001Lord, just be with us now as we conduct business and help us to to make sound decisions that are right for our district. In your name we pray. Amen. Amen. To the flag of the United States of America to the republic for it stands one nation under God indivisible with liberty and justice for all the Texas one Miss Temple. Nobody. Did anybody sign up? Okay. All right. At this time, we will open a public hearing to discuss the budget and proposed tax rate for the 2026 fiscal year. Dr. Johnston will be presenting the report. Good evening. Good evening. And as we are required to do every year before we ask the board to adopt a budget, we have to have a public hearing to get feedback from anybody that uh wants to provide some feedback.
002So tonight going to go over the budget development process, actually show you the budget that we're asking you to adopt, talk about property values, and then next steps. So the overall budget supports the commitments, vision, and mission of the Red Oak ISD strategic plan. It's been prepared in accordance with the district policy and they've been reviewed. The revenues and expenditures have been reviewed and based on data elements available at this time and there some of those could change and we'll talk a little bit about that as we go through the development process shared with was shared with the board in January the calendar of how we were going to do things. We met with all the budget managers, principles and department heads in February. We gave the campuses and departments their budgets in March and
003asked them to complete it and identify where they need to spend the funds. And again, pretty much the budgets from last year were the same as this year. But the campus budgets are based on enrollment. So we project what the enrollment would be for next year. And then the department's budgets are pretty much just rolled over from the prior year. So, even with the 89th legislative session being over, districts are still waiting for guidance. We heard some late last week, but we're still waiting for all the different components before we can formally have a budget that we want to use for next year. So then we because of all this, we've been advised to adopt a budget based on the known values and current formula that you have. So I've modified it slightly a little
004bit but it's still we have more to come for that. Again it'll probably take some time for TA to provide the final clarification. So the budget amendment will be occurring later in the preliminary property values for this budget process we received on April 30th and initially it was a 19.3% increase over the 2024 certified values. Certified values received last July. So 19.3% over that their final the CAD county appraisal district's estimate final while they presented the numbers ahead at time they also did an estimate of what they think they're going to be uh in July and so they're they projected 9.76% but it went down from 19.3 to 9.76. Then we did provide a budget update May 12th. A few things have changed since then. Like the next item, the tax rate. When I presented
005in May, I factored in some compression. There was two different compression models being talked about, one in the Senate, one in the House. And what the houses was 3.316. When the final House Bill two came out, there was really no reference to that compression and all the models that were given didn't have that compression in it. But last Thursday, we got from TA document that showed that 3.31 compression. So it instead of it even though the current budget has a 7377 at the M tax rate when we come back in July or August for a final adoption it'll be.7072 which is like a 6.36% increase because of that and the INS tax rate is staying the same again we'll calculate the final tax rate we send stuff to TEA in July and they tell us
006what that final tax rate will be it probably it won't change because we're already at the bottom. The minimum need to have as far as the tax there revenue assumptions. These are the same as we talked about in May. A slight increase in ADA 3% increase in the actual aotment special allotments because they are pretty comparable to what we budgeted this year to what finally came out. We budgeted a 3% increase in most of the ADA or special a lotments. So we did the same thing for next year. I did increase the basic aotment by the $55 which was approved in House Bill 2 and we increase the school safety aotment to $20 and $33,540 per campus. Last year it was only $10 per ADA and 15,000 per campus. As far as revenues, I'm budgeting
007tax collections being around 5.1%. And the reason for that is because again in November, we're going to have election to res increase the homestead exemption from 100,000 to 140,000. So we're going to have to take some of those additional projected increases. So even though the CAD thought it be like 9.7% it's going to be lower than that because you take off 40,000 for each homestead which is roughly around $500,000 from or I mean $5 million on the values. So again, we're also eligible for the fast growth aotment because we're a growing district that we get additional funds about over the last six years, our enrollment's gone higher than 250 students, which it has. So it's gone up 625 students. So we get additional funding based on 375 students in the form. It's roughly $390,000 if
