How did Pearland ISD end up with a budget surplus while other school districts are facing deficits?

ByRosie Nguyen

Tuesday, June 4, 2024

Pearland ISD sits on $4M surplus as other districts face deficits

In a landscape of budget deficits and classroom cuts, Pearland ISD is emerging as the rare Houston-area district with a surplus. But the district's leader admits they'll face challenges, too.

PEARLAND, Texas (KTRK) -- While multiple school districts in southeast Texas are grappling with budget deficits, Pearland ISD anticipates a $4.1 million surplus for the upcoming fiscal year. What did it do differently that helped keep them in the green, and what will the extra money be used for?

When Larry Berger became the superintendent of Pearland ISD two years ago, he knew money would be tight. But he said the main driving force that's helped keep the district afloat has been the voters.

In November, voters approved raising the district's maintenance and operations tax rate, which helps fund salaries, classroom supplies, and more. In order for the rate to be increased, state law requires that school districts hold a Voter-Approval Tax Rate Election (VATRE). The passage added $11.2 million to their budget.

In May, voters passed two bonds that brought in more money for the district. The $30 million technology bond will fund computers, classroom equipment, labs, and more. The $75 million infrastructure bond will pay for electricity, HVAC, plumbing, and more at schools and district facilities.

"Those two issues were a strategy that we had to get us financially sound. Our community voted both times to say, 'Yes. We believe in you. We believe in Pearland ISD. We support these propositions.' That's why our budget looks the way it looks," Berger said. "The number one reason we're being successful is the support of our community."

Berger said the surplus allowed the school board to approve a two percent salary and compensation increase for staff, paraprofessionals, and teachers. Another $2 million will go to their capital renewal plan, while the rest will go into a general operating reserve, which is essentially a rainy-day fund.

This is a different landscape than what Houston, Spring, Katy, Tomball, Conroe, and Spring Branch are dealing with, facing budget shortfalls. So what's keeping school districts like Pearland in the green?

"I think what you're seeing across the state is those individuals who handled the transition better after their federal funds (ESSER) from the pandemic went away. They're in a better situation right now than those who spent a lot of those dollars on personnel costs," Duncan Klussmann, assistant clinical professor at the University of Houston, said.

That's another strategy that Berger said they also utilized. Instead of using their ESSER funds for staffing, Pearland ISD used the time-limited money to pay for expenditures.

However, Berger said the $4.1 million is just a drop in the bucket when looking at their overall budget, which is $290 million. They anticipate several upcoming budget challenges.

One is the basic allotment amount, which has stayed the same since 2019. That's the per-student funding that public schools receive from the state, which still stands at $6,160.

"The legislature had a chance last session to increase that amount. But it was somewhat held hostage over the voucher fight. When that fight fell apart, those dollars were still not sent out to school districts. If they don't do something quickly next session, you're going to see it snowball, and many more districts will struggle," Klussmann said.

Second is inflation, which is increasing costs for facilities, operations, equipment, technology, personnel, and more. Another concern is the plateau or decline of student enrollment. A new free K-12 charter school, International Leadership of Texas, is expected to open in August.

"The surplus only takes care of us for a little while because if you look at our three-year projection, we'll be back in a budget deficit for 2025 to 2026," Berger said. "Inflation is out the roof. We have expenditures that we have to take care of, which will eat up our surplus very quickly."

ABC13 has reached out to Gov. Greg Abbott's office multiple times over the last several months regarding public school funding, but he continues to ignore our requests.

Pearland ISD will hold its next public board meeting on the district budget on June 11.

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