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Sherman ISD budget planning faces major unknowns as property values rise and enrollment could fall
Summary
District finance staff told trustees preliminary taxable values rose about 32% on the M&O side; state funding share is projected to fall and the board faces unknowns from pending legislation, certified property values and possible enrollment declines tied to a new charter school.
Sherman Independent School District officials told the Board of Trustees on May 20 that they are proceeding with budget planning amid several significant unknowns, including pending legislative changes, uncertified property valuations and possible enrollment declines.
A staff presenter said the district received a preliminary taxable value update in April showing an approximate 32 percent increase for the maintenance and operations (M&O) side compared with last year; that figure remains preliminary while tax appeals continue and certified values will not be available until July.
“Right now, we don't know what our certified taxable value is going to be until July,” the presenter said, noting the figure will affect local tax revenue calculations. The presenter added that if no additional tax-compression measures are adopted by the legislature, the district’s tax rate is likely to decrease by roughly 3 to 4 cents next year, but stressed that state action could change that outcome.
District staff also told trustees the local/state funding balance is shifting. In the current year roughly 63 percent of district revenue has come from local sources and about 36 percent from the state; staff’s projection for the following year shows about 87 percent local and roughly 12–13 percent state. The presenter warned that as local property values increase, state funding can decline under the education funding formulas.
Enrollment and average daily attendance (ADA) are further unknowns. Staff said a local charter school's opening could reduce Sherman ISD enrollment and that the district will need to choose an enrollment estimate to use in the budget that will be presented for adoption in June. The presenter emphasized that state law requires the district to budget based on current law and current certified data where available, and that an adopted budget may be amended later if conditions change.
On the expense side, staff said personnel costs account for about 85 percent of the district’s budget and that the district is reviewing positions, attrition and potential consolidation to reduce costs if necessary. The presenter said no new positions are being proposed at this time and that non-personnel costs (about 15 percent of the budget) are likewise under review for reductions.
Trustees asked clarifying questions about the tax-compression mechanism enacted in 2019 and whether a mandated rate decrease would occur even if the district is facing a budget shortfall. Staff answered that the tax-rate changes are dictated by the compression rules in place and the district does not unilaterally set that change.
District staff said they plan to bring a proposed budget to the board in June and that certified property values (received in July) and a TEA-set M&O tax rate (typically set in August) can require subsequent amendments to the adopted budget.
