption on June 19. A separate public hearing will be held June 5 on the tax rate, which is proposed to remain the same at $1.46 per $100 valuation. The rate has remained unchanged since 2012, though the District lost a total of $105 million in state funding from 2011 to 2016.
The Board meeting also included action related to the District’s interest and sinking (I&S) fund, which pays off debt from issuing bonds to build new schools and fund other projects.
Trustees authorized the sale of new bonds to fund ongoing construction and summer maintenance projects, and refinance portions of existing bonds to save the District $45 million in interest over the life of the bonds.
Trustees also approved an early pay-off of $11.8 million in bonds from 2005 using surplus revenue in the I&S fund. The surplus was generated this year through higher than anticipated property value growth. By law, a surplus in the I&S fund must be used for debt and cannot be used to fund daily school operations. By paying off the bonds now, rather than continuing to make regular debt service payments, FISD will save an additional $8.5 million in interest over the life of the bonds.
By refunding existing debt and paying off debt early, Frisco ISD reduces its debt burden and creates additional capacity within the I&S tax rate. Capacity could be used in the future to lower the I&S rate or allow the District to continue to issue additional debt to meet the needs of enrollment growth, while maintaining the same I&S tax rate.