CASTLEBERRY ISD projects budget shortfall, moves amendments after Moody's downgrades bond rating

CASTLEBERRY ISD's finance team told the school board it is projecting revenue and expenditure shifts for the 2024–25 closeout and preparing a baseline 2025–26 budget while noting a recent credit‑rating action that could raise borrowing costs.

The matter is significant because the district's fund balance and projected deficit influence its bond rating, borrowing costs and the room available for personnel and facilities spending; the board voted on an intra‑fund reallocation at the meeting and will hold a public hearing and adoption vote on June 16.

William Wooten, the district's chief financial officer, presented preliminary numbers and assumptions. Wooten said the district adopted a $45,900,000 budget but now expects to collect roughly 94% of that total — "which is a $2,600,000 budgetary shortfall." He reported cost drivers including an estimated 10% increase in health insurance and a 10% increase in property insurance, and said the district expects to end the year with a small net positive fund change on a working projection: "the net change in fund balance will be 97, net positive fund balance of $97,500." Wooten also described a projected general fund collections figure in the mid‑$44 million range and said debt service collections are expected near $7.8 million.

Wooten told the board auditors had reported a larger deficit in audited numbers, and that difference prompted Moody's Investors Service to downgrade CASTLEBERRY ISD's general‑obligation bond rating by one notch: "Moody's downgraded our general obligation bond rating from a 2 to a 3," he said, and explained the agency had concerns about the size of a deficit and the district's fund balance falling below targeted levels. Wooten said the district's current fund balance is about 19% and that the board and administration are pursuing controls to return to a target above 20%.

To address projection and control concerns, the administration brought a budget amendment that reallocates resources between functions within the general fund (non‑salary operational allocations) rather than expanding overall spending. The board approved "budget amendment number 2 on the month ending 05/30/2025" by roll call; the motion carried 7–0.

Wooten said the administration has slowed discretionary spending and paused some encumbrances, and reiterated the plan to present a balanced budget for 2025–26: "what we're doing about it, we're controlling spending... Slow down spending." The superintendent noted that unknowns remain — in particular the possible effect of House Bill 2 on funding — and that the board will consider the final budget at the June 16 public hearing and adoption meeting.

Ending: The board approved the intra‑fund budget amendment 7–0; the administration will present a revised budget that incorporates the latest state actions and the results of the audit at the June 16 hearing before adoption.