McAllen ISD budget workshop lays out shortfall, House Bill 2 changes and $3.1M in proposed capital work

McAllen Independent School District officials on Wednesday presented a proposed 2025–26 budget built on current law and the district’s latest assumptions while flagging a roughly $8.9 million worst‑case gap that may be narrowed by new state allocations from House Bill 2.

The district’s chief financial presentation, led by Joel Garcia, chief financial officer, showed estimated revenues under current law of about $96.2 million in local revenue, $130.2 million in state revenue and $26.7 million in federal revenue. Garcia said the budget used an average daily attendance (ADA) assumption of 17,685 students, a decrease of about 32 students from the current year.

Why it matters: administrators said payroll is roughly 75–80% of district spending and that recurring salary and benefit increases are the largest drivers of the shortfall. The board will adopt a budget and publish notices on a June timeline required by the Texas Education Code.

Key budget items and costs presented

- Salary models and teacher compensation: the presentation showed several salary‑increase scenarios (2%, 3%, 4%) and estimated costs. The slide deck also included the proposed teacher retention increase tied to legislative action; administration warned that final costs will change pending TEA guidance on which positions qualify for teacher allotments.

- Health insurance: administration reported a projected shortfall in the self‑funded health plan of about $4.8 million for the coming year. Garcia said moving to a single plan design, benefit adjustments and selecting a third‑party administrator could reduce the gap; the district plans interviews of TPA bidders.

- New positions and stipends: the budget includes proposed new positions (4 middle‑school bookkeepers, 1 middle‑school mariachi teacher, 1 fine‑arts coordinator, 1 behavior specialist and 1 marketing specialist) with a combined annual cost of $462,768, and estimated stipend increases totaling $582,569.

- Capital improvement projects: the presentation listed replacement of turf and track at Veterans Memorial Stadium at about $2.5 million and an overall estimated capital need of $3.1 million (to be drawn from fund balance, not the operating budget). Superintendent Dr. Gutierrez and trustees debated timing and whether some projects could wait for a future bond; trustees and staff emphasized the turf and track work as a safety priority.

How new state funding factors in

Administration reviewed early models of House Bill 2 and said the district could see sizable, but partly restricted, new allotments. Lorena Garcia (finance staff) summarized proposed new allotments including a “teacher retention allotment,” a basic/all‑purpose cost (ABC) allotment, special‑education evaluation funds, and a support‑staff retention allotment for non‑teacher positions.

Garcia said some new money is dedicated to specific uses (for example, special‑education evaluations and safety allotments) but that, cumulatively, the district expects roughly $5 million in new flexible funding after reserved amounts are applied. She added that the ABC allotment can be used for transportation, utilities, insurance and employer benefit costs — which could free general‑fund dollars for salary or planning‑period costs.

Administration’s budget summary and next steps

Garcia presented a summary that started from a projected deficit scenario of roughly $2.3 million under current law and, after proposed increases (new positions, health insurance, a 3% salary proposal, stipends), showed a worst‑case exposure near $8.9 million. He emphasized that some costs can be shifted across funds (food service, federal programs) and that pending HB2 allocations could materially reduce the gap.

The board will publish the proposed budget and hold a public hearing on June 24, with the legal adoption deadline of June 30. Administration said it will update the budget in the next workshop once final House Bill 2 spreadsheets and TEA guidance are available.

Quotes

"This is using current law... we need to break that down so that we can develop a proper budget," Joel Garcia, chief financial officer, said while reviewing the proposed figures.

"One of the proposals was increasing [employer contribution] by $55 per month... this will translate to a cost for the district of about a little bit over $2,000,000," Garcia said about options to reduce the health‑insurance shortfall.

"There is a lot going on. There's a lot going on," said a facilities presenter while explaining the district’s heavy use of athletic fields and the rationale for seating and press‑box upgrades at MacKay and Nikki Rowe campuses.

Ending

Administrators said they will return with revised budget models as final state spreadsheets and TEA rules become available. Trustees directed staff to continue identifying cost‑reduction options and to present one or more balanced budget scenarios at the next workshop.

Votes at a glance

- Adjourn meeting: motion passed by voice vote at the close of the special meeting; exact roll‑call tally was not specified in the transcript.

Sources: Budget presentation slides and spoken remarks in the McAllen ISD special board meeting, May 28, 2025.