Southwest ISD staff outline budget shortfall, enrollment assumptions and possible salary impacts as legislature considers House Bill 2

Southwest ISD district staff presented a budget update May 20 showing a projected deficit under current law and outlining assumptions for enrollment, property values and potential legislative changes.

Finance presenter Scott (district staff) said the district is planning the budget using current law and is projecting average daily attendance of 13,668 based on an enrollment projection of 15,216. He noted preliminary taxable values of about $7.5 billion and warned that protests and final certifications could change that figure.

Scott and other staff described a draft budget that, under current law and the district's assumptions, would produce a roughly $7.8 million deficit and reduce the fund balance from about $73 million to an estimated $57 million if the district were to spend to the full extent of the draft budget. Staff characterized the district's fund balance as healthy compared with nearby districts but said the district is pursuing reductions, including a proposed 10% reduction to nonpayroll departmental budgets and staffing-model changes that produced preliminary savings. The presenters said certain costs—facility maintenance, transportation, software increases and an opening budget for Alvarado Elementary—are rising.

On compensation, staff recommended a salary freeze generally but proposed moving employees who are on a salary scale up one step (teachers, nurses, librarians, counselors, and bus drivers), a step estimated to cost about $800,000. The presentation noted earlier actions to cover insurance costs and identified roughly $1 million in nonpayroll departmental reductions under consideration.

Officials discussed state-level proposals. Scott said House Bill 2 would raise the basic allotment and include provisions that direct substantial portions of any increase toward salaries; he said the bill, as discussed in the legislature, would increase the basic allotment by about $395 (as stated in the presentation) and that the district expects some funds would be restricted to salary increases for teachers and other staff. Staff showed an alternative draft budget assuming House Bill 2's proposals; that scenario reduced the projected deficit but still left the district with a multi-million-dollar shortfall because much of the increased revenue would be earmarked for mandated salary increases and program-weighted allotments.

Staff also described a significant reduction in Medicaid-related revenue the district had previously received—presenters said the district's Medicaid revenue had gone from about $3.5 million previously to a lower amount and that litigation and state changes have affected that funding stream.

Superintendent and board members asked for continued updates. Staff said the district will finalize compensation plans after legislative action and expects to present a recommended compensation plan aligned with the budget in July or August when certified property values and clearer legislative outcomes are available. The district also plans a demographic study to inform capacity and boundary decisions related to the planned opening of Alvarado Elementary.