Pasadena ISD CFO warns declining enrollment, lower taxable values leave $29M gap ahead of budget adoption

Pasadena Independent School District trustees heard a budget workshop June 17 in which Chief Financial Officer Dr. Timika Alford-Stevens outlined a proposed 2026–27 budget that forecasts a material gap between projected revenues and planned spending.

Dr. Timika Alford-Stevens, the district’s chief financial officer, told trustees the district is projecting roughly $162 million in locally generated revenue, about $360 million in state funding and about $7.2 million in federal funds for a combined revenue forecast she reported as approximately $528.6 million for 2026–27. She said the draft general fund budget now shows an estimated shortfall of about $29.2 million compared with prior drafts and that the district “can no longer rely on the fund balance to sustain our ongoing operations.”

The CFO explained how the state’s Foundation School Program determines an entitlement amount for the district and then applies local property tax collections against that entitlement. Using a numeric example, she illustrated that when taxable values fall — she cited a working example that reduced taxable value from $19 billion to $16 billion — the relative share the state must cover shifts but the overall entitlement remains fixed unless the legislature increases it. “We’re saying we need a bigger cup,” she said, urging lawmakers to raise the entitlement rather than simply shifting percentages between local and state shares.

Why it matters: the district’s maintenance-and-operations revenue is sensitive to property-tax rules, compression and exemptions; Dr. Alford-Stevens said those statewide adjustments mean higher local property values do not automatically translate into more available funding for local operations.

On staffing and cost reductions, the CFO said the budget team developed districtwide staffing guidelines and is planning attrition-based “right-sizing” that is projected to yield about $30 million in savings; additional non-payroll operational reductions are estimated at about $2.1 million. The draft does not include a districtwide general pay increase, though step increases for eligible employees are included. A district leader thanked staff and said the district remains open to revisiting compensation if financial projections improve.

Trustees pressed staff on fund-balance targets and timelines. The CFO said there is no statutory minimum fund-balance requirement in Texas but noted board policy sets a reserve target of roughly 12.5% (about one month) and that common best-practice targets are 60–90 days. She reported the district expects to end 2025–26 with just under three months of reserves under current projections.

Enrollment and program efforts: the CFO said the district is forecasting 42,674 students for planning (about 1,300–1,400 fewer than current counts) and expects average daily attendance of about 92%. Staff reported outreach for an expanded virtual program produced 187 interest forms, with 97 advancing and 47 new-to-district applicants; district staff said they hope the program adds about 100 new enrollees at the start of 2026–27 and could generate modest fee revenue by serving students from neighboring districts.

Next steps: Dr. Alford-Stevens said a public budget hearing will be held at the regular board meeting next Tuesday and that the board must adopt three budgets (general fund, child nutrition and debt service) before July 1. The proposed tax rate will be presented later after certified property values are finalized. The board took no formal budget votes at the workshop; Trustees Nelda Sullivan and Marshall Kendrick moved and seconded a motion to adjourn, which carried.