NEISD budget study: planned staff reductions, health-plan outlook and HB2 funding changes

At a budget study session, Susie Lackhorn, executive director of finance and accounting for the Northeast Independent School District, told the Board of Trustees the district is proposing central-office and campus staffing adjustments to reduce costs and presented an initial forecast for the district’s self-funded health plan and the expected impact of recently passed state education legislation (House Bill 2).

Lackhorn summarized staffing changes that have already produced savings in prior years and identified further reductions for 2025–26. She said the district eliminated 24 central-office positions last year, producing about $1.6 million in savings, and that for 2025–26 the district has identified roughly five central-office position reductions plus restructuring that together represent about $462,000 in savings at the time the slides were prepared. For campus staffing, Lackhorn said projected reductions include 110 teacher positions (estimated savings about $7.9 million), 14 nonteaching professionals and 27 campus assistants; she presented total multi-year savings figures she characterized as roughly $4.0 million to the general fund and $5.8 million across other funds.

On health benefits, Lackhorn said approximately 71.2% of eligible employees participate in one of the district’s medical plan options. She reported medical and prescription costs increased in plan year 2024 by about $3.6 million (with prescription costs driving most of the increase) and cited Blue Cross Blue Shield projections of a 7.9% increase in medical and an 11.4% increase in prescription costs for plan-year 2026. The district’s health-insurance fund is projected to end fiscal year 2025 with about 3.8 months of fund balance; the 2026 budget shows a projected loss of approximately $1.8 million on roughly $85 million of cost while remaining above three months of fund balance. Based on current projections, staff recommended no change to employee premiums for the coming year and said the board will revisit compensation after further analysis.

Lackhorn provided a legislative update on House Bill 2 and related bills that passed the session. She said HB2 includes an increase to the basic allotment (funding per student), changes to the teacher retention and classroom teacher allotments, a new allotment for certain fixed costs (transportation, utilities, insurance, payroll taxes) funded by enrollment rather than average daily attendance, and higher rates and an extra tier for the Teacher Incentive Allotment. She said the bill contains a $1,000 reimbursement line for each initial special-education evaluation completed, changes to pre-K funding rules (including a pathway for children of qualifying classroom teachers to be eligible), increases to school-safety allotments (from $10 ADA to $20 ADA and from $15,000 to $33,540 per campus), and other provisions affecting career and technical education and CCMR outcomes. Lackhorn cautioned that many details will depend on commissioner rulemaking and that the bill contains several non-funding mandates that need further review.

Board members asked staff for follow-up on specific points. Trustees asked how much of the staffing changes would be absorbed through attrition (Lackhorn said attrition would account for the reductions), whether enrollment decline or consolidations drove teacher reductions (she cited a mix of consolidations, projected enrollment loss and a secondary staffing-formula redesign), and whether the $1,000 evaluation reimbursement applies to private-school evaluations (Lackhorn said the language appeared to apply to every initial evaluation completed). Trustees also asked staff to confirm tax-reporting implications for employees who shift to hospital-indemnity coverage; Lackhorn said staff would research the 1095 tax-letter and follow up by email (the district’s counsel/staff were assigned to provide the confirmation).

Lackhorn and board staff repeatedly cautioned that the district’s final compensation proposal would be presented at the next regular board meeting after more complete analysis of HB2’s language and commissioner rules. She said the district is not recommending changes to employee health premiums at this time.

The discussion spanned central-office realignment, campus staffing thresholds and contingency plans tied to projected fall enrollment; staff noted that if enrollment comes in higher than projected the district would use contingency funding to hire additional teachers. Lackhorn emphasized the uncertainty created by pending TEA rules and ongoing review by school finance experts across the state.

No formal budget action or vote was taken at the session; the board will consider compensation and any recommended budget changes at a future meeting.