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Independent RSM review: $35 million drawn from general fund between FY21 and FY23; no impropriety found
Summary
RSM presented a multi-year review finding recurring deficits driven mainly by over-optimistic revenue assumptions tied to ADA declines; it reported a $35 million drop in fund balance from FY21 to FY23 and cited weak transparency and budgeting inputs.
An independent review by RSM—commissioned by the board in May 2024 and presented Jan. 30—found that Keller ISD used fund balance to cover recurring operating deficits and that conservative budgeting practices were not consistently applied in FY2021'FY2023.
RSM partner Leo Munoz said the district's general fund balance declined by about $35,000,000 from fiscal year 2021 through fiscal year 2023 and that the key driver was revenue shortfalls tied to average daily attendance (ADA) not matching the optimistic ADA levels used in budgets. Munoz said the review did not uncover evidence of financial impropriety.
RSM identified process issues: final budget decisions were sometimes made with limited participation from cabinet and finance staff; budgets relied on optimistic revenue inputs; and amendments during the year were used to address shortfalls once they emerged. RSM recommended more conservative revenue assumptions and improved transparency in budget inputs.
Trustees pressed RSM on whether the review found evidence of wrongdoing. "No," RSM said on the record, adding that the primary issues were assumption accuracy and governance of the budget process rather than fraud.
The board and RSM plan follow-up work to report proposed procedural changes to prevent repeat shortfalls.
