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Arlington Independent School District board members discuss future operating expenses at a meeting June 18, 2024, in the AISD Administration Building. (Drew Shaw | Arlington Report)
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Arlington ISD trustees seemed cautiously optimistic as they approved the district’s budget for the next year, despite a red-font $25.5 million deficit decorating the plan. 

What forecasts are the district’s budget based on?

47,299.15 average daily attendance

$44 billion in taxable values 

$1.0776 total tax rate

53,551 students enrolled

8,613 total staff

1,027 staff vacancies

$6,160 per student basic allotment

Numbers are subject to change

The district finalized and approved the plan at its board meeting Tuesday. It forecasts that the next year will cost $675.8 million in expenditures, while only bringing in $601.3 million in revenue, resulting in a $74.5 million deficit.

That would-be shortfall was cut down using $10 million in federal COVID relief funds, which expire Sept. 30, and nearly $40 million from other cost-saving initiatives.

The resulting deficit, and any unanticipated expences, will be covered by the district’s reserves, which is expected to be $253 million at the end of the current fiscal year, Chief Financial Officer Darla Moss said in an email. By October 2025, the end of next fiscal year, reserves are expected to drop to $228 million.

The district tries to keep its reserves above 16.67% of the general fund operating expenditures, meaning it wants to keep its reserve above $112.7 million over the next year. If spending stays on track with forecasts, the reserves will stay more than double the district’s goal.

Trustees blamed the budgeting challenges on the Texas Legislature not increasing state funding for public education in 2023 — a sentiment echoed by districts across the state. The basic allotment has stagnated at $6,160 per student since 2019, as inflation rose over 20% in the past five years.

“We are in a tight pitch coming up here,” Superintendent Matt Smith told trustees. “The Legislature has failed to take action over the last session, so this year is going to be a challenging year for us when we talk budget coming up.”

Districts across the metroplex are seeing similar shortcomings in their budgets. Fort Worth ISD’s recently adopted budget came with a $17.7 million deficit; Crowley ISD’s budget forecasts came in $23 million out of balance; and Dallas ISD, the state’s second-largest school district, adopted a budget with a $186 million shortfall last month. 

Trustees also lamented a 2 percentage point drop in attendance since the pandemic’s onset in 2020, which has impacted funding tied to daily attendance, as well as a drop in enrollment by about 5,000 students since pre-COVID-19.

The district breaks a bulk of its revenue into three categories: local, state and federal.

Arlington ISD’s federal funding, the smallest of the three sources, dropped 68% from 2023-24, falling from $12.5 million to $4.05 million as pandemic-era funding programs have tapered out. Revenue from local sources have also decreased from $392 million to $337.5 million. 

State revenue has increased from $189 million to nearly $260 million. That’s partly thanks to a homestead exemption increase and additional investment income, though much of that increase is funding that used to be considered local revenue.

In total, revenue is expected to increase by about $7 million from last year to $601.3 million.

Expenses have increased more. This year’s expenditures totaled about $576.3 million, according to forecasts presented to the board in May. For the next year, expenses are forecasted to be almost $100 million more.

Most of that cost increase is from salary and benefits. Last year, the district’s budget devoted $510 million to payroll and $89 million to general operating expenses. This year’s budget expects operating expenses to rise by less than $2 million, whereas payroll costs have risen by nearly $75 million. 

Roughly a third of that increase is because of the board’s recent vote to give all staff a 4% salary raise. The raise was in step with a four-year precedent that’s kept the district one of the highest paying in the metroplex, with a starting teacher salary of $64,600. 

To combat the deficit, Smith said the district will have to have “extremely tough conversations” as it explores budget reduction strategies like reevaluating the size of its staff by comparing it to other similar-sized districts, and scrutinizing how its using facilities to improve return on investment.

The district’s tax rate is expected to stay the same as last year, with a maintenance-and-operating tax rate of 78.69 cents and an anticipated debt service rate of 29.07 cents. 

Drew Shaw is a reporting fellow for the Arlington Report. Contact him at drew.shaw@fortworthreport.org or @shawlings601. At the Arlington Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.