The Canutillo Independent School District is considering laying off employees, increasing class sizes and cutting student programs as it faces potential financial exigency — the equivalent of bankruptcy for education institutions.
The Canutillo ISD school board met Tuesday to discuss the budget for the 2025-26 school year and go over cost-saving options, including eliminating elementary school music classes, canceling district-funded travel and setting a hiring freeze on non-essential employees.
Canutillo is the second El Paso area school district to openly discuss layoffs, though many others are also facing financial woes.
Socorro ISD, the second largest district in the county, is laying off about 300 employees and cutting its budget by $38 million to stave off financial ruin. The El Paso and Ysleta school districts, which are the largest and third-largest in the county, have not discussed layoffs. But EPISD is closing eight elementary schools next year, and YISD is considering borrowing $25 million to cover its August payroll expenses while it waits for the state’s scheduled payment.
CISD officials did not say how many employees may be affected by layoffs should the board approve them later this month.
Canutillo ISD communications director Gustavo Reveles said the board may vote on the layoffs by the next regularly scheduled board meeting March 25 to notify impacted employees in a timely manner.
The district is also offering a $500 incentive to employees to retire early, a practice that was started last school year when the district began cutting positions.
During the meeting, Reveles told the board the district’s financial turmoil could have been avoided had voters approved bond proposals in 2021 and 2022 to build new schools to attract new students and stave off declining enrollment.
“We’ve been talking about this for several years now, predicting that we would be here,” Reveles said during the meeting. “We told the community we would be looking at fiscal problems with the district if we didn’t act quickly.”
Last May, Canutillo ISD voters approved a $387 million bond proposal to replace some of its older campuses with new schools in growing neighborhoods and renovate existing ones.
After operating under a budget deficit for the last two years, the district has eaten away at its reserves.
Now, Canutillo ISD is looking into taking out an up to $15 million loan to cover payroll for July, August and September while it waits for a scheduled payment from the state and finds ways to cut its budget.
What changes is the district considering?
The district is considering eliminating various education programs and laying off employees who teach them, including its Montessori classes and elementary music classes.
It’s also considering cutting the pre-K-3 program, which is based on a philosophy that focuses on self-discovery and emotional well-being and changing its Career Technical Education Program.
During the meeting, trustees heard a presentation from the Texas Association of School Boards on a staffing review study comparing Canutillo ISD to the state average.
TASB recommended the board cut two employees from the financial services department, one from the communications department, four from the technology department and four non-campus clerical positions.
This would save the district $470,000 a year.
Staff said the district is going to look at employees’ qualifications, their performance, including test scores; their duties; professional background and seniority when deciding who might be laid off.
Canutillo ISD may also move students from Davenport Elementary to Bill Childress Elementary while the district rebuilds the campus.
Why is Canutillo ISD considering laying off employees?
District officials said Canutillo ISD had been in good financial standing for years until it began dealing with declining enrollment, increases in health care costs and demographic shifts that caused losses in federal funding to support certain groups, such as low-income and Spanish-speaking students.
Data presented by TASB on Tuesday show enrollment in Canutillo ISD declined from 6,250 during the 2019-20 school year to just over 5,700 during the 2024-25 school year.
Now, the district is expected to lose another 120 students in the coming school year.
That, on top of stagnant state funding that has not increased the basic allotment of $6,160 per student since 2019, left the district operating under a budget deficit in recent years.
“For the last two years, our funding continues to be an issue,” Reveles told El Paso Matters before the meeting. “The cost of operations have increased by 20% in inflation, and yet the state continues to provide the same allotment to us as they did in 2019, so we continue to have to do more with less.”
The district adopted a balanced budget every year between the 2018 and 2023 fiscal years, according to a budget presentation given to the board during the meeting.
In 2022 and 2023, it ended the fiscal year with a budget deficit of $1.2 and $4.4 million, respectively.
The district adopted a budget with a $3 million deficit for the 2024 fiscal year but ended it with a $1.1 million surplus after it sold a portion of its central office building to the Texas Department of Transportation.
The board adopted a $67.9 million budget with a $2.75 million deficit for the current fiscal year.
The deficit is expected to grow to $5.8 million by the end of the school year due to decreased enrollment, decreased property tax collections and increasing property values that make the district “property rich,” requiring it to start sending money back to the state to help fund “property poor” districts.
This will leave the district with $7.65 million in reserves, enough to keep operating for 41 days.
District policy requires it to have enough reserves to operate for 90 days, and needs at least 75 days to get an A in the Financial Integrity Rating System of Texas.
After the coming school year, the district expects its reserves to drop to $460,000, enough to operate the district for two days.
Now, the district expects to adopt a $67.8 million budget with a $6.4 million deficit during the coming school year.
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