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Denton ISD plans 2023-24 budget with limited state funding and pending property values

 Denton ISD's J.W. "Bill" Giese Professional Support Services Building
DRC file photo
Denton ISD's J.W. "Bill" Giese Professional Support Services Building.

It’s not all bad news for Denton ISD’s budget for the 2023-24 school year, but officials have already made cuts since the 88th Texas Legislature’s regular session failed to produce any bills that would give teachers raises or bump up the state’s allotment for Texas students.

Lawmakers deadlocked over school vouchers in the most promising funding legislation last session. Denton ISD joined other Texas school districts in a ”Mayday press conference” on May 1, but their pleas couldn’t move the wedge between state House representatives and senators. In March, the state’s legislative budget board estimated that, when adjusted for inflation, current school funding is at 2014 levels.

“Be mindful of the conversations we’ve had all fall and all spring about school funding legislation for those things,” Denton ISD Superintendent Jamie Wilson said during the latest budget hearing. “We’re working on the law from 2019 — 2019 funding levels, 2019 cost analysis — and so you’ll see where we are four, almost five years removed from that cycle.”

On Wednesday, the Texas Senate advanced a bill that would cut property taxes for Texas homeowners, send money to school districts so they can cut their tax rates and ease franchise tax bills for businesses. The bill would also tighten revenue caps on school districts, which could drive down tax rates even more. The hitch? The Texas House adjourned from the special session weeks ago, making the future of the bill unclear.

But Texas school districts can’t bank on the bill right now. Denton ISD has already braced for impact, and recently shuttered its small but growing Virtual Academy when the recent session ended without more money for public schools. It also reduced all department and campus budgets by 10% heading into the next school year. While property taxes and home values in Denton County have gone up, the state has been sending school districts less money for maintenance and operations. As the cost of running schools has gone up, now with inflation at play, the district faces doing more with fewer resources.

The current school budget is based on a budgeted tax rate, said Jennifer Stewart, the district’s budget director. Denton ISD has to wait for Denton Central Appraisal District to certify property values, and then get approval for the values from the Texas Education Agency.

“They have to turn around and assign that tax rate to us,” Stewart said. “Then we can present it to you guys for approval in September.

“Just a reminder, that can change. It can change with legislation on the tax rate. So that’s to be determined at this point.”

Stewart said school officials all over Texas are having to have “tough conversations” about how to fund campuses with no additional dollars. They’re having to make tough calls, or they are “having to submit deficit budgets” to their school boards.

School districts have two types of tax rates: maintenance and operations, which includes state funding and pays salaries, contract services and other things such as travel; and debt service, which has to pay for bond payments.

Denton ISD’s current total property tax rate is $1.3446 per $100 property valuation — 80.46 cents of that is for debt service, and 54 cents for maintenance and operations.

According to the district’s board book, the proposed total tax rate for 2023-24 is $1.2646 per $100 valuation, based on current law and estimated property value growth of 18%. That includes 72.46 cents for debt service — 8 cents less than the current debt service rate — and the same maintenance and operations rate of 54 cents.

Stewart said the district has decided to take a conservative approach in estimating the upcoming year’s average daily attendance, which is what determines how much Texas schools get from the state. There are 33,295 students projected to be enrolled in Denton ISD in 2023-24, according to the district’s consulting demographer. The firm, Zonda, has set average daily attendance at 94%, or 31,297. The district has projected the enrollment at 32,979, and projects an average daily attendance at 31,000.

Stewart said the preliminary property value growth is at 32.38% growth, which would yield an additional $8 billion over current certified values.

“Half of that value is under protest,” Stewart said. “But even after the review period is over, we’re going to see a significant increase in property value growth. Just the brand-new property added to the rolls by June 3 was $2.2 billion. So we’re going to see a significant amount of growth.”

How does that translate to dollars? The proposed 2023-24 budget is $250 million, an increase of about $23 million. As for state funding, the district is planning to get an estimated $40 million, down from $67 million that came in last year. The district is estimating that it will pay $157.3 million in debt service in 2023-24, a $28.4 million increase over payments made last school year. The district is also budgeting less money for child nutrition supplies, but more for nutrition commodities.

The district is also planning to spend on teachers.

“Here’s what’s going to be uncompromised: our teachers,” Wilson said. “You guys are committed. We’re going to do everything we can to make sure we recruit and retain the very best for our kids, and involve our teachers in the process. ... We’re in a highly politicized environment, not a big governance environment, as we’re working through.

“If things don’t change in the fall, we’ll have to have some conversations about what things we know are necessary that we can continue doing. There are things we can do. None of them are pain-free. They are all painful.”