Seguin ISD hears large budget shortfall, lawmakers' proposals could shape raises and tax vote timing

Seguin Independent School District finance staff told trustees the district faces a structural shortfall heading into 2025–26 and that any pay increases for staff will depend heavily on how the Texas Legislature finalizes school finance bills and whether the district pursues a tax ratification election (TRE/VADER).

Chief financial information and budget presentation: Finance staff (identified in the meeting as "Bridal") presented scenarios that show an estimated $2.8 million deficit if the district adopts a budget similar to the current year without additional revenue or reductions. Under House Bill 2 as drafted during the session, Seguin ISD’s preliminary estimate of additional revenue for 2025–26 was about $4.23 million; the Senate version at the time of the presentation projected about $2.9 million. The presentation showed a range of possible compensation strategies: 3% across-the-board, 4% across-the-board, and higher blends that target teachers or hourly staff differently. The administration recommended a cautious approach because the Legislature had not finished action and TEA had not finalized compressed tax-rate figures.

Why it matters: The board must adopt a budget by its June meeting but the final revenue outlook remains uncertain. The Legislature’s proposals include increases to the basic allotment and other weights, and some proposals would require districts to dedicate a portion of any year-to-year funding gain to employee compensation. A TRE (often called a VADER in the presentation) would raise local revenue by adding “golden pennies” that require voter approval; that additional revenue would also be subject to the state’s compensation-spending rules if the legislation is enacted.

Key figures and scenarios presented: Finance staff reported the district’s estimated fund balance at the end of 2024–25 would be about $29 million under current assumptions. With projected budget additions (about $3 million in requests from campuses/departments) plus a 4% districtwide pay increase and the House Bill 2 numbers as then proposed, the district’s projected 2025–26 deficit would be about $4.3 million, leaving an estimated ending fund balance near $24.7 million. The district’s local policy requires a minimum assigned fund balance equal to 25% of annual expenditures (about $21 million under current estimates). The presenter emphasized that the board could amend the adopted budget later in the year if the Legislature’s final action changed revenue.

Compensation and the Legislature: The presenters described the House and Senate compensation proposals then under discussion. On the House side, an increase in the basic allotment plus a requirement that 40% of the district’s revenue gain be used for compensation (with 75% of that amount targeted to classroom staff) was under consideration; for Seguin that would have implied a required spend of roughly $1.2 million targeted to teachers, counselors, librarians and nurses. The Senate version the presenters summarized would provide different, smaller per-teacher increases targeted by experience band. The administration said they do not recommend committing to final raises until the Legislature and TEA publish final guidance and yields.

Tax ratification (TRE/VADER) timing: The presentation explained how local “golden pennies” work and that a successful TRE increases local collections but also generally increases the state’s guarantee calculations used in school finance. The superintendent and CFO said a TRE passed in November would affect 2025–26 revenue and therefore that outcome would change the size of any required compensation increase. The district planned to post tax-rate notices in June and adopt a budget at the June 17 board meeting; the formal tax-rate adoption would occur in August after TEA publishes the final compressed tax rate.

Next steps and board direction: Trustees were told budget amendments are likely after initial adoption because of pending legislation and a tight hiring market; the administration said it will bring a balanced budget proposal to the June meeting and will present updated compensation proposals only after legislative changes are finalized or if the board elects a TRE. Trustees and staff agreed to continue analysis and to bring a clear compensation plan for adoption only when revenue certainty increases.

Ending: The presentation closed with reminders about the June public hearing schedule and the district’s timeline to adopt a budget in June and set the tax rate in August once TEA final figures are available.