Disclaimer!!!!!
I am NOT an expert in school finances. School finances are very complex and require experts such as Elaine Cogburn, CFO of Leander ISD. For this blog I rely on her expertise and other things I have researched.
Is Leander ISD Broke?
Absolutely not! Leander ISD like every school district has debt but they are very financially viable. They are rated by the Financial Integrity System of Texas as A or “Superior Achievement”. Leander ISD has made considerable debt progress since 2015 and is currently rated by S&P as AA for their underlying credit program and a long term credit rating of AAA (Leander Financial Report June 2021). Leander ISD financial outlook is considered stable and is not at all “broke”.
That is not to say Leander ISD should be complacent. School budgets rely on a lot of things including home prices, aid from the state, and government regulations. So it needs to be closely monitored and adjusted.
There are two different categories in which Leander ISD budgets money to pay for their expenses. The first is for Maintenance and Operations (M&O), and the second is for Investment and Sinking (I&S). I&S allows Leander ISD to pay off debt such as bonds, which are mostly used for buildings and facilities. M&O funds the operations such as salaries, transportation, supplies and utilities. How the funds are collected by Leander ISD (and used between M&O versus I&S) can be quite complicated. When you factor in Texas Recapture and the Voter-Approval Tax Rate Election (VATRE), the picture can become very fuzzy very fast. The importance and impact of a VATRE requires another blog to explain; so for the purpose of this writing we are going to keep it simple.
Also let’s take a look at the 2021-2022 finance budget which lists the revenues and includes expenses. The finances were even better than expected for Leander ISD! We certainly like to hear this! Here is a video summary. Leander ISD started the year with a 25 million dollar deficit projection. At the end of this year Leander ISD fully expects the deficit to be further whittled down. Here are the projections:
Projection 1 - Most Conservative (without any Average Daily Attendance Hold Harmless funds or other federal funds) - 16.4 million dollars
Projection 2 - Assumes additional relief funds - 4.4 million dollars
Projection 2 seems more likely as they are funds we fully expect to receive (see below) but there is no guarantee. Under Projection 1, the Leander ISD General Fund would be reduced by about 9%, while under Projection 2, the General Fund would be reduced about 2%.
Let me explain Projection 2 a bit. This is a projection because we haven’t received the funds and so while we expect Projection 2, it is no guarantee. In part, our school funds released by the Texas Education Agency (TEA) is dependent on the Average Daily Attendance (ADA) of students. ADA is the sum of attendance counts divided by the days of instruction. Obviously this declined in 2021-2022 due to the recent pandemic. Under “Hold Harmless” funding will still be made available to school systems that saw declines in ADA due to COVID-19. Preliminary estimates are that this will generate an additional 7 million in revenue. There are additional federal funds that we may receive due to COVID-19, Elementary and Secondary School Emergency Relief (ESSER) Fund, and additional CARES act funds from Williamson County. This amounts to another 5 million dollars.
For more detailed information please see the following resources.
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