Northside projects $60 million FY26 shortfall; board weighing reserves and cuts as state alters school‑finance rules

Northside ISD Superintendent Dr. Kraft and finance staff told the school board that the district is projecting a roughly $60,000,000 general‑fund deficit for fiscal 2026 and a larger shortfall over the two‑year budget window unless the district adopts additional reductions or the state provides more funding.

The presentation to trustees focused on how a committee substitute of House Bill 2 and related legislation would alter state aid formulas and create new, narrowly‑targeted allotments. Megan, finance staff, summarized the package the Legislature circulated: a new fixed‑cost allotment of roughly $1.3 billion statewide and a teacher‑compensation increase that, for districts with 5,000 or more students, provides $2,500 for teachers with three to five years’ experience and $5,000 for teachers with five or more years of experience. The Legislature also set aside $500,000,000 for pay increases for other employees; staff estimated that amount would equate to about a 1–1.25% general pay increase if applied statewide.

Why it matters: trustees heard that the math still leaves Northside with a funding gap because the state changes do not increase the core basic allotment enough to cover rising costs. The district forecast that, under current assumptions, it would draw $45.9 million from its instructional‑continuity reserve in FY26 and borrow from unassigned fund balance for the remainder. To avoid using reserves entirely, staff said the district must find roughly $79.6 million in either additional recurring revenue or recurring reductions across the biennium.

What officials proposed and cautioned - Staff presented preliminary models showing FY26 general‑fund revenue of about $986 million against higher projected expenditures and a $60 million shortfall. The models assume continuing enrollment decline and a 94% attendance factor for ADA calculations. - Finance staff said the new fixed‑cost allotment (the “ABC” allotment in materials) could cover some benefit costs tied to teacher raises, but bill language was not final and the district did not yet know all allowable uses of that money. - Trustees and staff discussed possible ongoing reductions in staffing units and central‑office professional support, reductions already included in the FY26 model, and a continued zero‑based budgeting review of all departments.

Trustee and staff remarks - Dr. Kraft said the package is “hardly a comprehensive school‑finance bill” and warned it would not close the funding gap districts face. - Megan, finance staff, cautioned that the district’s figures are preliminary because full bill language, regulatory guidance and detailed state modeling were not yet available. - Trustee Freeman and others urged the district to be cautious about drawing reserves in the first year of the biennium and emphasized the need for public outreach to explain the gap to voters.

Next steps - Staff will finalize a compensation recommendation for board consideration and continue 0‑based budget reviews. The board asked staff to return with refined scenarios after bill engrossment and before final FY26 budget adoption in August, when the tax‑rate decision will be required.

Ending: Trustees were repeatedly reminded that the proposed state changes include teacher compensation but do not fully address rising benefit and utility costs; staff told trustees further legislative and regulatory detail is needed before final budget decisions are made.