NEISD budget study: staffing cuts, health plan outlook and HB 2 funding changes under review

The Northeast Independent School District reviewed staffing reductions, the district's self-funded health plan and implications of the recently passed school funding legislation (House Bill 2) at a budget study session, district finance staff told trustees.

Susie Lackhorn, the district's Executive Director of Finance and Accounting, led the presentation and said the district has identified central-office and campus staffing changes that reduce costs and that the board should await additional analysis on HB 2 before finalizing a compensation plan.

Lackhorn described multi-year staffing reductions and savings: central-office changes included a set of position eliminations and reorganizations that yielded roughly $462,000 in the current update (she said five positions were identified in that change) and earlier reductions that amounted to about $1.6 million for 2025–26. Over several years, she said, the district realized roughly $4 million in general-fund savings and about $5.8 million across all funds from staffing changes. For campus staffing, staff presented a projected reduction of 110 teacher positions that would save about $7.9 million; reductions also include 14 non-teaching professionals and 27 campus assistants, with combined savings reported at about $10.2 million. Lackhorn said those campus reductions are being treated as attrition: "Everything will be attrition. ... This 110 positions will be, absorbed as we have to fill those and turnover."

On the district's self-funded health plan, Lackhorn reported that about 71.2% of employees are enrolled in a district medical option and that calendar-year 2024 medical and prescription spending rose, driven largely by prescription costs; she said Blue Cross Blue Shield projects a 7.9% increase in medical and an 11.4% increase in prescription costs for plan-year 2026 pricing. Staff recommended no change to employee premiums at this time: "We're not recommending any changes to our health insurance, so no increase to our employees," Lackhorn said. The health fund was presented as having a multi-month fund balance; staff projected the fiscal-year 2025 fund balance to end at about 3.8 months and presented a 2026 budget showing a modest loss (Lackhorn said a roughly $1.8 million shortfall against about $85 million in plan costs was projected for one budget view).

Lackhorn walked trustees through provisions in House Bill 2 as the district interprets them, warning that final rulemaking by the Texas Education Agency could change implementation. Key items she cited from the bill as currently understood include:

- A $55 increase in the basic allotment, funded in part by changes to the golden penny yield; adjustments to classroom teacher and teacher retention allotments. - Narrower statutory definition of "classroom teacher" (a teacher who teaches more than four hours per day). - A new allotment to fund nonadministrative staff raises and a new enrollment-based allotment to offset fixed costs (transportation, utilities, insurance, payroll taxes). - Special education changes, including a $1,000 reimbursement for every initial special education evaluation completed. "It just says a thousand dollars for every evaluation completed. So every initial evaluation completed," Lackhorn said. - Increases to the teacher incentive allotment (TIA) rates and the addition of a lower tier (reported as "acknowledged") so more teachers may qualify for some level of incentive. - An increase in the school safety allotment (presented as increasing from $10 per ADA to $20 per ADA and from $15,000 per campus to $33,540 per campus in the district's reading). - Career and technical education changes including increases to some multipliers (P-TECH multiplier cited moving from $50 to $100) and expanded reimbursement for certain certification exam costs.

On pre-K and tuition, Lackhorn said HB 2 would allow children of classroom teachers to be eligible for state-funded pre-K and would prohibit districts from charging tuition for those pre-K students; she said TEA rulemaking will determine details and implementation timelines and that the district expects it may take one to two years for some provisions to be operational.

Multiple trustees asked for clarifications during the presentation about attrition versus layoffs, fund balance calculations, tax reporting and how specific HB 2 provisions would be implemented. The board's finance staff said they would continue reviewing the full bill text (Lackhorn noted she still had pages left to read) and work with legal and policy staff to translate legislative language into district policy and budget recommendations. Trustees deferred a major compensation decision to the regular board meeting the following week to allow further analysis and rulemaking guidance to arrive.