'I'm just floored': Here's how West Oso ISD plans to address $2 million budget shortfall

West Oso ISD is facing a budget shortfall, with revenues not meeting expectations.

If the district continued with the budget approved for the year, it would face a $2 million deficit.

Instead, the district is taking steps to bring spending down. On Monday evening, the West Oso ISD board of trustees heard budget insights from the Texas Association of School Board Officials.

The budget shortfall is the result of overly optimistic attendance projections that haven't happened. In addition to cuts and careful future planning, the district's challenges could be eased by increasing attendance rates.

Addressing the shortfall is one of the first tasks before interim Superintendent Kimberly Moore. Moore, who was chosen to lead the district last week to replace retiring Superintendent Conrado Garcia, previously served as the district's executive director of academics.

The district is stressing transparency about the financial situation and potential solutions and consequences.

Last week, Moore visited campuses to discuss a recently approved voluntary early resignation incentive program with staff.

The district has also posted several documents on the West Oso ISD website homepage, including a "fast facts" page to dispel rumors, a copy of the TASBO budget review and the presentation shared with the board Monday.

The district also has an online suggestion form for members of the community, staff, families and students to share anonymous recommendations or concerns.

How did the district get here?

At the center of the district's financial woes is the decline of student enrollment and attendance rates. For the past two years, the district has overestimated how many students would return to class, basing spending on revenues that didn't materialize.

Up until 2018-19, enrollment at West Oso ISD was growing, with more than 2,000 students. The district then lost students each school year, with the greatest decline — 92 students — in 2020-21.

State funding is based on a district's average daily attendance. If students don't show up to class every day, then even if they are enrolled, the district can't count on as much state funding.

"Every day a child doesn't come to school, A, they don't learn," TASBO chief certification officer Rebecca Estrada said. "That's the most important thing as an educational institution. But, importantly, from the standpoint of funding ... we leave money on the table."

Across the state, Texas pays schools about $50 per student per day of attendance, Estrada said.

Attendance rates in the district have also been dropping. Pre-pandemic, the district saw attendance rates of more than 90% each year — as high as 93.4% in 2016.

But in 2020, attendance rates dropped to 88.4%. That figure fell again to 87.5% in 2021.

Every two years the district submits attendance estimates to the state, which the state uses to submit payments during the school year.

At the end of each year, the district's actual average daily attendance is calculated and the state either pays the district additional funds or reduces the next year's funding to account for the actual number of students.

In 2018-19, the district projected 1,886 students but calculated an average daily attendance of 1,928. At the end of the state settle-up process, the district earned an additional $1.5 million. But since then, the trend has reversed.

The district projected an ADA of 1,935 students in 2019-20, but only saw 1,837. As a result, there was a small settle-up. The next year, the district again predicted more than 1,900 students, but saw even fewer — 1,729 students. The district then owed $952,980.

Last year, the situation worsened. The district predicted an average daily attendance of 1,928, just below what the district's enrollment turned out to be, 1,969. But on the average day, only 1,713 showed up. The district owed the state $3,064,090.

This year, state payments are based on an average daily attendance of 1,937. The district's budget was built on a more conservative average daily attendance of 1,808 without using the full state payments. But, again, actual figures are not meeting either optimistic projection.

Instead, average daily attendance will likely be just over 1,700, similar to the past two years.

The trustees, who are responsible for approving budgets each year, repeatedly expressed confusion as to why they had been brought optimistic projections each year when attendance data showed a decline.

"I'm just floored that we're at this point," trustee Shirley Jordan said, adding that the board might have been more proactive if it had been presented with more information initially. "I go by what the administration tells me because that's what we hire them to do and there were a lot of things that we were not informed of. ... I just hate that we're in this predicament because of the teachers and the children that we are serving. They're going to miss out on a lot, and it's not fair."

At the same time that student attendance and resulting revenues have not been meeting expectations, the district has been adding staff. Payroll is the biggest cost of any district's budget, Estrada said.

In 2018-19, the district reported about 317 full-time equivalent teachers, including about 149 teachers, 23 support staff and 28 educational aides. In 2021-22, the district reported 329 staff members, including more teachers, support staff and educational aides, though administrative staff stayed almost the same. This year, staffing is about 312.

The big picture: In 2019-20, the district had a surplus of $1.4 million, but in 2020-21 had a deficit of $2.1 million.

How is the district responding?

One of the most significant things the district can do is better identify and track financial, staffing and student enrollment trends that may have a negative impact on the budget, Estrada said.

"As a board member, the more accurate the information is, the better decisions we're going to make," trustee Oscar Arredondo said.

Board President Velma Rodriguez called the TASBO recommendations a "roadmap," noting that the district has started taking action this fall.

"We have seen those cuts, and they've made a difference," Rodriguez said. "They've made a dent. We're not where we need to be, but I can honestly say that (administration is) working on it, and with the plan they have given us, I believe we're going to get there."

Going forward, the district has reported to the state much more conservative average daily attendance projections of 1,686 for next year and 1,648 for 2024-25.

The district is overstaffed, Estrada said, and will need to adjust staffing to match changes in student enrollment.

Moore said that the district will primarily reduce staff through attrition. This means that as staff members resign or retire, the district will not automatically replace them unless a new hire is required due to enrollment and certifications.

Staff and student ratios will still be within state limits and lower than many surrounding districts, Moore said. But some contracts may not be renewed for the next school year, Moore said.

"There may be some reductions in staff due to program changes," Moore said.

The district is also reducing non-payroll costs such as supplies and staff travel and is selling unused property to increase revenue. The district is also looking for ways to use what remains of federal COVID-19 relief funding.

"When we're talking about the $2 million shortfall, that's really just looking at state funding from ADA and taxes compared to our expenditures," Moore said. "It doesn't include that federal funding, so we're still able to utilize some of that federal funding to offset some of that deficit."

The district can also reduce the number of workdays per school year for certain staff members, consolidate course sections with low enrollments and reduce staff turnover, Estrada suggested.

According to Estrada's analysis, West Oso ISD had high staff turnover, with about 14% of teachers having less than a year of experience and about 34% having between one and five years of experience.

The hiring and training costs are expensive, Estrada said, but can be reduced by retaining staff.

Simply increasing attendance could address some of the district's challenges.

According to Estrada's analysis, a 1% increase in attendance could increase state funding by $176,400. A 2% increase could pay for the salaries of 5.8 full-time staff members.

"If you encourage them and get them to school, you're going to get more money," Estrada told the board. "That softens the impact of any cuts."

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This article originally appeared on Corpus Christi Caller Times: Here's how West Oso ISD plans to address $2 million budget shortfall