Conroe ISD Preparing for Possible Shortfall in 2017-2018 Budget

CONROE, TX — The beautiful thing about fund-base accounting is that the balances can change from year to year. Conroe ISD is expecting a $3 million operational surplus for the 2016-2017 fiscal year, but the district is preparing for the possibility of a $22 million shortfall for the 2017-2018 budget year.

How is it possible that a district can go from up one year to down the next, overspending, bad management? Those would be the obvious suspects, but in this case they aren't applicable.

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Conroe ISD's budget is about to take a hit because of a property value double whammy. Since property values have risen so rapidly over the last five or six years the state of Texas has decided to reduce funding to Conroe ISD.

The funding reduction is part of Texas' infamously convoluted Robin Hood school finance plan, which was passed in the 1990's and takes state money from property rich school districts and gives it to property poor school districts.

Since property values in Montgomery have been going up at about 8 percent per year for something like the last 10 years, the state of Texas has whittled Conroe ISD's payments down pretty far.

Last year, only about 1/3 of the district's operating revenue came from the state of Texas. Next year it's expected to be even less than that. If property values were growing at the rate they were four years ago, back before the price of oil bottomed out, a reduction in state funding wouldn't be a big deal for Conroe ISD.

However, since West Texas Crude isn't expected to clear $50 a barrel until well after Donald Trump or Hillary Clinton take the Oath of Office, property values in Montgomery County have begun to slip.

It seems that early estimates from the Montgomery County Central Appraisal District put property valuations increasing by about 6 percent this year.

The one-two punch of decreased state funding and dropping property values could lead the district to enact a wage/hire freeze, raid the fund balance or consider alternative forms of revenue heading into the 2017-2018 school year.