As districts across the region prepare their budgets for the upcoming fiscal year, many questions remain about future funding.
From delayed property tax evaluations, to concerns about future state funding amid economic uncertainty following the COVID-19 health crisis, districts across Texoma are working to prepare budget documents with the best available information.
“Basically, 2021 in terms of state funding is the second year of the biennium,” said Tyson Bennett, Sherman Independent School District assistant superintendent of finance and operations. “So, there is definitely uncertainty related to student migration, future closure and things like that. Until we really get back into normalcy and back into school, the future oftentimes is dependent on many factors that are out of our control.”
Members of the Sherman ISD school board received an update on the budgeting process Monday night during a discussion on the district’s response to the COVID-19 epidemic. This comes as the district approaches the start of its fiscal year in July.
Property valuations delayed
One of the most immediate concerns to the district is the ongoing delay for property appraisals within the district’s taxable area.
Last week, representatives with the Grayson County Appraisal District said COVID-19 has delayed appraisal notices by about three weeks.
“Any delays of those key finance elements are going to make it more difficult to project your revenue for the future,” Bennett said.
Traditionally, the district will receive preliminary values back in March or April. While these will be shifted and adjusted in the following days and weeks, this data will give the district the information it needs to begin the budgeting process.
With the delays, officials with the appraisal district have considered alternatives to help get preliminary values, however, some of these have been rejected.
“We have gone so far as to ask that we just maintain the prior year’s values except for new improvements,” Chief Appraiser Shawn Coker said last week. “As of now, we have been told that we will be audited and held to the same standards that we always have.”.
State funding questions loom
In addition to the questions about property taxes, Bennett said other questions remain about state funding.
Among them, there are still questions on how average daily attendance will be calculated, with all districts across the state going to distance learning from home. This is one of the numbers used to determine school funding, among other criteria.
Bennett said two scenarios based on are being considered based on if the district’s return back to session before the end of the school year. The decision will use historic data on attendance levels along with other average attendance records.
While this is an immediate question, Bennett said even great questions on funding and budgets. As the current crisis passes, Bennett cautioned that the full impact for districts may be felt next year once state legislators return to business and state-level finance is discussed.
“I think the more important question is going to be in the next biennium when the legislature goes back into session in January of next year, 2021 and you are starting to look at the effects of the state budget,” he said. “I think that’s where you are going to see a greater impact to the state budget, and obviously an impact to the state budget is going to affect education, transportation, health, human services and all the areas that are funded through the state budget.”
These concerns have led the district to consider a more conservative approach to budgeting for the foreseeable future. While next year year will see major shifts for the district as the new high school comes online, other aspects of the transition may be delayed.
With the change to the new high school, and the conversion of the existing high school into a second middle school, the district had anticipated several projects, including remodeling, painting, and heating and air upgrades throughout the district. At this time, the district does not anticipate any issues with the high school project itself.
Initially, the district anticipated that this would occur at once, thanks to a fund balance that the district built up over recent years.
However, the funding uncertainty has led the district to consider staggering these over time rather than investing heavily at once.
“Our fund balance is for situations just like this: emergency situations,“ Bennett said. ”So, we’ve hit an emergency situation where you could see future funding in the next biennium negatively impacted due to the economy from COVID-19.“
Denison has the advantage of time
Meanwhile, Denison ISD has the advantage of having more time to wait for numbers to solidify before it finalizes its budgeting process. Unlike Sherman, DISD’s fiscal year runs through August, giving it two more months to complete budgeting.
DISD Assistant Superintendent Randy Reid said there are several ways that values could be determined, including a possible free on property values. Other scenarios include considerations for property values that have shifted in part due to the ongoing epidemic.
“Right now, as it stands, the values on January 1 is the value you will be taxed on. There may be some adjustments, and I’ve been hearing that there may be some changes, but there is nothing definite yet.”
“We are kind of playing this by ear at the moment and kind of waiting until we have a better projection,” Reid said.
Reid did not discount the possible future impacts that the district may see, but he said it was too soon to tell, and too soon to take action.
“We may have to look at budget cuts, but at this point we don’t know that,” he said.
Michael Hutchins is the local government reporter for the Herald Democrat. He can be reached at firstname.lastname@example.org.