El Paso ISD forecasts multimillion-dollar shortfalls as attendance, SHARS and uncertain state aid squeeze budget

El Paso Independent School District officials told the board at a special April 1 budget workshop that the district faces continuing revenue pressures and a projected gap unless state or federal action changes current assumptions. "Our projected surplus, our deficit at this time is $24,200,000," a budget presenter said, describing the current-year forecast that incorporates both year-to-date activity and a February–June projection.

Why it matters: The district’s forecast ties a large portion of the shortfall to lower average daily attendance (ADA), unresolved federal SHARS reimbursements and the unsettled shape of House Bill 2 at the Texas Legislature. Those factors influence how much state and federal money the district will receive and therefore how much must be covered from reserves, property sales or internal reductions.

District finance staff led by Chief Financial Officer Martha Guiren and budget presenters walked trustees through the line items that drive the shortfalls. At the state level, staff projected an approximate $17.7 million shortfall tied primarily to ADA: the district adopted a budget assuming 90% ADA but staff said the current ADA ratio used in forecasting is roughly in the high 87s. Staff said one percentage point of ADA is worth roughly $3 million to the district. Separately, staff reported a federal-level shortfall tied in part to SHARS reimbursements, estimating a $1.7–$2.0 million reduction in federal revenue in the current forecast because the district has not received expected SHARS funds.

Staff also explained how other items affect fund balance. The district began the fiscal year with an unreserved fund balance of $147.1 million (about 80.8 days of operating expenses) and staff projected closing the current fiscal year with roughly $122.0 million (about 70.2 days). Staff estimated district daily expenditures of about $1.5 million.

On property sales and one-time sources, staff said the forecast includes proceeds from property transactions only as forecasted revenue, not as realized cash, and will be removed if closings do not occur by June 30. "We have recognized, as of January 31, $9.3 million," a presenter said, and staff said the forecast also includes approximately $10.1 million expected from two additional sales (the northeast land and a bond-related transaction) if they close by June 30. Officials cautioned those amounts remain projections until closing.

Staff noted several one-time uses drawn against the operating fund, including a $4.2 million transfer into the district healthcare fund and approximately $1.3 million in annual contributions to sinking funds for outstanding maintenance tax notes tied to projects such as the El Paso High maintenance tax note. The presentation said roughly $9 million remains set aside in the facilities and construction function specifically for El Paso High work, including about $3 million for vestibules work described in the packet.

Trustees and staff focused on accounting treatment. Trustee questions prompted staff to clarify that the forecast is prepared on a modified-accrual basis and includes projected revenues and expenses through June 30; property sales are included as forecasted accrual amounts only when staff judges their realization to be "more likely than not," but staff said they avoid representing unclosed sale proceeds as cash in the bank.

Public comment during the workshop tied to budget pressures. Ross Moore, identified in public comment, criticized the numbers and warned that limited compensation increases and strained working conditions could drive staff departures. "Real bluntly, those numbers look for voting at best, and that's being polite," Moore said, adding that staff workload, conditions of work and retention should be priorities.

Legislative uncertainty: staff ran two revenue scenarios tied to the unfolding House Bill 2 negotiations. Under current law assumptions, staff showed a roughly $20.5 million reduction in state revenue compared with the prior adopted budget; a committee substitute to HB2 producing a $220–$395 per-student increase in the basic allotment could reduce the district’s projected state shortfall substantially in staff models but would come with strings. Staff emphasized the committee substitute language that House leaders proposed would require a portion of any basic-allotment increase to be spent on compensation; staff said the bill’s draft allocates about 40% of a basic-allotment increase to compensation and roughly 75% of that compensation-focused portion would be required to flow to classroom teachers. Trustees asked staff to model the net fiscal impact after subtracting the portion of new state funds that must be used for compensation.

What was not decided: The workshop produced no formal board votes. Staff described planned next steps: a revised forecast in June after year-end transactions and another budget workshop on April 22 focusing on compensation and healthcare, and staff said they will return with updated numbers after the Legislature and after any property-closing activity.

Ending: Trustees asked staff for clearer line-item comparisons, historical department reductions and the tax impact of any proposed changes. Staff said cabinet members would present proposed reductions for additional review and that the district will continue to use conservative assumptions while updating the board as new information arrives.