El Paso school districts have begun planning their budgets for the 2025-26 school year as they wait to see if state lawmakers will increase school funding in the 89th session of the Texas Legislature.
School districts across the state are attempting to calculate how much revenue they could bring in next school year.
Many districts are expecting budget deficits and are looking for ways to reduce expenses and increase revenue.
Some, including the El Paso and Ysleta independent school districts, are looking into making changes that could affect their employees’ take-home pay depending on the outcomes of the Legislature, including increasing health insurance premiums and giving raises.
Socorro Independent School District trustees looked into potential budget cuts and are considering holding a voter approval tax rate election to generate more revenue and build its reserves.
If approved by voters, the district would be able to raise its maintenance and operation tax rate and bring in up to $28 million.
Most districts in El Paso have already made significant changes to their budgets as they dangle over a financial cliff amid declining enrollment, stagnant state fundings and, in some cases, overspending.
SISD announced plans to lay off up to 300 employees and cut programs to cut the district’s budget by $38 million. Employees across the district have already received notice informing them that their contracts will not be renewed next school year, but officials have not disclosed how many.
EPISD plans to close eight elementary schools in the next two years to reduce expenses and YISD officials have considered taking out a $25 million loan to cover cash flow while awaiting state payments.
Lawmakers are looking into raising the basic per-student allotment for the first time since 2019 under House Bill 2 — the House’s omnibus school finance proposal. The current version of the bill would raise the allotment from $6,160 to $6,555.
El Paso school districts are required to approve their budgets before the end of the fiscal year June 30. Most plan to vote on it in mid-June, just weeks after the legislative session is scheduled to end and just over a month after EPISD and SISD hold school board elections.
Health plan increases
During their most recent board workshops, EPISD and YISD trustees discussed the possibility of increasing their employees’ health insurance premiums as the cost of their health care rises.
Both districts said much of their health care costs are driven by the treatments of chronic conditions, such as cancer, high blood pressure, and diabetes, and the use of specialty medications.
EPISD administrators recommended that the district raise premiums by 15% and give a $5 million infusion to its health fund.
EPISD Superintendent Diana Sayavedra said some pieces of legislation, such as HB 2, could help offset some of the health care premium increases by funding raises for school employees.
HB 2 would require districts to use 40% of any school funding increases to pay for raises for teachers and staff. Even with additional funding, Sayavedra said the district will likely have to continue to gradually increase insurance premiums in the future.
“The funding outlook from the state may assist with some of the compensation, because every bill that’s been presented requires a percentage of that money going towards compensation. Even so, our long-term strategy would be that if we did this 15% push, then year-over-year we would need to incrementally increase that so we’re not faced with a huge jump again,” Sayavedra said during a board meeting Tuesday.
YISD Superintendent Xavier De La Torre said insurance premiums for its employees could increase depending on how much of the cost the board decides to cover.
De La Torre said the district could pass any health insurance increase costs to its employees; split the cost, allowing YISD to cover a portion while the employee pays for the rest; or completely cover the cost of any health insurance increases.
Both districts say they were able to cover increases in their employees’ health care costs by making infusions to their health funds.
But, as they deal with declining enrollment, inflation and budget deficits, the districts may not have enough reserves or revenue to continue covering the rising costs of health care.
SISD reduced its health care plan contributions during the last budget season in June 2024, bringing drastic increases to the cost of some employees’ health insurance.
Budget preparations
As school districts prepare their budgets for the coming school year, many are checking to see how much revenue they can bring in with and without funding increases from the state.
If there are no changes to school funding, EPISD officials said they expect to have a $542 million budget for the 2025-26 school year, with a $17 million deficit.
If basic allotment were increased to $6,380 under the current version of HB 2, it would reduce the deficit to about $3 million.
EPISD officials also looked at what its deficit would look like if it doesn’t close eight elementary schools in the next two years under a plan meant to improve the schools that remain open, known as Destination District Redesign — or DDR.
Without the closures, EPISD expects its deficit to rise from $17.6 million to $32 million, depending on whether the Legislature increases the basic allotment.
If the board approves the health care infusion, it will add $5 million to the deficit.
YISD officials estimated the district would generate $368.3 million in revenue under the current law. They did not reveal the district’s projected expenses or whether they expect a deficit.
If lawmakers pass HB 2, YISD expects to bring in an additional $20.9 million from the state. District officials said about $11 million of that would be used to give employees raises.
Preparing for an extended session
The last time the Legislature convened in 2023, lawmakers went into multiple special sessions as Gov. Greg Abbott attempted to pass a controversial education savings accounts program that allows parents to send students to private schools using state funds — also known as vouchers.
Lawmakers in the Senate and the House approved this year’s voucher proposal, Senate Bill 2, and have sent it to Abbott’s desk to be signed into law.
Still, some districts are preparing to approve budgets at the current school funding rate if the Legislature needs special sessions to deal with school funding.
Building a fund balance
Though SISD leaders have yet to publicly discuss the district’s projected budget for the coming school year, they emphasized the need to have a surplus to build its reserves, also known as a fund balance.
“The importance of contributing to the fund balance is still top of mind for all of us. We know that it’s not enough just not to draw from it. We have to improve it. Maybe the discussion is by how much we have to improve it for it … to avoid having to obtain those short-term loans to maintain our cash flow,” SISD Interim Superintendent James Vasquez said during a board workshop Thursday.
SISD has adopted a budget deficit every year since 2016, requiring the district to dip into its reserves to cover its expenses. Between 2022 and 2024, SISD used more than half its savings, district officials said in December.
The district had $50.4 million in reserves in 2024, or enough to keep the district running for 33 days. Those reserves are expected to drop to $28.4 million in 2025, or enough to operate for 19 days.
SISD policy requires the district to have enough to keep the district afloat for 75 days. Texas school districts also need to have enough to keep running for at least 75 days to get an A in the Financial Integrity Rating System of Texas.
The post El Paso school districts begin preparing budgets with uncertain state funding amid legislative session appeared first on El Paso Matters.
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