Finance committee hears SHARS repayment options, enrollment dip and $80M financing plan; advisors warn of rating sensitivity

Harlingen CISD financial staff and external advisers briefed the Facilities & Safety Committee on several fiscal items that will affect the district’s near‑term budget and longer‑term borrowing plans.

SHARS repayment options: Staff said the Office of Inspector General identified an amount the district must repay for prior SHARS (school Medicaid) billings and presented three repayment options: pay in full, apply current SHARS reimbursements against the liability until paid, or request a payment plan. Staff recommended applying current and future SHARS billings to the liability (staff estimated that approach would clear the liability in roughly seven to eight weeks using routine receipts). Staff also said they will explore whether a long payment plan with no interest might be beneficial.

Enrollment and attendance: The business office reported a December enrollment of about 60,434 students, a decline of roughly 346 students compared with the prior year; staff said the enrollment variance translates to an estimated $2.1 million in lost revenue for the current fiscal year. Attendance projections were reported near the district target (about 93.02% actual versus a 94.5% target).

After‑school (Health) program: Staff presented fiscal results for the district’s after‑school Health program. Last fiscal year the program showed a $226,000 loss (revenues ~$434,000 versus expenditures ~$660,000). At midyear in the current fiscal year staff reported a roughly $58,000 shortfall and said, after tighter staffing controls, the year‑end shortfall may be nearer $120,000. The program currently charges $70 per month per child; staff proposed commissioning a market‑value study to evaluate rate increases and discount structures for families with multiple children. Staff suggested a potential rate in the range of about $100 per month would narrow the deficit but said they will return with a recommendation after the study.

Budget process and 0‑based budgeting: Staff outlined a budget calendar and said the business office will use 0‑based budgeting starting in January with principal and director workshops, then return to the board with updated proposals; budget submissions are due to the business office in early March.

Financing plan and bond market briefing: The district’s financial advisers — Naveen Hossa, Dr. Miguel Los Santos and Blanca Malloyanes — presented options for financing approximately $80 million in capital and maintenance needs (roofing, HVAC, parking, field lighting, doors/windows, security systems and similar projects). Advisers proposed combining multiple outstanding maintenance‑type borrowings and the new financing to produce a single annual payment and discussed two payment schedules (a level payment schedule and a schedule with lower payments in the first three years to soften short‑term general‑fund impacts). Advisers used a market assumption of about 3.8% for illustrative purposes and said timing for a potential sale is roughly February with closing in March, depending on rating‑agency feedback and market conditions.

Rating and fund‑balance concerns: Advisers warned that recent declines in the district’s fund balance (audited general‑fund balance shown in materials declined from roughly $48 million to about $17 million across the most recent audits) could affect the district’s credit rating, which in turn affects interest rates. The advisers said bond insurance could be considered (a one‑time premium) to stabilize credit and reduce borrowing costs if warranted; they also discussed shifting amortization schedules to limit immediate budget impact.

What the committee directed: Committee members supported staff pursuing option 2 for SHARS (apply current billings), asked staff to complete the after‑school market study before recommending a rate change, and endorsed continued work with the financial advisers to refine the proposed financing structure and timing for a potential February sale. Several board members emphasized that employee compensation remains the top budget priority as the budget process advances.

Ending: Staff and advisers will return with detailed recommendations: (1) a SHARS repayment implementation plan, (2) results and recommendations from the after‑school market study, and (3) a refined financing plan that models multiple amortization schedules and the costs and benefits of bond insurance.