Waco ISD CFO outlines legislative funding changes, projects roughly $7.2 million net revenue gain but warns of staffing and benefit pressures

Cheryl Davis, Waco ISD chief financial officer, reviewed major actions from the recent Texas legislative session and described the law’s effects on district revenue and spending.

Davis said the legislature did not enact the $8.5 billion package some had anticipated; instead House Bill 2 includes targeted allotments (teacher compensation, special education, safety and an allotment for basic costs). She summarized how those new and changed allotments will flow to districts, and explained how increases in homestead and over‑65 exemptions will reduce local property tax collections.

Why it matters: The combined state allotments and local tax changes will change Waco ISD’s revenue mix in 2025–26 and affect how the district applies one‑time and recurring funds to salaries, benefits and special programs.

Major takeaways - Teacher retention allotment: Davis estimated Waco ISD’s allotment at roughly $3.3 million to help fund teacher compensation increases. The state formula provides fixed sums (e.g., $5,000) for eligible classroom teachers; eligibility excludes teachers teaching fewer than four hours a day and does not cover benefits. Davis said the allotment must be applied to salary and cannot be paid as a temporary stipend. - Support staff allotment: The district is estimated to receive about $430,000 for non‑teacher staff salary increases; Davis noted that allotment is small relative to overall support‑staff pay needs. - Special education: The legislature will rework special‑education funding across tiers or intensities and fund initial full individual evaluations at $1,000 per evaluation; Davis estimated a roughly $622,000 state increase for special education in the near term but said many special‑education costs are already in the district’s baseline budget. - Allotment for basic costs: A new allotment of about $106 per enrolled student (based on enrollment) is intended to help with district operating costs such as benefits, payroll taxes and utilities; Davis estimated WISD could receive approximately $1.4 million from that allotment. - Property tax effects: Increases to the homestead exemption (to $140,000) and the over‑65/disabled exemption (to $60,000) will reduce local M&O collections. Davis estimated the exemptions would reduce the district’s local collections by roughly $3.9 million, partially offsetting some state funding increases.

Net fiscal effect and timing Davis produced a districtwide projection showing approximately $11.1 million additional state aid offset by lower local property collections, and a net estimated revenue increase of about $7.2 million. She warned that much of that increase is effectively earmarked: approximately $3.7 million will be required to cover teacher compensation increases and an additional amount will be needed for benefits tied to those raises.

Other notes and next steps - Davis said the competitive procurement threshold rose (from $50,000 to $100,000), which will reduce the number of formal bids the district must issue. - She reported the district’s projected operating deficit for the current fiscal year is smaller than the previously adopted $8 million figure and she estimated the near‑term deficit at roughly $6–7 million depending on final property values and appeals. - Calendar: Davis outlined the budget calendar and reminded trustees of statutory timelines for tax rate adoption and public notices in July and August.

Ending: Trustees asked for clarity about the distribution of allotment dollars and the district’s ability to cover benefits; Davis said the allotments and the district’s coding of employee roles (TEAMS/PEIMS) will be reviewed to ensure the district receives all eligible funds.