Mercedes ISD presents budget workshop showing staffing cuts, $2M health‑insurance risk and $891K projected deficit

Mercedes ISD Chief Financial Officer Sylvia Garza presented the district’s second budget workshop, telling the Board of Trustees that preliminary Hidalgo County appraisal values increased 10.55% while net taxable value rose about 4.6%, and that the district is planning a proposed 3¢ disaster-penny tax authorization for 25–26 with an estimated collectible levy of $9,051,682 at a 95% collection rate.

Garza told the board the district’s projected enrollment for 25–26 is 4,001 students and an average daily attendance (ADA) estimate of 3,641. Using preliminary property values and a tax rate of 1.1269, she said that estimate would generate roughly $41,859,629 in Foundation School Program (FSP) funding and that the projections include a $220 per-ADA increase that the Texas Education Agency (TEA) published about two months earlier.

"This is the right size to deal with the enrollment decrease that we've had over the past several years," Garza said, summarizing staffing changes: the district started the year with 719 employees, had 30 leave through May (reducing to 689), and expects an additional 30 resignations at year end for a projected 659 FTEs to close the year.

Garza outlined estimated revenue and expenditure changes tied to the $220 basic-allotment increase under House Bill 2: the built-in increase generates about $801,000 under Garza’s simple model, with roughly 60% (about $480,000) as unrestricted funds and 40% (about $320,408) earmarked for employee compensation. Of the compensation portion, she reported that 75% (about $240,003) must go to classroom teacher salaries and the remaining 25% (about $80,001) may be used for other employees.

On savings and cuts, Garza projected about $1.7 million in payroll reductions from staffing adjustments, an estimated $800,000 in campus reorganization operational savings (the board discussed closing two campuses as part of reorganization), potential savings on security services via RFPs and technology, and possible energy-saving measures. She said the district is prioritizing raises over one-time stipends and is looking to use recurring savings to increase compensation.

Garza warned of rising costs: the district’s employer portion of health insurance was described as "575 per employee" in the presentation, and because fewer employees will contribute under the early-resignation scenario the district is estimating a roughly $2,000,000 deficit in the self-insured health plan by the end of 2024–25. "Deficit balances are covered by our general fund," Garza said, and she told the board staff will propose options in the next workshop to control those expenditures.

Garza presented the district’s current snapshot and estimated an operating deficiency of about $891,003.94 based on preliminary values and current spending patterns; she estimated an ending fund balance of approximately $22,941,897 after known revenues and expenses between May and August. Garza said some federal funds and grants can be reallocated to offset locally funded positions and that the district will pursue additional grants.

Board members praised district staff for work on the budget. Board member Mr. Rodriguez said, "I wanna commend the staff" for their efforts and noted the district’s progress from earlier larger deficit projections. The board and administration emphasized the work continues and that any proposed personnel or benefit changes will return to the board for review.

No formal actions were taken at the workshop; the meeting was a nonaction budget workshop and the board will reconvene for a third budget workshop in June (date coordination pending).