Magnolia ISD (MISD) has released its preliminary budget, which comes just after the Texas Legislature reached its decision on the statewide school budget, including a budget cut, for the 2012-2013 biennium.

The Texas Legislature began discussing a large budget cut which was originally estimated to be nearly $10 billion statewide. MISD predicted that it would lose $12 million.

While lawmakers disputed the budget cut, MISD attempted to prepare for the massive cut and laid-off about 115 employees, which included support staff and probationary teachers. The district also indentified other non-payroll reductions in preparation for the unknown budget cut headed its way.

However, in July the legislature passed SB 1, which details how state school districts would receive funding, but also included approximately $4 billion in cuts.

Finally knowing its revenue for the upcoming school year and able to formulate a budget, MISD is now moving forward with budget planning.

Chief Financial Officer Erich Morris said the overall reductions for MISD are $6 million for Fiscal Year (FY) 2011-12 and $6.7 million for FY 2012-13.

For FY 2010-11, MISD is estimated to have $78,144,718 in the budget. That is $4.9 million less than FY 2011-12, which was $83,044,718, according to Morris.

Morris said the $4.9 million reduction was strictly from personnel, as payroll is the largest draw from the budget.

“MISD’s budget is comprised of approximately 85 percent personnel and employee benefits,” he said. “This means that any time these types of reductions are handed down by the state, there is simply no way to cope without affecting personnel.”

MISD will make a $600,000 reduction to non-personnel funding. He explained that no changes would be made to school programs.

“Activities within campuses or department ‘may’ be slightly affected, but only as a result of 10 percent cuts to total budgets,” he added.

Morris said that MISD was able to rehire 32 of the teachers that were laid-off in preparation for a massive budget cut.

Tomball ISD (TISD) had no lay-offs and chose not to fill vacant positions in preparation for the budget cuts. TISD decided to use reserve funds to cover revenue reduction and payroll expenses.

However, Morris said MISD chose not to use its reserve funds.

“The district elected not to use reserves in the best interest of the district,” he said.

He said the main contributor to not using the reserves is the delayed state payments and cash flow considerations.

“In short, it is not uncommon for the state to delay up to two months of payments in any given school year,” Morris explained. “During these months of revenue delay or absence of fund balance would require the district to seek loans simply to meet monthly payroll requirements.”

He said the reserve balance, which is slightly more than $14 million, was not a feasibly option to offset the significant state reductions for MISD.

MISD has also proposed that its tax rate will remain the same at about $1.40 per $100 valuation. The Maintenance and Operation (M&O) rate are proposed to remain unchanged at $1.04 and the Interest and Sinking (I&S) rate are proposed to remain unchanged at about $0.36.

MISD will hold its regular meeting and public hearing on Aug. 22 to approve its final budget and tax rate. For more information, visit magnoliaisd.org.

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