Laredo ISD workshop: House Bill 2 increases aid but district still faces $6.9M shortfall; trustees weigh set-aside and pay proposals

LAREDO June 2025 — Laredo ISD officials briefed the Board of Trustees on the districtbudget outlook under changes in state school finance (House Bill 2) and a set of proposed compensation changes, but said final coding guidance from the Texas Education Agency (TEA) is still pending and will affect how new state allotments are applied.

Chief financial staff and human-resources leaders told trustees the districtestimates the teacher-retention allotment in House Bill 2 will generate about $6.1 million for the district, and a new support-staff retention allotment (calculated at $45 per adjusted ADA) will generate roughly $721,125. An additional "basic costs" allotment (ABC) was identified as a new source that could be applied to near-term insurance funding, with an estimated $2.1 million available under current HB2 assumptions.

Despite those increases, the districtpresentation showed a projected budget shortfall of about $6.9 million under current-law reporting assumptions if trustees do not make offsetting choices. CFO Marcela Ayala told the board: "We are recommending that we publish the notice based on current law." She said that recommendation was to preserve flexibility while awaiting TEA rules that will affect how the new money is coded and reported.

Key policy changes discussed: the presentation summarized several significant HB2 changes as presented to staff, including: - a $55 increase in the basic allotment per student, which produces estimated gains for the regular program and other categorical allotments; - changes to special-education funding to an intensity-based model (the commissioner will set tiers) and adjustments to the dyslexia and compensatory allotments; - JROTC courses will now count toward CTE funding; P-TECH add-on funding increases; and early-education and bilingual program changes with new weights in some categories; - homestead-exemption increases under Senate Bill 4 and 23 that reduce local collections but are counterbalanced by state adjustments; and - the school-safety allotment rising toward approximately $1.3 million, which can be used for eligible safety-related costs including officer salaries.

Staff estimates and trade-offs: budget staff presented an illustrative compensation package that would add an estimated $12.8 million in recurring personnel costs, including market adjustments across pay structures, a recommended 3.5% midpoint increase and HB2-mandated teacher supplements (for example, year-3/4 and year-5+ teacher supplements). Ayala and compensation lead Gabby Rogelio estimated that HB2 funding will not fully cover those proposed increases; the shortfall after state funding would be roughly $5.9 million to $7.0 million depending on benefit-cost assumptions and which elements are included.

Fund balance and timing: staff told trustees the district currently holds an unassigned fund balance and other set-asides that provide roughly $8.8 million of discretionary cash. The district also maintains a two-month operating reserve equal to about $42 million. Staff outlined trade-offs: trustees could publish a budget under current law while adding compensation contingency language that would allow retroactive adjustments after TEA coding is finalized, or they could adopt a HB2-modeled budget once TEA issues final guidance.

Trustee discussion and requests: trustees debated the timing and transparency of publishing the proposed budget, with several members pressing for a single-page, easily understood summary by function (instruction, operations, etc.) and for the detailed placement scales that TASB used to propose the new pay structures. Trustees asked for: - a concise, published comparison of a current-law budget and an HB2-modeled budget for review; - a breakdown by major employee groups showing proposed minimum, midpoint and maximum pay after the recommended adjustments; and - concrete cost estimates for police compensation changes and associated stipends used by neighboring districts.

Staff direction and next steps: staff said they will prepare a one-page comparative budget notice for the board; provide pay-scale placement and the proposed salary tables; model the cost of substitute coverage and any additional stipends for police and other critical positions; and return with recommendations on whether to use fund balance to cover one-time shortfalls for insurance vs. incorporating costs into recurring budgets.

Ending: Trustees did not adopt a final budget at the workshop. Ayala reiterated the recommendation to publish a budget notice on current-law assumptions and to include contingency language in the compensation plan so the board can adjust once TEA releases final coding. Trustees asked staff to prepare clearer one-page and departmental breakdowns for final action before the end-of-June adoption deadline.