The majority of Texas school districts are bracing for more financial troubles, with many anticipating that they will close out 2025 in a budget deficit. But why?
According to a survey conducted by the Texas Association of School Business Officials, nearly 63% of districts across the state expect to face a shortfall, a continued troubling trend across Texas.
While rising costs and stagnant funding have contributed to the deficits, as previously reported by The Dallas Express, experts now suggest that mismanagement at the local level has also contributed to the issue.
John Petree, President of Texans for Excellence in Education, spoke on the importance of fiscal responsibility and why school budgets are so difficult to balance.
“At the state level, the static basic allotment remains a challenge, as it has not kept pace with inflation and the rising costs of education. However, districts are primarily responsible for their financial outlook despite what the state does or does not do,” Petree told The Dallas Express.
“That being said, it is important to acknowledge that approximately 40% of Texas school districts—both large and small—have successfully managed these financial challenges and will end their fiscal year in the black,” Petree added.
One of the districts’ biggest modern challenges may be miscalculating declining student enrollment in the post-COVID era.
With fewer students in attendance, districts receive less per-pupil state funding, leading to revenue shortfalls that many districts did not anticipate. Some school leaders also flat-out failed to account for long-term maintenance or operational expenses tied to bond-funded projects, such as sports facilities and fine arts centers, which continue to drain money long after their construction ends.
Another major factor contributing to budget woes in Texas schools is the cut-off from the federal Elementary and Secondary School Emergency Relief funds provided during the pandemic to help districts address disruptions. Without these federal dollars, districts that relied on the funds to cover recurring costs and did not change their spending habits after the pandemic now find themselves scrambling for new revenue sources.
Beyond revenue concerns, financial decision-making at the district level seems shaky across Texas.
Many school finance administrators allegedly rely on a shared budgeting spreadsheet commonly referred to as “the template” to project revenues and expenditures. However, Petree argues that managing school budgets requires more than just plugging numbers into a pre-existing one-size-fits-all formula.
“Most school finance leaders utilize a common spreadsheet often referred to as ‘the template’ in preparing their budget revenue drivers. It is a very complicated spreadsheet that requires extensive knowledge and experience to administer. Also keep in mind that ‘the template’ is not a state or TEA product,” Petree explained. “The state does provide a general planning document called a ‘Summary of Finance,’ but this document does not provide all of the necessary indicators to accurately forecast all aspects of anticipated state revenue and tax collections. The trickiest thing about school finance is that it requires extensive ongoing monitoring once the initial budget is developed.”
Looking ahead, many school districts across Texas are now forced to consider drastic cost-cutting changes, including cutting staff and after-school programs.
Despite efforts to compensate for deficits, 42% of surveyed districts reported this year that they would not be able to provide staff raises without additional funding from the Texas Legislature. Yet, Texas Scorecard recently reported that school superintendents’ salaries in Texas are on the rise, despite school leaders statewide asserting that their districts are financially “underfunded.”