McAllen ISD trustees hear 2026–27 budget outlook; fund balance will dip after $16.9M payoff

McAllen Independent School District Deputy Superintendent for Business and Operations Lorena Garcia told the Board of Trustees during a budget workshop that the district remains in a strong financial position but will see a one‑time reduction in fund balance as it pays off a maintenance tax note that matured this February.

Garcia said the district closed the prior year with $152,000,000 in total fund balance and about $106,000,000 unassigned — which she described as the equivalent of roughly 152 days of operations — and that a $16.869 million qualified school construction (maintenance tax) note will be paid off this year, reducing the total balance. "It's just we're paying off debt," Garcia said, noting the payoff will cause the orange bar on the fund‑balance chart to fall but is not a sign of fiscal distress.

The presentation showed the district's revenue mix is split among local, state and federal sources; Garcia corrected a slide typo and said the federal share is 16%. She reported the current approved budget totals about $265 million in revenues and fund balance, with a debt‑service fund of about $13.9 million. State revenue projections were adjusted down by approximately $1.4 million after certified property valuations and third‑six‑weeks ADA calculations, while local tax collections rose about $5.18 million — producing a net surplus of about $3.73 million on the snapshot presented to the board.

Garcia cautioned that investment earnings, which once produced as much as $7.3 million in a year, are not a reliable long‑term supplement to the budget because interest rates have declined. She noted the district budgeted $5.2 million in investment earnings but said that figure is sensitive to market changes.

On fund‑balance categories, Garcia outlined five classifications (unassigned, assigned, committed, restricted and non‑spendable) and said the board has approved roughly $9 million in amendments this year — about half for stadium work and a $750 retention stipend for staff — plus technology, student programs and operations support. Even with these uses and the tax‑note payoff, she projected a June snapshot fund balance of about $121 million and an unassigned balance measured at roughly 139 days of operating expenditures, comfortably above Texas Education Agency guidance she cited (at least 75 days).

Garcia also presented preliminary assumptions for 2026–27 budgeting: planners are modeling a conservative 400‑student enrollment decline, a modeled $4.4 million decrease in state revenue under that scenario, and an assumed 3.2% property‑value growth for the tax template. She warned the state's Education Savings Account program could further reduce state funding if more students participate, estimating that a 1% migration could cost the district about $1.4 million; a 5% migration could cost about $7 million under the district's calculations.

On staffing and compensation, Garcia previewed options — from no general increase with targeted adjustments up to a 3% increase with adjustments — and said staff will return with market comparisons and a deeper analysis at the next workshops. "We'll look at compensation and provide comparisons so we are competitive as a district so that we can retain our staff," an unidentified board member said; Garcia agreed to include that benchmarking in future presentations.

No budget adoption vote was taken at the workshop. Trustees asked for additional breakdowns of assigned, restricted and unassigned fund balances, and staff said they would provide detailed category reconciliations for the board before subsequent workshops. The board adjourned the meeting at 6:22 p.m.