Pearland ISD projects $4.1M surplus, tax rate decrease for fiscal year 2024-25

ByHaley Velasco

Friday, May 31, 2024

PEARLAND, Texas -- Despite having more expenses than revenue projected, Pearland ISD's fiscal year 2024-25 budget should see a surplus of nearly $4.1 million after additional savings are factored in, according to the board of trustees' May 14 budget workshop.

As part of that presentation, officials are also projecting a slight decrease in the overall tax rate.

What's happening?

Despite the projected surplus, PISD officials said there are several budget challenges ongoing.

The main budget challenges PISD faces root from the state's basic allotment per student in attendance, which is $6,160 and has remained the same since 2019, according to district documents.

While Texas' basic allotment is a rising concern, another potential concern is the addition of the International Leadership of Texas, a new free K-12 charter school in Pearland, which is opening in August, according to the charter school's website.

District officials are unsure of the amount of students who could leave PISD to attend the charter school, which in turn would cause the district to lose more revenue.

Other challenges include increasing costs for facilities, technology, personnel and safeguarding students' needs; inflation reaching nearly 20%; and a declining enrollment of more than 190 students, according to district documents and the Texas Education Agency.

To mitigate these challenges, the district is hoping to use the following solutions:

Maintain a healthy 95-day fund balance

Ensure 55% of allotment is directed toward education priorities

Use a zero-based budgeting cycle, which is a budgeting method that requires all expenditures to be evaluated, for the next fiscal cycle

Maintain capital renewal funding, and use 50% of surplus funds for future capital projects

By the numbers

For FY 2024-25, PISD will have estimated revenue of about $213.3 million. This has increased from FY 2023-24 by more than $1.2 million, according to district documents.

An increase in revenue is based on the following budget assumptions made by district officials:

20,915 students for projected enrollment in 2024-25

$11.5 billion in estimated net home values for July

8% growth in taxable home value

$100,000 homestead exemption

PISD will have estimated expenditures of $217.4 million. This has increased from FY 2023-24 by more than $5.2 million, according to district documents.

District officials said these are the following assumptive expenditure costs for FY 2024-25:

2% general pay increase

3% salary savings

$915,555 equity adjustments

$235,735 additional personnel requests

However, salary savings could add more than $8 million to the budget, which would give the district a surplus of more than $4 million. That surplus would go to the district's fund balance, documents show.

The tax rate is also projected to decrease by $0.0023, bringing the tax rate from $1.1373 to $1.1350, according to district agenda documents.

While the interest and sinking, or I&S, rate will remain at $0.3481, the maintenance and operating, or M&O, rate will decrease from $0.7892 to $0.7869, according to district documents.

Quote of note

"We want to continue to retain the best employees we can, and that compensation needs to be increased, and it's difficult to do when you don't have the budget to make that happen," PISD Superintendent Larry Berger said. "We do have uncertain state and federal funding mechanisms of what is coming around, and we have declining enrollment. ... We are graduating more seniors than we have enrolling kindergarten students, and that is a continued issue for Pearland ISD."