HISD Budget Shortfall Projection Reduced To $115 Million

HOUSTON, TX — It looks like the Houston Independent School District could avoid a worst-case scenario in its 2018-19 school year budget. A revised deficit includes several budget assumptions related to Hurricane Harvey relief and pending litigation, slicing nearly $100 million from previously published forecasts.

Whereas the announced shortfall earlier this month projected the shortfall to be about $208 million, the revised budget now shows a $115 million shortfall

HISD first began budgeting for the 2018-2019 school year immediately after Hurricane Harvey hit in August of 2017. Using a worst-case scenario, the district’s financial team projected a $208 million deficit based on four dynamic factors:

1. The Local Optional Homestead Exemption (LOHE) lawsuit
2. A recapture payment to the state
3. A potential property tax value decrease
4. An anticipated student enrollment decline

Taking direction from HISD Board President Rhonda Skillern-Jones, district administrators crafted a revised budget outlook for the 2018-19 school year.

The district’s legal team feels strongly that the state will prevail in the LOHE lawsuit. For HISD, this means a reduction in its recapture payment because the TEA will recognize half of the 20 percent local homestead exemption given to homeowners. A decision in the lawsuit could come after a hearing this spring. A win would reduce HISD’s recapture payment by $51 million.

Under the Texas Education Code, TEA Commissioner Mike Morath has the authority to adjust property values. Based on the damage sustained from Hurricane Harvey and the lasting impact of the storm on HISD students and staff, the district anticipates the commissioner will adjust property values, which in turn, would reduce our recapture payment.

Governor Greg Abbott, Lt. Governor Dan Patrick and other state leaders have publicly stated their support for this action. This press release from Lt. Governor Dan Patrick in September 2017 confirms his support for schools districts in Region IV impacted by Hurricane Harvey, which includes HISD. In addition, Commissioner Morath surveyed school districts after the hurricane to gather projections on their property tax collections post-Harvey. HISD estimates a $42 million adjustment for property value loss associated with Hurricane Harvey.

In addition, the HISD Board of Education favors a district budget performance review to be conducted by a firm that has previously worked with large school district budgets. An agenda item is anticipated for the April 2018 board meeting. If approved, an immediate audit would begin with a completion date set for the end of the year.

School principals have already started projecting where to make cuts in faculty and staff, similar to this open letter from the Bellaire High principal to Cardinals parents earlier this month. For example, in the "worst-case scenario," Bellaire would cut its faculty by 30 and support staff (cafeteria workers, janitorial staff, on-campus security) would see the loss of about another 20 folks.

Here's a timeline of the district's scheduled meetings and actions over the next four months in preparation of the 2018-19 budget:

• Trustee community meetings
• Budget Workshop
• Regular Board meeting

• Magnet presentation to the Board
• Budget Workshop
• Regular Board meeting

• Regular Board meeting
• Expected Board vote on budget proposal

• Statutory deadline for budget to be passed

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