008I'm not mistaken. And and again because we're increasing we'll be increasing salaries certainly because of the sh new shaws folks we get reimbursement from the state for some of our TRS payments. So therefore that's being increased. Now the only downside of this revenue component is we're probably going to get less money from the state for Medicaid called chars. And back in 2011, well 2017 an audit was performed on 2011 data and they basically said that the state was miscalculating how they should be allocating to camp to schools that Medicaid. So they started asking money back and that number's gone down. So I've taken $500,000 out of that revenue a lot because of that. And then because uh the revenue is going to increase from the state and taxes increase slight increase in interest earnings they
009will have. Now on the expenditure side at this time we're not changing or increasing the compensation plans until we know more about all the different components of House Bill 2. There's several different components that haven't really been shared how they're calculating that information. And we added net increase of four positions due to student increases, expansion of required instructional programs, adding 25 additional positions due to Shaw Middle School, and again the slight increase in property liability insurance because we're adding another school as well. Same thing with utility costs because Shaw is going to be opening and we're going to continue the attendance incentives which has been very productive for the district to keep employees coming to work every day. So again, that's kind of a background of the budget. Here's the actual budget numbers. Expenditures are
010$102 million for both the general fund, student nutrition and debt service fund. The general fund is $79 million. Student nutrition is $4.5 million and debt service expenditures is $18.2 million. On the general fund side, the main and this is going to change again because expecting the tax rate to be a little higher than it will be. So the local taxes showed an increase of 1.1 million. That's going to go down. When I did the numbers, it actually gave us a little bit more state funding with the lower tax rate because that's something I'll show you at the end about probably. So again, about $2.5 million increase in the current general fund revenue on the expenditure side. The same $2.5 million with again the majority of it being in payroll costs. That's where we're adding those
011individuals and again break down by the function. Most of it increase is going to be in the instructional side because that's to educate students. Again, here's a chart showing that over time, you know, you either have wealthy districts or poorer districts. And we're getting over 50% of our funding from the state. So, we're not viewed as a wealthy district. Some districts get maybe 70 80% from tax collections. We don't. We only get 39 39% tax collections. So most of our funding does come from the state foundation school program. On the expenditure side, 85% of our current budget is on salaries, which is becoming more and more the norm. It used to be around 80 75 to 80% of your budget is spent on salaries, but over the last several years that number has gone up.
012I think the average right now is roughly 85 86% here in the state of Texas from what I've been told recently. And on the function side, again, the majority of it is on instruction of students. Around 72% is all the components of the instructional side. And on the fund balance, the pink line there is what the district's fund balance policy has been. The green line is what the state recommends your fund balance to be. And then the maroon lines or bars are what our fund balance is. And our fund balance projected right now is a little over $21 million, which is about 27%. So, we're slightly above the 25% that the state recommends you have. Again, the the pink line, the district had a 15% for a while and then we increased it back in
0132021 that to move it to the 25 coincide with the state, but we're still above the 25%. But we're not up there like maybe some districts are at 30 to 40% of their budget is or fund balances. And here again, this is a chart I always like is where a dollar goes. Again, 72 cents of every dollar goes to teaching, transporting, supervising, counseling students. 5% goes to help support that through library materials, training, curriculum development. 13 cents goes towards securing, operating, and maintaining facilities. And only 10 cents goes towards central office kind of expenditure. So from a student nutrition expense perspective in the past we've had them have more expenditures than revenue because the fund balance grew up over back during co the fund balance increase and there's limitations on what you can have on
