Sherman ISD adopts balanced 2025–26 budget while flagging changes from House Bill 2

Sherman ISD trustees unanimously adopted the district—s 2025—26 general fund, debt service and food service budgets at their meeting after a budget workshop and public hearing, board members said.

The budget presentation by district finance staff emphasized that the adopted figures are based on pre-House Bill 2 funding rules and therefore could change once the Texas Education Agency issues implementing rules. "This budget is based on current law; we will bring you an amended budget once we know the rules and indicators from TEA," Mandy, the district—s budget presenter, said during the workshop.

Board members were told the district used preliminary certified-value estimates from Grayson County and other customary assumptions to project revenue and expenses. The plan presented to trustees shows the general fund balanced with a modest positive bottom line (just over $11,000), driven in part by higher preliminary local property values and by budgeting decisions to hold some spending in reserve pending state guidance.

Why it matters: Sherman ISD staff said recent state legislation (House Bill 2) affects school finance formulas but that TEA has not yet released the implementing rules. That timing leaves district staff to adopt a budget under "old law" and amend it later if needed, a step the district said is required to maintain operations by July 1.

Key points from the presentation and discussion included:

- Revenue drivers and uncertainty: Staff said district revenue projections rely on local property tax collections and state funding, with local revenue rising markedly after the district received preliminary taxable values from Grayson County. Preliminary values shown in the workshop were roughly 39% to 40% higher than the prior year—s preliminary roll, and staff said about 75% of that increase was new value not on last year—s roll.

- Tax-rate assumptions: Using current compression rules, staff estimated the district—s maintenance and operations (M&O) tax rate at about 0.707073 (versus 0.7552 in 2024—25). Those numbers were presented as the working assumptions used to compute local revenue for the budget; trustees were not asked to adopt a tax rate at the meeting.

- Recapture and Chapter 313 payments: Presenters explained that rapid local value growth increases state recapture (the portion of local increase the state withholds) and that recapture estimates were built into the state-revenue projection. Staff also discussed multi-year payments linked to the district—s Chapter 313 agreements with large taxpayers (referred to in the presentation as "313 agreements"). The district said it budgeted only part of the sizable first-year payment from those agreements, noting the payment stream varies year to year and that the district intends to use a portion of the funds to rebuild its fund balance.

- Personnel and priorities: Trustees were reminded personnel costs make up about 85% of the budget, so salary and staffing changes are the dominant budgetary lever. Board members and staff noted the Legislature authorized raises in the recent session; district staff said they plan to present a pay plan and amended budget when the TEA rules and other details are finalized, with the goal of adopting changes in July if possible.

- Federal and food-service funding: The food service budget assumes continued federal reimbursement processed through the Texas Department of Agriculture and participation in the Community Eligibility Provision (CEP), which allows Sherman ISD to serve free meals districtwide. The district said the reimbursement rates for next year are fixed for the year because the contract and program are already in place.

Formal action and next steps: Trustee Nathan moved to adopt the three budgets as presented; Trustee David seconded. The board voted unanimously to approve the budgets. Staff noted the district expects certified property values in July, TEA—s maximum compressed rate (MCR) in August, and a proposed tax rate to be presented to the board in September. Staff said they will return with an amended budget and any necessary pay-plan changes after TEA issues rules implementing House Bill 2 and as tax and certified-value information becomes final.

Discussion vs. decision: The board—s vote approved the budgets as presented (a formal action). The budget presentation included discussion of possible changes and explicit direction that staff will return with an amended budget or pay plan once TEA issues implementing rules; no pay raises or staffing changes were adopted at this meeting.

Public comment: A public hearing was opened on the proposed budgets prior to the board—s vote; there were no substantive public amendments recorded in the meeting transcript.

The board then recessed to closed session to consult with legal counsel and discuss personnel and real estate matters.