Houston ISD Exploring Solutions to Budget Shortfall Caused by State Cuts

District has lost $120 million in annual state funding

February 21, 2013 – The state of Texas’ unconstitutional school funding system has placed the HISD Board of Education in the position of considering two options for covering a projected $72 million deficit for the 2013-2014 school year: deeper cuts to classroom spending and/or a property tax rate increase.

An update on the budget situation was presented to the Houston Independent School District Board of Education during a public workshop meeting today.

In 2011, Texas lawmakers chose to reduce public education spending by $5.4 billion statewide, which meant a $120 million cut for the Houston Independent School District over a two-year period.  HISD joined with many other Texas school districts to challenge the school finance system in court, and earlier this year a judge agreed that the state is not adequately funding public schools at the necessary level for students to meeting increasingly tough standards.  However, the state is appealing that ruling and state lawmakers so far have indicated an unwillingness to address the issue now.  As a result, HISD does not anticipate receiving additional state funds in time for the upcoming school year.

The HISD Board of Education must adopt a budget by June and a property tax rate must be set by October.  Assuming state lawmakers take no action to fix the school finance system, HISD must come up with $72 million to address student needs for the 2013-2014 school year. Closing the state-imposed financial gap through classroom budget cuts would reduce the amount of money schools have to spend per child by about $328, or 10 percent, and would result in more teacher layoffs and other staff reductions.  Closing the gap by raising taxes would require a 6-cent increase to HISD’s property tax rate.  This would cost the owner of the average HISD home, valued at $200,000, an additional $88.80 per year, or $7.40 per month.  The Board of Education could decide to address the deficit through a combination of deeper spending cuts and a tax rate increase.

HISD has the lowest property tax rate among the two dozen school districts operating within Harris County.  The district’s property tax rate is a full 20 cents below the county average of $1.3576 per $100 taxable value.  HISD is among just eight Harris County school districts that grant homeowners an additional 20 percent homestead exemption.

The HISD administration plans to recommend a budget that essentially maintains current student service levels.  The budget proposal is not expected to include staff pay raises.  The proposal is expected to include about $20 million in targeted assistance funds for students in schools that are keeping the district from meeting the Board of Education’s expectation that every Houston school will offer a consistent, rigorous education in a safe environment.

Last year, HISD addressed the impact of the state’s budget cuts by using one-time money, including district savings.  Those funds are no longer available, and district expenses cannot continue to outpace annual revenues, said district Chief Financial Officer Kenneth Huewitt.