Superintendent's Message: NEISD's financial framework
In August, North East ISD received the highest rating of "Superior Achievement" from Schools FIRST (Financial Integrity Rating System of Texas), a financial accountability system for Texas school districts developed by the Texas Education Agency. This is our ninth year to receive this distinction. The primary goal of Schools FIRST is to achieve quality performance in the management of school districts' financial resources. It is a significant goal given the complexity of accounting associated with Texas' school finance system.
At North East, we strive to be good stewards of taxpayer dollars. However, explaining the school finance system to our stakeholders has always been one of our biggest challenges. We want people to understand where the money comes from, and where it goes. When given the opportunity, we strive to communicate the framework of our operations to the community, which is why I want to share this message with you.
Our school district has three major funds that feed the budget: Maintenance and Operation (M&O or General Fund), Debt Service, and Capital Projects (Bond Fund). The money generated from M&O taxes and state aid support the day-to-day operations of the district. Debt Service property taxes are used to pay back the bondholders who buy our bonds. The bond money is used for capital or construction projects only. This includes facility upgrades and new schools. By law, bond money cannot be used for teacher salaries. The expenses or savings we incur on bond projects cannot be used to offset any impact the economic downturn or state's Target Revenue System has had on our budget.
Since 2006, Texas school districts operate under a state finance system where state and local funding is capped based on revenue per student. Even if property values go up and property tax bills increase, school districts don't receive any more money per student for daily operations. Any increase in property tax revenue from appraisal growth simply reduces the amount of state money received by districts. If a district's property value decreases, the state's portion of funding is supposed to increase to make up for the loss in local revenue. Unfortunately, as property values declined statewide recently, the state re-wrote the funding formulas instead of increasing aid to districts.
In fact, the Texas Legislature cut $4 billion in school funding across the state in its most recent session. NEISD's loss was $28.4 million in 2011-2012, with an additional $14 million in 2012-2013. Our austerity efforts over the last few years helped cushion this blow, as we have all had to tighten our belts in an effort to operate more efficiently.
Our operations include transporting, feeding, and ensuring the health and safety of our students. We maintain and clean our buildings, pay utilities, and provide access to extracurricular activities and instructional support to more than 67,000 students. Even with all this, the majority of our budget -- 86 percent -- is spent on salaries and benefits. We are a people business, and we invest in the highly qualified teachers, administrators and support staff who make this district so great.
Currently, NEISD residents are voting on NEISD's 2011 bond proposal. A small portion of the package addresses growth, while the majority addresses equity and renovations. No matter the outcome of the election, NEISD will continue to serve its students to the best of our ability without sacrificing instructional quality. We are regularly recognized for our ability to do so, as well as the transparency of our efforts. NEISD will continue this tradition.
Posted on October 25, 2011