014fund balance. So we're down below that limitation, but at the same time trying to make sure that fund balance isn't too high for student. So we're adding about 300,000 more expenditures than what we're projecting for revenue. We'll see how that turns out during and again from a food service perspective only 42% is on salaries and benefits and the rest of it is on the food materials and preparing the food. On the debt service side, we're reducing our fund balance by 1.6 million. And again, the majority of that is trying to pay off debt as it we're able to do that as well as with the issuance of the 2025 bonds. Then that's going to be a more expenditures for us this year because we're going to make a bond payment in August so we can
015get some of the homestead exemption and then we'll have uh next February as well. So, and again, this shows our fund balance and debt service. We want always have enough fund balance to make that August payment and that's roughly around $7 million. So we do have $7.4 million fund balance projected right now for 2526. So now some additional supporting information that we pro provide every year talk about the different components that make up the budget on the basic aotment side. This is a chart showing many years of the basic aotment and again the last six years it's been at 6160. This year it's gone up to 6215 and you heard during the legislation session a lot of people talking about how with CPI going up roughly 22% over the last six years you should had
016about 1300 $1340 added. They only added $55. So again, a kind of slow or low 12 $1,285 would have been nice to have gotten us back up to that inflation because all other costs of the districts have been impacted by inflation. So on the student enrollment, our student enrollment has increased over the last few years. It went down briefly during COVID, but it's come back up and it's projected to increase. The current year budget we budgeted 6635. We actually had 6692 for the fall snapshot enrollment and next year projecting it to be 6727 and then go up for the slow slightly go up over the next few years after that. Far as average daily attendance, this is important because the average daily attendance drives the funding from the state and that number has gone up
017too. Although this year it's not as high as we hoped it was going to be about 93 94% this year. Our goal is to always get it to 95 or higher. And so that's what we hope will happen next year. On the weighted average daily attendance, this is what the state says. take the total funding from the state and then the portion of the property value study that would be taxes divided by the 6160 and that that's what your weighted day that's what they're saying the weighted average daily attendance so that number has gone up too every year this last year it was down slightly next year so hope would be roughly around 90 9200 as 88 or the weighted 80 as I call Now the revenue per W has gone up over the last
018few years roughly projecting to be $7,700 per watt is the funding from the state as well as that tier one property taxes. The taxable values have continued to go up projecting them to be $4.5 billion this year. So that's going up still. Every year they've gone up and probably will continue to go up. The estimated tax revenue again based on the current numbers about $31 million in the M fund and $14.6 million in the INS fund. We typically project around only 99% collection. So we took a 1% off for delquent that we don't get. And I have a slide here in a second that shows you what that has been. And so this is kind of what it's been over the last few years. Last few years we've been closer to 100% collection. Uh in
0192024 we weren't because the state you over 65 numbers. They didn't provide us the right numbers in July and so that's why it was less last year. This year we're hoping to get we still have the month of June to go. So hope to get closer to the 99% in the tax collections in the tax rate history. Again, that tax rate has gone down since 2019. It's gone down by the projected budgeted numbers. It's gone down by 43 cents. But by adding in the 3 point uh additional reduction, the 3 cents, it's going to go down to 46.28 or 39.5% reduction. So it's gone down almost 40% since 2019, which is good for the taxpayers. Then here's the tax rate history for all of both of the maintenance and operation and then the interest in
020syncing. Then another chart we show from year to year and this is last year's but we don't have this year's yet. These are the top 10 taxpayers in our school district and the biggest one is Compass Data Centers and that that's actually they have two or three I think three three maybe four data centers. Those are all combined into one. carbon is number two. Then we have some other ones more subdivision kind of things. So about 16% of the property values from the top 10 taxpayers. So now the discussion of property values again went over this in May but I was just do it again. Uh there's two different types of property values. There's one that we get from the CAD, the county appraisal district, which that's what we base our tax collections on. That's
021called the local certified property values. Then there's the state certified property values. That's what the controller determines. Again, I think their goal is to ensure the equitable distribution of state funding for public schools because you have over 250 counties in the state and each of them may have different ways of calculating the property values. They do some sort of it's kind of an audit process where they try to equalize everybody statewide, but they only do their study every two years. But it's it is what we have right now. It'd be nice if they got rid of that and took it just to property tax collections and maybe they'll do that in the next. So again, if you get more local share or tax funding, then you get less state. Got two districts here. Both of
