Tomball ISD reports $70 million-plus in reserves; finance chief says district exceeds board policy minimum

Zach Boles, Tomball ISD chief financial officer, told the board on Feb. 11 that the districthas audited fund balances of more than $70 million as of the fiscal year ending June 30, 2024. "To meet the requirement of board policy CE local, we needed to have 3 months or 25% held in reserves under assigned or unassigned designation. At 70 just over 70,000,000, we do meet that requirement under board policy. We have 3.77 months available, and so that roughly estimates to, 31.4 percent of the current year's operating budget," Boles said.

The report, delivered during the board's regular meeting, broke fund balances into standard governmental accounting categories and explained program restrictions and board-authorized commitments. Boles said nonspendable balances were "just under a million dollars," restricted balances of about $3.1 million are tied to state Career and Technical Education (CTE) allotments, committed fund balances total roughly $36.9 million set aside for future construction, and assigned balances of roughly $1.3 million represent outstanding purchase orders. The unassigned, spendable balance was presented as about $68.7 million.

Why this matters: County and district officials and rating agencies look at reserve levels when evaluating a district's financial health. Boles noted Tomball ISD maintains a "double A plus" rating with Moody's, S&P and Fitch, which supports lower borrowing costs on debt. He said the fund balance provides liquidity to cover timing differences in revenue and expenditure cyclesfor example, the district receives much state funding in August and September and again the next summer while local property tax collections are concentrated later in the calendar year.

Boles also reviewed how fund-balance categories work in practice: restricted funds require release by the board before spending; committed funds require a board resolution to set aside and a board action to release; assigned funds are designated for specific purposes but are not formally committed by resolution. He told trustees the $36.9 million committed for construction came from prior actions in 2021 and included about $934,000 remaining from a prior strategic plan allocation.

Board and staff context: Superintendent Martha Salazar Zamora introduced the report and noted the presentation fulfills the annual requirement in board policy CE (local) after the district's annual financial report is approved. In response to a trustee question about self-insurance, Boles clarified that the district's self-insurance reserve is held in a separate fund outside the general fund and that premiums are budgeted in the general fund but housed in that separate fund.

The board did not take action on the fund-balance report; it was presented for information and compliance with policy. Boles told trustees the district is not recommending changes to reserve policy at this time because the Texas legislative session is in progress and that any future recommendations would come later in the fiscal year as legislative outcomes become clearer.

Ending: Trustees offered brief thanks and no follow-up action was taken at the meeting. The fund-balance presentation was one of several reports on the Feb. 11 agenda.