Mercedes Independent School District staff on Tuesday presented the proposed 2025–26 budget and tax rate at a public hearing, detailing a proposed general fund with roughly $57 million in revenue and a proposed total tax rate of 1.097 (a decrease of about 0.0297 from 2024–25).

Miss Horace, a district staff member who led the presentation, said the proposed tax rate breaks into three parts: the maintenance and operations (M&O) component, a state-mandated compression “pennies” provision set at $0.03, and a debt-service rate for voter-approved bonds. She said the debt-service portion would remain at $0.34 and that the $0.03 compression rate could generate about $900,000 for the district.

“This balanced approach is a positive step toward maintaining financial stability for the district while continuing to support our students and staff,” Miss Horace said, concluding the presentation.

Why it matters: the budget relies heavily on state funding and shows pressures from health insurance claims. Miss Horace told the board the district’s general fund revenue sources are roughly $7.6 million (13%) in local revenue, about $44 million (77%) in state revenue and about $5.8 million (10%) in federal revenue, producing roughly $57 million in total general-fund revenue. She said the district proposes a balanced budget for 2025–26.

On expenditures and specific funds, the presentation said facilities and maintenance (function 51) account for about 12% of the general-fund budget, food services (function 35) about 8%, and the remainder is allocated across transportation, counseling, campus leadership and administrative support. For the debt service fund, staff reported about $2.6 million in local revenue (roughly 66%) and about $1.3 million in state aid (about 34%), for about $4.0 million in total revenue; expenditures for principal and interest were budgeted at about $3.5 million, leaving an estimated excess of about $513,000.

The presentation also reviewed federal- and grant-funded programs: Title grants (Title I, II, III and IV) were listed at about $3.7 million, a special-education cluster at about $880,000 and a CTE Perkins grant at about $87,000, summing to roughly $4.7 million in federal special revenue.

A key concern in the presentation was the Health Insurance Fund. Miss Horace said estimated employee contributions are about $5.0 million while projected claims/expenditures are about $6.0 million, producing a potential deficit of about $1.0 million for that fund.

Board members asked follow-up questions about the district’s fund balance and spending decisions. Miss Horace said prior projections had shown a $5.3 million deficit for 2025–26 but that the administration now estimates the shortfall is closer to $3.0 million and that the district is proposing a balanced budget overall. When asked about the district’s required minimum days of fund balance for financial accountability, staff answered that the district is required to hold roughly 75 days and that, with the current unaudited balance, the district has about three months of reserves.

One board member praised staff for recent savings tied to school consolidations and vacancy reductions. “I’m very pleased to to to hear that we will be couple million dollars, less impact on the fund balance than we had the original budget,” said Miss Torres, a board member.

Board members also requested that staff provide updated final expenditures as soon as possible — “at the earliest possible convenience, about another week or so” — so the board can see how close final figures are to the presented estimates. Miss Horace confirmed staff will produce those updated numbers and noted end-of-year and auditor entries remain to be completed.

No formal budget adoption occurred at the hearing; the presentation concluded and the public hearing was closed. The board later moved to adjourn. The presentation binder provided to trustees contains additional documentation and supporting schedules referenced during the hearing.

Details from the presentation and the board’s questions may be used in later budget adoption or amendment actions.