Round Rock Independent School District held a public hearing June 17 on its proposed 2025–26 budget and tax rate, during which district staff presented a “middle” budget the board will adopt now and amend in August once the Texas Education Agency releases final coding guidance for recently passed state bills, staff said.

At the hearing, Mr. Covington, a district staff member presenting the budget, told trustees the district is adopting a baseline budget by function codes now because TEA advised districts to do so until House Bill 2 (HB 2) and Senate Bill 4 (SB 4) are fully coded into state systems. “We are able to do the official budget into the function codes without HB 2,” Covington said. He said the district will return in August to amend the budget when HB 2 implementation details are available.

The budget as presented shows total revenues of about $461.0 million for adoption tonight and total proposed expenditures of about $472.4 million, producing a planned deficit of roughly $11.0 million that staff said they expect to eliminate after the August amendment. Covington said the district’s August estimate, which incorporates HB 2 assumptions, would raise total revenues to about $478.9 million and produce a small surplus of about $97,000.

Why it matters: The timing of state legislation and TEA guidance affects how districts can record salary and retention funding in official budget function codes. For Round Rock ISD, that timing determines when the district can legally and administratively encode HB 2-related pay increases and related state funding, and whether recapture liability changes.

Key assumptions and financial highlights
- Property values: staff used a 2% increase in property values from the Williamson County Central Appraisal District for projections.
- Enrollment and attendance: staff projected flat enrollment and a blended attendance rate of about 92%.
- State funding: staff said the district used the state basic allotment increase in its projections and is awaiting TEA guidance to code HB 2 salary increases into the adopted budget.
- Salaries and compensation: staff said HB 2 contains teacher retention elements that affect pay scales. Covington explained the district could not place HB 2-driven pay increases into the required function codes until TEA provided coding guidance; the board earlier approved the district’s compensation plan and the district has entered pay increases into payroll systems. An HR representative said, “you can’t provide retroactive pay increases for employees who are under contract,” and that pay increases already entered will be effective with the July payroll cycle; teachers would see changes reflected in their September checks.
- Recapture and state changes: staff said without HB 2 the district’s recapture liability would be roughly $9.85 million; under the district’s HB 2 assumptions that recapture projection goes away.
- Special programs and student services: the proposed budget increases funding for special education and dyslexia by approximately $3.0 million compared with the prior year, and raises instructional allocations overall.
- Reductions and savings: staff outlined about $10.4 million in reductions from the 2024–25 budget going into 2025–26, including reductions to other departments averaging about 10%; specific savings highlighted included reducing TAG teacher FTEs (from 58.5 to 53) to save about $324,000, freezing six police officer positions to save about $373,000, shifting capital positions tied to the bond to save about $985,000, and more-effective use of Title I funds (about $900,000).

Debt service and tax rate
District staff said the maintenance-and-operations (M&O) rate projection is based on the appraisal and growth assumptions and that the district is maintaining a flat interest-and-sinking (I&S) rate of 0.183 per $100 of taxable value to cover a defeasance payment and preserve future debt capacity. Covington said the district’s I&S assumptions include a defeasance payment of about $15.5 million and that the district’s June fund balance for debt service was roughly $116.1 million; principal and interest obligations for the coming year and related assumptions were presented in the hearing slides.

Food service (full-service fund)
Staff said the district’s food service contract has been approved by the Texas Department of Agriculture, that the district is not proposing meal price increases, and that federal reimbursement rates for the national school lunch program are higher for 2025–26. Staff reported the food-service fund balance dropped from about $7.5 million last year to about $3.3 million and that projected food-service revenues are roughly $20.1 million with expenditures of about $19.3 million, producing a projected surplus of roughly $902,000.

Other details and next steps
Staff noted several timing and technical constraints. TEA did not release the HB 2 function-code guidance before the district’s required June 30 budget adoption deadline; TEA advised districts to adopt budgets now and amend them when coding guidance is available. Trustees asked whether the district will need to re-post notices; staff said the budget would need to be re-posted in the paper only if the tax rate as amended comes in higher than previously posted. Trustee Landrum and others questioned the legality and precedent for adopting a budget that must be amended; staff repeatedly cited TEA guidance and the timing of state actions as the reason for the two-step process.

During the hearing trustees asked clarifying questions on the budget detail slides, including why bond-related expenses dropped compared with the prior year; staff explained that a large arbitrage payment tied to previously issued bonds (related to 2018 bond sales and pandemic-related slowdowns) contributed to higher costs in the prior year and that the comparable charge in 2025–26 is smaller.

Public comment and formal action
No public commenters had signed up at the start of the hearing; the board announced the public was allowed to sign up through the end of the meeting. The June 17 session was a public hearing; no formal board vote on the budget was recorded during the time stamped in the transcript. Staff said they are presenting the three budgets (M&O, I&S, and full-service) for adoption, with an amendment to follow in August when HB 2 coding is available.

The public hearing was adjourned at about 5:54 p.m.; the board scheduled to reconvene after a short break at 6:10 p.m.

(Reporting details are based solely on the June 17 public hearing transcript provided by Round Rock ISD.)