The numbers coming out of the Texas School Districts’ Perspectives at this year’s Houston Investor Conference were stark.
Across four of Texas’s largest school districts, Houston, Dallas, Austin, and Cypress-Fairbanks ISDs, chief financial officers gathered at the event organized by City Controller Chris Hollins’ office. They described a system under financial strain, underfunded by the state and forced into increasingly hard choices about staffing and the future of public education.
The ‘$10 billion worth of need’ at HISD
“The bond’s going to have to rise from the people. That’s the only way. Somebody’s got to become kind of the hero and say, ‘the school district needs a bond.’”
– Dr. James Terry, Chief Finance and Business Services Officer at Houston ISD
For HISD, the infrastructure crisis is waiting to be resolved.
Dr. James Terry, Chief Finance and Business Services Officer at HISD, said the district is on track to balance its budget this year, a significant turnaround after facing a deficit that once reached $528 million.
The progress, however, comes with difficult decisions, including school consolidations tied directly to financial realities.
Additionally, HISD’s $4.4 billion bond proposal failed at the ballot in November 2024.
But if HISD were to seek another bond, public support would be crucial to pass one, Terry added.
“The bond’s going to have to rise from the people,” Terry told the Defender. “That’s the only way. Somebody’s got to become kind of the hero and say, ‘the school district needs a bond.’”
In reality, he added, HISD’s needs far exceed that bond amount.
“We have $10 billion worth of need,” he said. “We use duct tape to keep our HVAC systems together. And we’ve got portables. The need truly is there.”
Per Terry, most school districts seek a bond every five years. But HISD has not had one since 2012.
In a similar move, Eduardo Ramos, Deputy Superintendent of Business Services for Dallas ISD, said his district has also proposed a $6.2 billion bond package for voter approval on the May 2 ballot. This measure, if passed, would become the largest school bond request in Texas history.
He said Dallas ISD had spent a year building a facility scoring system that evaluated every building on physical condition and educational relevance, then structured the program across phases to minimize tax rate impact.
The bond funds would be used to upgrade safety systems, expand physical education and athletic facilities, and purchase new school buses, among other things.
Cypress-Fairbanks ISD CFO Karen Smith described a similarly methodical approach, noting that her district’s long-range planning committee deliberately spread bond investments across multiple years to keep the community’s tax burden as steady as possible.
CFOs like Smith are already preparing for a difficult 2027-28 budget cycle, planning to move to zero-based budgeting to find efficiencies that incremental cuts can no longer deliver.
For HISD, the state takeover in 2023 complicated the trajectory of its bonds.
“All those things did not lead to a lot of good publicity for Houston ISD, so when we went out for a $4.4 billion bond, it failed,” Terry explained. “Like many of the school districts here, we have some schools that are over 100 years old. When we started, we had a position control of 37,000 employees. We now have less than 25,000 employees. We did not affect our teachers.”
He added HISD is going to refinance “in the near future.”
The reasoning behind consolidation
While the bond question remains open, HISD is taking a more immediate step to stabilize its finances, which is consolidating underenrolled schools.
Terry confirmed that consolidations were planned for the coming fiscal year, the underlying math being, “For a school district to be, in accounting terms, break even, they need about 300 to 400 kids,” he explained.
Every school in the consolidation plan falls below that threshold, meaning each one is a fixed-cost drain before a single variable expense is added.
Eliminating those losses, he said, would help the district hold its ground.
“We’re going to break even this year, so it will help us with our funds next year,” Terry said to the Defender. “But we don’t know exactly what the legislature is going to do next year or exactly what the enrollment is going to be.”
The sentiment echoed across the panel.
Smith [Cy-Fair ISD] described a recent process of cutting $58 million from her district’s budget, one that she said had to begin at the top before any asks were made of individual campuses.
Katrina Montgomery, CFO of Austin ISD, described an even steeper climb of a projected $100 million in reductions needed for the coming year, layered on top of years of deficit budgets that had left the district’s fund balance fragile.
“Year over year over year…we’ve passed deficit budgets, and so now we’re in the place where we have to figure out how to continue to grow our fund balance,” Montgomery said. “That’s where the stress and the hard work really come in.”
Austin ISD also lost approximately 3,000 students in a single year, compounding the gap. Her takeaway was that staffing allocations demand far closer monitoring, citing one campus that was overstaffed by 14 full-time positions at an average cost of $85,000 each.
“When I came to Austin, there was a saying, ‘At Austin ISD, you can have everything,’” Montgomery added. “Yeah, you did, and that’s probably where we are now.”
