CFISD board warned of budget pressure as Legislature begins session; trustees press for homestead-exemption relief and special-education fixes

CYPRESS-FAIRBANKS INDEPENDENT SCHOOL DISTRICT — District finance and legislative staff told trustees Feb. 6 that long-term inflation, flat state per-student funding, declining average daily attendance and the expiration of federal stimulus funds have combined to create a large budget gap for 2024–25 and to influence planning for 2025–26.

Karen Smith, the district’s finance lead, reviewed state funding mechanics and the local drivers of the district’s projected deficit. She said the basic allotment remains $6,160 (last increased under House Bill 3 in 2019), that the district has held a 20% local optional homestead exemption for years and that special-population weights and average daily attendance directly affect state revenue. Smith listed major cost increases the district must absorb: a roughly $63 million effect from the local optional homestead exemption on the maintenance-and-operations side, about $15 million from a 2% drop in average daily attendance since the pandemic, and significant new operating costs to staff and run recently opened facilities.

Smith said the district previously used federal stimulus and higher interest income to blunt the deficit; those revenues have declined or expired. The adopted 2024–25 budget assumed use of some fund balance and included reductions of about $58.7 million; remaining projected deficits were described in the presentation (district slide figures cited by staff). She also reported a contested change in SHARS/health-reimbursement results: the district was informed it would receive less Medicaid-related reimbursement than expected and is appealing cost-report results that affect 2022 and 2023 filings.

Teresa (Theresa/Teresa spelled variably in the transcript) Holt, the district’s legislative liaison, reviewed items to watch during the 89th Legislature: the state budget, teacher pay proposals, a proposed expansion of education savings accounts, property-tax relief options and bills addressing special education and school safety. She noted that the comptroller’s January 13 revenue estimate left the legislative process workable but that final school-finance changes historically arrive late in the session. Holt flagged several bills of consequence to CFISD’s finances: proposals to increase teacher pay through a teacher-incentive allotment, possible changes to the safety-and-security allotment, Senate Bill 260 (safety allotment changes referenced), and Senate Bill 2 (education savings accounts) as having passed the Senate the previous night.

Trustees and Superintendent Dr. Killian said district leaders are urging legislators to recognize the local optional homestead exemption (a policy that has reduced local tax collections but been maintained to provide homeowner relief) and to consider special-education funding changes. Trustees noted that even reported increases for teacher pay or safety—if targeted narrowly—may not help other district payroll costs (bus drivers, aides, counselors, police officers and campus support staff) and warned that unfunded or underfunded mandates would force local cuts.

Discussion points included the district's request that state leaders consider a mechanism to reimburse or otherwise recognize the district’s longstanding optional homestead exemption, the need to preserve or increase special-education funding (Sen. Bettencourt’s proposals were mentioned), and the possibility that safety and security allotments would not cover local police costs.

No budget decisions were finalized at the work session; staff said they will prepare the district’s 2025–26 budget based on current law, monitor the legislature, and return to the board with updated revenue projections as bills and comptroller estimates settle.