Waco ISD CFO warns of multi‑million‑dollar deficit as legislative uncertainty continues

Waco ISD Chief Financial Officer Cheryl Davis briefed trustees on an evolving budget picture that she said includes an estimated $7.5 million deficit in the current year and a revised projection that reflects carryover and amended items. "We are looking at about a $7,500,000 deficit in the current year," Davis said. She told the board the district's revised budget calculations, enrollment projections and local property-value estimates could produce longer-term pressure and potential recapture obligations.

Davis reviewed revenue changes and one-time items that have helped in the current year: a roughly $1.6 million adjustment in the foundation-school program related to homestead exemptions and about $2.0 million in investment income above prior expectations. But she warned that special-education counts are rising and will likely require an additional commitment of roughly $1 million in district resources next year. Davis also said the district's preliminary estimate of recapture for next year is roughly $272,000, based on preliminary certified values and projected enrollment declines.

Trustees asked how pending state action on school finance and House Bill 2 might affect the district. Davis summarized staff analysis of the committee substitute for HB2: it includes significant teacher-compensation funding (statewide dollars that would, in staff estimates, generate about $4,087,000 for Waco ISD under the bill's formulas) but also leaves benefit costs and some implementation questions to local districts. "This would generate about $4,087,000 for the district," she said, adding that the district would likely face about $750,000 in additional employer costs for retirement and other benefits associated with that pay increase. Trustees asked whether the state funding is permanent and whether the district should treat increases as recurring; staff stressed much remained uncertain and that some increases are described as "permanent" in statute language but must be reappropriated biennially.

Davis described near-term actions staff will take to narrow the deficit: targeted cuts to supplies and materials (~$500,000), vacant-position reviews and using a portion of the district's fund balance to smooth the gap for one year. She also noted the district has one remaining year of free student-workbook coverage under the current contract, and staff will continue to refine enrollment and local-value assumptions ahead of final certified values. The board asked staff to return with a formal plan that pairs expenditure adjustments with monitoring metrics and contingency triggers.

What happens next: district staff will present a budget adoption proposal reflecting updated certified values, final legislative outcomes and any federal funding changes. Trustees asked for a follow-up timeline and a clearer menu of proposed reductions before taking adoption votes.