022them get the same amount of funding and then the in district B gets less taxes, so they get more state. This is kind of that seesaw that I do from time to time showing. And then the problem with the property value study is typically the state will use whatever is the highest. If the certify value studies higher than the total the local collections then they use that number. But the problem is you have to base your tax collections on the local CAD number. So the problem is, so if the state says your property value study is higher, they're going to presume you're getting more taxes than you actually are. So you get less state funding. So districts lose state funding if that property value study is higher. So that's why it's always try to keep
023them as close as possible. And again, here's another chart just showing over time as the property values increase, you would think the collections would go up. Also, the taxes tax collections go up and so therefore the state aid might change. The problem with this calculation for us, we're a growing district. So, we also get more state funding because our student enrollment is increasing. So, it may not be a one for one where tax collections going up, state funding goes down. But, as you see from 23 to 24, the property values did go up, but our state funding went down because the tax rates went down. So now the next steps you'll ask later tonight at the regular meeting ask the board to adopt the 2526 budget. We'll continue to monitor current year budget to make
024sure all of our calculations for the 2425 budget mirror what we thought they were going to be for and if they are different then we might change them before we come back in August and come come back and adopt a budget amendment later this summer. I'm presuming August because we won't get all the tax information till the end of July. This will give us some time to come back in August and hopefully have a more robust budget based on all the House Bill 2 information that we're still trying to decipher how it's going to impact us. They're talking about certain different components like a $45 for some salaries and then $106 per enrollment for fixed cost. So, we're trying to figure out what all that's going to end up helping us from a revenue perspective,
025but we can come back and request some additional salary increases for all of our staff. you can adopt the budget probably August, but if not, maybe September and that's pretty much it. Can you mention real quickly about the senior citizen ceiling and possible compression as far as the uh tax rate? If they have a senior citizen exemption, homestead exemption, then it will not increase. Yeah, I mean that's increasing too. The uh as far as the senior citizen, the tax rate will not increase. tax rate won't increase but their value or their exemptions. Yes. So they could actually pay less. Yes. Correct. Okay. And what happened back last year was they forgot apparently in 2019 they passed where if the tax compression takes place the tax rates and the ves that the over 65 pay really
026go down. But they did not implement that until last year. So they had couple year makeup and so we were getting left in just an example about $4 million of frozen levy for the homestead exemptions and last year it went down to $2 million. So they took $2 million away from us because they were not they weren't implement they didn't implement correctly back in 20 probably 2020. So yes so there are probably some over 65 that their taxes are almost going to go down to maybe zero. I just got one quick question as far as that um under the Medicare reimbursement. You know, we're how far does that go back? How how far how's that I know it's going to affect us some, but you know, how how far are they trying to reach back
027on that? Well, I mean, we had been budgeting around a million dollars. Mhm. And then this year we're probably going to get around 200,000. Next year, what we submitted so far for next year is closer to 500,000. So we that's why we went from a million down to 500,000 with budget. So it's just trying to decipher how they really and again it's not the district's fault. It's how the state process and the fact that they went back to 2011 impacting us in the last couple years. It's uh it's not fair, but that's the way it is. Okay. There are some districts just trying to get away from that process at all and not not try to collect the Medicaid reimbursements. Okay. I was just curious. We're still pursuing We're still moving down that path to
028do that. Okay. To continue with the Medicaid. Yeah. Alexa, I was just curious, you know, when they make a mistake, you know, how it affects us. It always does. Thank you. Sure. Any other questions from the board? Okay. As this is a public hearing, is there anyone in the audience that has a question or comment? If so, raise your hand and we'll call you up to the podium. Okay, looks like there are none. Thank you. Thank you.