SCUCISD budget workshop previews child nutrition, property-value effects of new homestead exemptions and tax-rate options

Schertz-Cibolo-Universal City Independent School District officials on July 20 held a budget workshop to preview next year's budget, discussing the Child Nutrition Fund, preliminary certified property values and the expected effect of two new state homestead exemptions, and possible tax-rate scenarios the board could post before an Aug. 18 public hearing.

The session was led by Superintendent Maloney and Chief Financial Officer Brian Moy. Moy told the board the Child Nutrition Fund is "running right about where we're projecting for next year" but noted uncertainty about federal and state special grants added during the pandemic. "For the last several years, the lunch prices have gone up 10¢. This year, we're actually looking at a 20¢ increase in, meal bridal, and here's why," Moy said, explaining the district wants to avoid a much larger single-year increase if federal reimbursement calculations change.

Moy said the food-service program will run an approximate $2 million deficit next year because of a planned large kitchen/serving-line renovation at Samuel Clemens High School and other one-time purchases. That deficit, he said, will reduce the Child Nutrition fund balance by about $2 million to roughly 4.5 months of operations. Moy told trustees federal regulations limit allowable fund balances in child nutrition programs and that the district had filed a spend-down plan after COVID-era grants lifted balances in many districts.

Why it matters: the budget workshop tied those program-level decisions into larger revenue and rate choices. Moy said certified property values would not be available for about 15 days, but staff's preliminary data showed only modest growth before exemptions: Guadalupe County values were near flat (+0.2%) while Bexar County values increased by about $150 million in the portion of the district in that county, producing roughly a 1.7% net increase in taxable value before exemptions.

Moy and staff then described how two state bills would alter taxable values: Senate Bill 4 expanding the general homestead exemption to $140,000 and Senate Bill 23 expanding the additional over-65 homestead exemption from $10,000 to $60,000. Using the district's preliminary estimates, staff said those two exemptions could reduce total taxable value by about $877 million, or roughly 8% in the district's preliminary calculation. Moy cautioned those numbers are early and expected to be refined when appraisal districts finalize reports on July 25.

The projected decline in local taxable value increases the state's share of school funding under Texas's formula; Moy explained that some lost local collections would be offset by greater state aid but that the mechanics differ across funding tiers and by how the district sets its tax rates.

Tax-rate options and debt service: the workshop reviewed multiple combinations for the maintenance-and-operations (M&O) and interest-and-sinking (I&S) rates. Staff presented a scenario that would post a 12-cent increase to the M&O rate (to fund compensation and one-time capital items), paired with differing I&S rates. Moy said, "We know we're gonna make just under $29,000,000 of payments. That would leave us with 12,900,000.0 to use for a defeasance," referring to the district's ability to apply surplus I&S collections to reduce outstanding principal or to refund/refinance debt.

Staff outlined tradeoffs: keeping the I&S rate at the current level would preserve the district's existing state hold-harmless aid for older bonds but yield more local dollars to use on defeasance or refunding transactions; lowering the I&S rate could increase a new hold-harmless payment under the recent homestead changes but reduce local collections available for defeasance. Moy said refunding work planned for the fall could yield roughly 10% savings on the bonds being considered and that a refunding could produce about $15 million in interest-cost reduction over the life of the bonds, assuming no district contribution.

Fund balance and policy language: staff showed a projected general-fund ending balance of roughly $53.5 million in the worst-case scenario discussed (about 4.3 months of operations, about 32% of expenditures), above the district's CE(Local) target of 25%/90 days. Moy said he plans to bring suggested language to clarify what the board considers "operating expenditures" for the policy so that one-time capital purchases do not artificially inflate the operating-expenditure base used to calculate the percentage target.

Next steps: Moy told trustees certified property values should be available July 25, the district will meet with financial advisors July 31, and the board will hold a public hearing on tax rates Aug. 18 with the uniform election date for any voter approval election set for Nov. 4 if needed. Moy also said the district will post the state-required tax-rate notice and that trustees have time to refine the exact combination of M&O and I&S rates before final adoption.

Moy and other staff answered trustee questions throughout the workshop but no tax-rate or budget adoption vote occurred at the workshop; those decisions were left for future board action once appraisal and TEA guidance are finalized.