Devine ISD Board grapples with budget deficit

The Good – Paying Off Debt

In 2018 Devine ISD will pay off two debts: the 2009 Unlimited Tax Refunding Bond Series which started at $3,045,000 and was used for the Libraries at the high school and elementary, HS Science, 3rd grade wing, and Cafeteria renovations at the elementary & intermediate campuses; and the 2003 M&O QZAB (Qualified Zone Academy Bonds) of $1,000,000 which was used for construction/renovation of the Ag buildings at the high school in 2003 (It is always Good when a debt is paid in full!)
Devine ISD also has a healthy fund balance with reserves over $8.8 million.
– Fortunately, for years, DISD has been saving any yearly leftover reserves in the General Fund balance and they will be able to use those funds to compensate for the deficit and still leave a healthy fund balance.
That will also allow them to maintain all school positions within the projected budget. The final budget will be up for approval at the next School Board meeting on June 19th.
In regards to filling all of the positions of teachers who have resigned or retired, Ramirez explained, “We were able to make it work. We will have more than enough, but for the 17-18 school year we will have to dip into our reserves a little bit.”
The Bad – Unpaid Delinquent Taxes and more
A number of issues, including projected lower property values, delinquent taxes, and no new school finance legislation, have made a big impact on the proposed Devine ISD Budget for the 2017-18 school year which includes a projected deficit of $257,378.
– The killing of Texas House Bill 21 of the Public School Finance legislation means that school districts across the state will not get an increase in funding for the next two years. (This puts an even heavier burden on local funding.)
Finance Director Shannon Ramirez did point out that over a million is funded by federal grants, which have not been officially announced.
“If any of these grants are declined, or reduced, we will have to take that from the general budget,” Ramirez explained.
She further explained after the meeting, “The Board adopts three funds: The general, cafeteria, and debt service. We have other funds that are grant based and those budgets are not adopted by the board. We will know some of the federal grant amounts this week. Most of these grants pay salaries. If any of these grants decrease, the difference to make up the salaries hit the general fund.”
– Projected 2017-18 Property Values are lower than the preliminary 2016-17 values that are still to be finalized by the state.
In 2015-16, property tax values in the Devine ISD school district were $403,575,591.
That rose over $18 million the next year. Property tax values in the district were $421,978,638 in the 2016-17 school year. Projected preliminary values declined slightly by $1.6 million to $420,295,488 for the 2017-18 school year.
– Delinquent Taxes owed to Devine ISD currently stand at $920,000, with half of that from the 2016 tax year (when we saw property tax values in Devine school district rise by over $18 million).
“It seems like we had more protests this year,” one board member noted.
“The values went up a lot last year,” added board member Wes Herring.
“It seems like most people who went in to protest got a little something though,” noted Nancy Pepper. “Some went in to talk to them and came out with lower amounts than they had before.”
Pepper pointed out that our projected revenues looked really good last year, but as our local projected revenues went up, our state revenues declined proportionally.
Pepper explained that when our local projected tax revenues go up, “The state says ‘Oh you’re projected to get more local revenues, so we are going to take away some of your state revenues.”
“But then we cannot always collect the local taxes?” another board member asked.
“Yes,” replied Ramirez.
Ramirez further clarifies by email that “As property taxes rise, it shifts the revenue burden to the local district by reducing the amount of state aid and making us more dependent on our tax collections.”
The District works with Tax Attorneys and the County on collections. Because the State allocation numbers are based on the projected (not actual) property tax collections, unpaid taxes greatly affect the revenues for the district. When there are unpaid taxes, the state will not adjust the increase in funding; they only go with the projected amounts. The General Fund Revenue Sources are over 70% from the State, 29% Local, and <1% Federal. (It is interesting to note that if even less than one third of these delinquent taxes were paid, there would be no budget deficit!) The Ugly – Budget Deficit DISD Director of Finance, Shannon Ramirez, presented the Proposed Budget packet and explained factors supporting the numbers and the ways her staff and the administration worked together to make adjustments. (Note: The Texas Education Agency regulates all accounting and business practices and has created the accounting structure that all school districts are required to use.) - The 2017-18 Budget reduced expenses by $488,870, which included no vehicle purchases and a $105,000 reduction in the technology budget. This technology reduction was possible because of the current initiative still in place and the past three years of upgrading the systems by IT Director, Scott Pesato and his staff. The 3 year technology initiative is concluding this current school year. - The DISD Budget Summary shows a deficit of $257,378, of which $196,000 is an increase in salaries, and $59,597 from the Debt Service fund. As noted previously, this deficit will be covered by the General Fund balance. By Nancy Saathoff and Kayleen Holder