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Sherman ISD finance staff warns of $2 million deficit, urges conservative 2025–26 budgeting amid legislative uncertainty
Summary
Finance staff presented the district’s revenue mix, explained why state per‑student funding has not kept pace with inflation and said the board must close an approximately $2 million deficit to present a balanced 2025–26 budget while the Texas Legislature remains unsettled.
Mandy Lewis, presenting budget planning information to the Sherman Independent School District Board of Trustees, told trustees the district currently relies heavily on local property tax revenue and faces an approximate $2 million deficit that staff aim to eliminate before adopting the 2025–26 budget.
“Right now we’re probably looking more like 70/30 — 70% local and 30% state,” Mandy said, describing the district’s revenue mix and explaining that local growth increases property collections while state funding per student has not risen since 2019. She said the district currently receives $6,160 per student from the state’s basic allotment and estimated Texas would need to increase that by about $1,300 per student to match inflation since 2019.
Lewis said the board must adopt a budget in June under current law and that staff are taking a conservative approach because legislative outcomes — including potential school choice or voucher proposals tied to funding — remain unresolved. She told trustees the district is monitoring certified property values, preliminary April values and the comptroller’s property studies that affect recapture calculations.
Recapture (local property value increases shared with other districts under state law) is already in effect for Sherman ISD, Lewis said, and she noted an estimated recapture payment of about $1.5 million tied to recent value increases. The district also is consulting a firm that specializes in 3.13 agreements (special tax/value arrangements) to clarify how hold‑harmless provisions and recapture interact.
Why it matters: personnel and compensation account for roughly 80–85% of the district budget. Lewis said eliminating the deficit without knowing final legislative outcomes will require district leaders to consider staffing, benefits and other reductions or revenue adjustments, while continuing to prioritize classroom needs.
Trustees asked for clarification of timing and risk. Lewis and Dr. O’Neil said staff are running updated projections every six weeks and will present revised scenarios after receiving preliminary certified values in April and further guidance on any potential legislative changes.
Ending: Lewis asked trustees to remain conservative in planning and to expect staff to return with updated revenue estimates and proposed options for closing the 2025–26 shortfall before the June budget adoption.
