District finance staff warn legislative package leaves little flexible money despite teacher pay items

Eagle Mountain Saginaw ISD finance staff presented an updated budget outlook on May 19 and told the board that proposed state funding changes give some targeted increases but leave the district with limited flexible revenue to plug a projected deficit.

Finance presenter Rob told trustees the district’s preliminary projection earlier in the budget cycle showed a roughly $10 million shortfall when the model excluded uncertain compensation increases. The district reported an estimated ending fund balance of about $70 million (roughly 103 days) without adjustments; that figure would fall under the $10 million gap scenario. A fiscal-calendar change adopted by the board will shift the district’s reported fund balance for 2025–26 to about $72 million (about 105 days), Rob said.

Rob summarized competing House and Senate approaches to school finance. He said the House-passed House Bill 2 would raise the basic allotment by $395 but that the increase would include restrictions (40% explicitly required for compensation) and carry new spending requirements; the Senate committee substitute for HB2 reduced the basic allotment increase to about $55 and folded in a teacher retention allotment modeled by an earlier Senate bill.

“House Bill 2 had an increase of $395 to the basic allotment,” Rob said. “The committee substitute for HB2 provides a $55 increase to the basic allotment… It does include the teacher retention allotment model.”

The committee substitute incorporates a teacher‑retention allotment that would direct raises to teachers based on district size and years of experience — a program Rob said would provide materially different dollar amounts for districts under 5,000 students versus larger districts. For larger districts (5,000+ students) he described tiers that would be smaller than those used for smaller districts; the district is analyzing implications.

Trustees and staff described the package as constrained. Superintendent Hollingsworth and Board President Tolbert both characterized some proposals as effectively “restricted” funding that does not address other staff categories or operational needs. Tolbert said the structure amounts to a “bait and switch” because it ties money to narrow purposes while leaving broad operating pressure unaddressed.

The district also flagged other bills and changes that could affect local revenue and expenses: a proposed increase to homestead exemption (Senate bill language under consideration) that the state would fund through the formula could alter local tax collections and equalization, and the governor‑signed voucher law (effective 2026–27) and recent school‑safety allotment proposals could change funding and requirements. Rob said the district will wait for the legislature to finish and then re‑model the budget before the June 16 budget workshop.

Why it matters: staff said even if the legislature sends some new education dollars, strings and formula mechanics can limit local discretion, so the district must plan for constrained flexibility while monitoring voucher administration guidance from the Comptroller’s Office and final legislation by the end of the regular session. Rob said the district’s next formal budget steps will follow the close of the legislative session and a June 16 budget workshop.

Ending: trustees asked administrators to return with scenario analyses on procurement/schedule tradeoffs for capital projects and a reworked budget reflecting final legislative actions after June 2, when the legislature is scheduled to adjourn its regular session.