Rockwall ISD trustees hear budget workshop on school funding myths, projected deficit and possible reductions

Rockwall Independent School District trustees on Tuesday heard a budget workshop that reviewed how commonly cited per‑student funding figures are calculated, explained why Rockwall ISD receives less maintenance and operations (M&O) revenue per student than nearby districts, summarized pending state legislation that could affect district revenue, and laid out a three‑phase plan of revenue and cost adjustments to address a projected deficit.

Finance Operations and Technology staff member Mr. Carter led the presentation and told the board that broad figures often cited — such as the $15,503 per‑student number appearing in the Texas Education Agency (TEA) annual report — include debt service, one‑time federal COVID relief and other items that are not available for day‑to‑day classroom operations. "We've never spent more on public education than we ever have before," Carter said when describing how headline totals can mislead about what is available for instruction.

The workshop contrasted those statewide aggregates with M&O funding, which Carter said is closer to $10,400–$10,800 per student on average across Texas after removing items not available for operations (debt service, certain non‑cash accounting adjustments and one‑time federal dollars). For Rockwall ISD specifically, Carter said the district received about $8,500 per student in 2022–23, compared with roughly $9,800 for surrounding peer districts — a difference he estimated at about $1,284 per student or roughly $25 million annually if Rockwall had the same per‑student revenue as peers.

Carter explained components that affect those comparisons: about $13.4 billion of the statewide total is for interest and sinking (I&S) debt service; roughly $2.7 billion is an accounting adjustment for Teacher Retirement System (TRS) contributions that does not represent cash flowing to districts; and TEA counted nearly $14.1 billion in federal dollars in 2022–23, much of it ESSER (COVID relief) funding that has since expired. He also discussed "recapture" (local property tax revenue the state takes and redistributes) and said the chart TEA publishes can double‑count some flows, making headline per‑student figures appear larger than operational funding available to districts.

On the legislative front, Carter summarized current proposals the district is tracking: Senate Bill 2 (education savings accounts), House Bill 2 (a broader school finance bill that would increase the basic allotment and change minimum teacher‑pay requirements) and Senate Bill 26 (which tiers pay increases by district size). He gave examples of possible outcomes: an increase to the basic allotment in HB2 of $220 would be far short of restoring 2019 buying power, and changing the mandatory share of district spending on teacher pay from 30% to 40% would translate to an estimated $1,200 average pay increase in Rockwall under the bill as drafted. Carter also explained proposals for additional property tax relief in the current session and warned that language as drafted could leave Rockwall ISD exposed for bonds sold in 2023–24: he said the district sold $194 million in bonds in 2023 and $82 million in 2024 and that, without a hold‑harmless provision, the district could lose about $3.41 million in tax collections tied to those bond sales — an amount Carter estimated would require raising the I&S tax rate by roughly 2.38¢ to recover locally (about $100 per affected taxpayer under his example).

Turning to the district's internal projections, Carter gave a starting point of an $8.7 million structural deficit after removing one‑time items, and described ongoing budget pressures (staffing for growth, special education costs, transportation and inflation) that put the district in the neighborhood of a $10.5 million projected deficit in the near term. He also noted that Rockwall ended fiscal 2023–24 with a $5 million deficit and said current estimates put the district's overall shortfall at about $15 million without actions.

To address the gap, staff outlined a phased approach. Phase 1 (immediate/current year) focuses on revenue generation and near‑term adjustments: modest fee increases (gate receipts, facility rentals, meal prices), grant reclassifications, strategic use of fund balance, and contract renegotiations. Phase 1 items identified so far total roughly $2.3 million of additional revenues and $1.9 million of cost reductions, though about half of the revenue and $650,000 of cost savings are one‑time.

Phase 2 (next fiscal year) includes options that would be pursued if state relief does not materialize: a possible voter‑approved tax ratification election in November 2025, expanded hiring freezes, changes to energy management, and studying student displacement policies (sending overflow students to other campuses when grade‑level capacity is reached) to avoid immediate hiring or portable classroom costs. Carter said student displacement would be complex to implement and would be researched well in advance.

Phase 3 (later actions) lists more severe measures that staff want to defer as long as possible: fees for participation in activities (transportation, fine arts, CTE, athletics), continued personnel reductions including potential RIFs, reducing district health‑insurance contributions, and program reductions or eliminations. Carter emphasized the district is vetting options and preparing implementation plans so that, if state funding and property‑tax relief fall short, the district will be ready to act.

Trustees asked clarifying questions during the presentation about the composition of state funding, recapture, and transportation optimization; Carter said staff will return with more specific proposals and comparative market data in April and May to support decisions. The board did not take any votes during the workshop.

The district's presentation materials and the recorded workshop were made available on the district's website and the board's Swagit archive, Carter said, and staff encouraged stakeholders to consult the "Where Does the Money Go?" webpage for the myth‑versus‑reality materials and one‑page summaries created by the district.