EDITOR’S NOTE: Bay City ISD Superintendent Dr. Dwight McHazlett, in a recent email to the Bay City Sentinel, wanted the following information to address reporting on BCJH teachers’ comments at a BCISD board meeting published in the newspaper.
BCISD Budget Status
In recent weeks there has been some discussion regarding the financial position of the district with regard to staff compensation, class sizes, and other school budget concerns.
These are valid concerns which deserve explanation. We received positive feedback from campus staff that attended our public budget meeting in October; therefore, we are sharing the information in this format with the hope you find similar value as our October campus attendees.
When the current administration entered the district in August of 2022, one of the first priorities was to determine the long term financial well-being of the district.
Several significant budget constraints were found to be in existence upon arrival:
Phase 1 Findings:
District Revenue is less than expenditures including a 5% midpoint raise for staff resulting in an original deficit of approximately $1,446,766.
Note: unless revenue increases through student enrollment and good attendance, deficits are paid by the district’s fund balance, roll-over to the next school year.
Temporary Federal COVID ESSER funding was set to expire.
Unfortunately, BCISD had historically paid many of its top salaried staff including teachers, counselors, and administrators using Temporary ESSER-2 funds that were set to expire in 2023-24 totalling approximately $2,418,449.00.
If BCISD did nothing to address this constraint the district would eventually run out of funds.
Note: At this point BCISD would have to overcome a combined $3,865,215 rolling deficit.
An additional $2,035,464 of Temporary Federal COVID ESSER-3 funding was set to expire in 2024-25.
New combined rolling deficit = $5,900,679.
Additionally, approximately $1,800,000 of funding was used for salaries that were coded to the State Compensatory Education (SCE) spending requirement and were offset using temporary ESSER funds.
It was determined those salaries could not count towards the required SCE required spending, therefore, the amount was added to the deficit.
All funding codes were immediately corrected moving forward.
The new rolling ESSER deficit was now at approximately $6,253,913 if significant adjustments were not made.
In response to these significant existing constraints, the current BCISD administration set forth on a plan to restore long term financial health to the district.
Almost 80% of our daily operations budget goes to staff salaries.
BCISD moved forward with a staffing plan that would begin to reduce the staff size as individuals left the district through attrition versus job cuts.
Phase 2 Findings:
School districts primarily operate from two budgets at the local level:
1) Maintenance & Operations (M&O): Day-to-day operations account that pays for all salaries, instructional costs, extracurricular activities, insurance, utilities…
(2) Interest and Sinking (I&S): These funds are used to construct schools, facilities, and other major facilities related improvements.
When the current administration arrived, BCISD had just taken out a Maintenance Tax Note in the amount of $4,925,587.50.
This was concerning as the loan was taken out against the M&O account where salaries come from instead of I&S which is typically used for larger expenditures used for facilities upgrades.
Based on this information we decided to research and find if any additional loans had been taken out against the M&O salary account further back in our history.
Unfortunately, there were a significant number of loans dating back to 2009 that the district continues to pay back (see termination dates below). The most recent M&O loan FROM 2022 will be paid off in the 2037 school year.
The table above shows the approximate combined commitments charged to the M&O Staff Salary account for M&O loans, the offset State Compensatory monies, ESSER salaries, and the 5% raise from 2022. This is coming from the same account as staff compensation.
Phase 3 Findings:
BCISD Participates in several 313 tax abatement projects.
Chapter 313 tax abatement agreements allow Texas public school districts to offer temporary property value limitations to certain businesses in exchange for capital investment and job creation, thereby temporarily reducing the businesses’ local school property tax bills.
In return, districts receive temporary supplemental payments from the business.
Unfortunately 313 agreement supplemental payments are also temporary and typically devalue over time.
Instead of being set-aside as supplemental temporary payments, the 313 agreements were historically budgeted as revenue to the M&O bank account. This may have created a 313 bubble. When these 313 temporary funds expire a negative impact to the M&O budget may occur.
The following temporary 313 agreement payments have been historically budgeted as revenue which may temporarily inflate M&O revenue until the payments expire similar to Federal ESSER Funds.
Moving forward we plan to commit future 313 agreements to paying off M&O loans early, save interest, build M&O salary capacity simultaneously.
Deficit Budget Intervention Strategies (not all inclusive)
As mentioned at the beginning of this update, almost 80% of the M&O budget goes to staffing and salaries.
BCISD has instituted staffing formulas congruent with state allowances.
Staff Reductions include combining the Head Football Coach/Athletic Director into one position and combining the Chief of Communications and Director of Marketing positions
BCISD has saved approximately $170,000 in annual insurance premiums this year alone
We introduced a plan to repay the M&O loans early using temporary 313 payments versus budgeting the temporary funds annually.
This would save interest and build M&O capacity simultaneously.
Current administration introduced a plan to repay the I&S debt early through a possible resolution that could be adopted when the tax rate is approved this year.
We introduced innovative Pre-K Partnerships with area daycares that will in–crease revenue through additional enrollments.
More partnerships are anticipated next year.
We worked hard to secure alternative funding during these difficult financial times including:
Normally buses are paid out of local funds which would potentially significantly increase the current deficit.
The following innovative strategies were implemented as our bus fleet ages:
ESSER Federal Funds were used to purchase two new diesel-fueled buses, for longer trips with no impact to the deficit.
Money saved for two buses with cameras installed = $276,000 in savings to the local deficit
EPA Clean Bus Grant: BCISD applied for and received a grant to purchase 10 electric buses (for shorter town routes) valued at $3,900,000 in savings to BCISD.
Safety & Security Formula Grant: $231,823
Cycle-1 Safety Grant: $190,951
Cycle-2 Safety Grant: $188,836
LASO 2 Grant: $160,000
LASO 3 Grant: $140,000
Teacher Incentive Allotment Local Designation System (for increased teacher earning potential based on student performance).
Campus Allotment – Recognized estimated Student growth payout $6,305
Campus Allotment – Exemplary estimated Student growth payout $12,610
Campus Allotment – Master estimated Student growth payout $23,017
Teacher National Board Certification (for increased teacher earning potential) = $6,305 est.
Summary:
Although the M&O loans combined with other constraints mentioned total $24.3M, our current deficit is at approximately $4.4M.
We are making significant gains by attacking the M&O loans saving time and interest along with conservative budgeting.
BCISD is experiencing a number of unique financial challenges along with a state-wide public school funding shortage.
Although we are all in favor of smaller class sizes and increased pay; current revenue and historic budget constraints have inhibited our efforts.
Intervention strategies are ongoing and we are seeing very optimistic news regarding teacher pay in the current legislative session.
These difficult financial times have caused a great deal of stress for everyone and very difficult decisions have been made to intervene; however, the long term financial health of the district must be safeguarded against the constraints mentioned above.
These difficult decisions to reduce the deficit have carried BCISD through some challenging times over the past three years without having to conduct a Reduction In Force.
Thank You all for your sacrifice over the past three years and sincerest appreciation for your unwavering support for our students.
Imagine the space in the budget when the M&O loans are gone!
We are making significant progress. Let’s stay the course as a team!
