Canyon ISD reviews budget pressure from HB2 teacher retention allotment and rising costs

CANYON, Texas — Canyon ISD trustees heard a budget workshop June evening outlining how new state teacher-retention funding and rising operating costs affect the district’s multi-year finances.

The presentation, led by Leila Dothbello, staff member, and introduced by Dr. Flusche, staff member, reviewed the district’s current fund balance, projected deficits, enrollment estimates and the district-level implications of House Bill 2 (HB2), the state teacher retention allotment.

The presentation matters because HB2 alters how some raises are funded and because the district is forecasting a multi‑year budget shortfall that will influence decisions on salaries, staffing and services. According to staff, a projected budgeted deficit for the current year is roughly $6,000,000 and, if unchanged, would reduce the district’s fund-balance cushion to the required minimum in about 4–5 years.

Leila Dothbello walked trustees through the district’s revenue and expenditure structure and fund-balance math. “If your revenue is larger than your expense, you have an excess budget,” she said, using that framework to explain why conservative enrollment and revenue assumptions are being used for planning. Staff reported an audited fund balance (most recent audit) that leaves a padding they described as approximately $27,000,000 above a stated minimum reserve of about $23,000,000.

On HB2 funding, staff summarized the law’s payment structure as presented by the Texas Education Agency data the district received: the state estimates a teacher retention allotment for Canyon ISD of about $3.3 million to cover $2,500 for some early-step teachers and $5,000 for more-experienced teachers. Staff also noted an additional $45 per average daily attendance (ADA) instructional support allotment estimated at roughly $493,000, based on the district snapshot ADA figure used by the state. Dr. Flusche said the $45/ADA allotment “specifically excludes admin and then, like, central office leadership.”

Staff showed multiple modeled compensation scenarios — from doing only the pass-through steps required by HB2 up to district-funded percentage raises (1%–2.5%) across all staff. Dothbello reported the district’s payroll base and calculated that adding the teacher steps plus a 2% across‑the‑board increase for other staff would raise total payroll expenditures materially; she summarized the incremental cost estimates for 1%, 1.5%, 2% and 2.5% scenarios and stressed that the state-provided amounts do not cover employer-side costs (TRS, unemployment and workers’ comp at an estimated 10.25%).

Trustees asked clarifying questions about timing and mechanics. Dr. Flusche told the board that the district must decide on compensation in July to permit staff to produce final budget numbers for the August budget adoption and tax-rate actions. “You have to decide on salary so we can see how much that affects budget,” Dothbello said.

Board members and staff discussed alternatives including one‑time lump-sum payments versus permanent salary increases, and whether to prioritize certain job categories (for example, campus administrators, counselors, nurses and other non‑classroom staff). Dothbello said districts sometimes use one‑time lump sums in tight years, but cautioned that lump sums can create ongoing expectations if repeated.

No motion or vote occurred. Staff were directed to produce updated scenarios and to provide numbers trustees requested for the July board meeting (including modeled costs of applying $5,000 to campus administrators and options for targeted or across-the-board increases). Trustees agreed to schedule additional budget discussion time ahead of the July 14 regular meeting where a pay decision is expected to be made and then incorporated into the August budget adoption process.

The workshop also reviewed enrollment snapshot figures used for state funding (staff reported 11,492 students in the most recent snapshot and an estimated 11,645 for the coming year) and noted inflationary pressures on insurance (estimated 15–20% increase) and utilities (about 10%). Staff said the district is transitioning financial software this year and will incur one-time transition costs from running both systems concurrently.

Trustees said they want more comparative compensation data and a possible updated salary study to benchmark Canyon ISD pay scales against similar districts. Dothbello offered to run additional scenarios and provide detail on how many staff would fall into each HB2-funded category and the employer-cost impact.

Next steps: staff will supply the requested cost scenarios before the July meeting; trustees plan to decide on compensation strategy in July so the budget can be finalized and adopted in August.