The Royse City ISD school board underwent a lengthy workshop session on Monday during which it discussed how to handle the district’s increasing debt payment over the next several years.
RCISD Chief Financial Officer David Carter presented the board with the challenge the district will face in the coming years regarding its increasing debt payment.
The district will have to make its values grow in order not to use its M&O money, which pays for things such as teachers’ salaries and field trips, to pay off debt.
The district’s debt payment would equate to $8.6 million in three years.
The district’s tax values have increased about $30 million over the last five years, a modest growth rate, according to Carter.
To counteract the increasing debt, Carter said the district would have to be proactive with its budget over the next three years.
“Even assuming a modest growth in taxable value, this is a reality,” Carter said. “That’s why on that budget priority we say we want a proactive approach, because the time to address this is now.”
Carter said that to stay at the state-mandated maximum tax rate of 50 cents, the district would have to grow $64 million without having to supplement I&S funds.
The district’s current fund balance is $9.4 million, and it will have surpluses of $71,000, $85,000, $84,000, and $76,000 each year for the next four years, respectively.
“What we want to do is we want to budget $500,000 in an ‘other use’ account code,” Carter said. “We want to set that money aside so that at the end of the year, the $71,000 surplus would be $571,000, and we would want to do that for each of the next three years. We want to carve out a budget of $1.5 million over the next three years to help mitigate those big chunks in those three years if our values don’t grow as much as we need.”
Carter said the reason he’d like to appropriate the money into an “other use” account is so the money does not get spent on anything else unless the need arises.
“We’re setting the money aside and saying that we are not going to touch this unless we have to for a specific purpose,” Carter said. “We’re safeguarding those funds to help us to be proactive over the next couple of years.”
Board member Eric Fort liked the idea that the funds could go towards the schools if they were ever in need of them, as one-time expenditures.
“I didn’t want those types of funds to go into the fund balance without the schools being able to utilize them if a need arose,” Fort said.
Superintendent Kevin Worthy said it was important that the school district works closely with the Community Development Corporation and city council to see what future commercial developments will be coming into the city, in order to get an idea of how much growth the school district can account for in its budget.
“It’s important for us to have a clear picture of what’s coming,” Worthy said. “It is a definite partnership with the district and the CDC, and they understand how important it is to bring industry in for our school district. That’s the neat thing about it, and the key component of it is that they’re willing to help.”