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Crosby ISD declares financial emergency to allow mid-year layoffs

October 9, 2018

Crosby ISD on Monday became the 16th Texas school district to declare an official financial emergency since 2012, a move that will allow officials to institute mid-year layoffs in an effort to keep the northeast Houston-area school district financially solvent.

Trustees voted unanimously Monday evening on a resolution that established financial exigency and a need to cut staff. Superintendent Scott Davis has not said how many people could potentially lose their jobs as the district struggles to right its finances, but the resolution included 15 employment areas that could be affected, including teachers at all grade levels, special education specialists, librarians, curriculum coordinators and the director of transportation.

In all, the 6,000-student district 30 mile northeast of Houston will need to cut at least $5.5 million through layoffs.

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After the meeting that drew a standing-room-only crowd of about 150, Davis said more details on the layoffs would be given at an Oct. 15 board meeting. He said the process of identifying jobs to cut started weeks ago and maintains one central goal: affecting classrooms as minimally as possible. District-level positions were first on the chopping block.

He said he wants to finish the layoffs in one fell swoop so remaining teachers will not spend the rest of the year in fear.

“I handwrite birthday cards to my staff, and one of them got one today and she wouldn’t open it. She thought it was a pink slip, and I thought ’Oh my God, this is terrible,” Davis said. “I want to get to an end so people can quit being afraid. It’s no fun walking into a building and everyone scatters because they think you’re coming to talk to them, and sadly that’s kind of where we are right now.”

The vote is the latest in a string of drastic actions Crosby ISD’s board and Davis have taken since learning the district is teetering on the edge of financial insolvency. face tea takeover?

The current administration first learned the depth of the challenges in June when former Chief Financial Officer Carla Merka left the district to take a job at the much larger Pasadena ISD. After she left, current CFO Lesa Jones discovered a series of “cash-flow issues” that seemed to stem from three main issues: construction spending, bloated payroll expenses and poor revenue and expenditure estimations.

The district’s reserve funds, essentially its rainy day fund, are nearly wiped out. Officials had to dip into the construction fund to pay staff over summer.

As a result, the district will need to cut a total of about $6 million from the $57 million budget trustees approved in June.

While Davis has ordered every department to cut spending by 60 percent, he said the only way to slim the budget enough to continue operations would be to lay-off staff. He and Jones said the amount Crosby ISD spends on payroll far exceeds what other districts spend.

It’s typical for districts to spend about 80 percent of their general fund budgets on payroll expenses. Without layoffs, Crosby is poised to spend 89 percent of its general funds on salaries and benefits.

That would leave the district with $5.9 million to spend on everything including fuel, school supplies and field trips. Last year, the district spent more than $12 million on such expenses.

Jo Ann Crawford, who served as a trustee for 23 years before leaving the board about four years ago, said the board was responsible for approving bloated budgets, but it will be teachers and students paying the price.

“This hurts me to ask,” Crawford said, “but how can you look at our community’s families knowing everyone now has the burden of either paying higher school taxes or losing their jobs because of this board’s careless decisions.”

Declarations of financial exigency have been rare since 2011, when the TEA created tougher statewide standards districts must meet in order to qualify.

Districts now must meet one of five criteria, including: losing 20 percent or more of their fund balance; dramatic decreases in student enrollment; 20 percent decreases in per-student funding from the general fund; recovering from a natural disaster; encountering an unexpected expense costing at least 15 percent of the general fund; or another circumstance approved by the education commissioner.

Since the rule-change, 15 other districts have qualified for the designation. Jones said the district could qualify for financial exigency by noting that it lost more than 20 percent of its fund balance in the past several years. Crosby’s fund balance fell by 49 percent between 2016-2017 and 2017-2018.

Circumstances vary in every instance in which a district has sought to declare financial exigency. Two districts near Houston have done so since 2012 - the now-closed La Marque ISD and Beaumont ISD.

La Marque ISD officially was closed in the summer of 2016 after it failed to meet financial accountability goals, according to Houston Chronicle archives. Their issues began in 2012, according to the Galveston County Daily News, when the district faced a $1.4 million deficit. Voters also opted against a tax hike, and the district struggled to produce financial solvency plans that appeased the TEA. Ultimately, the district laid off teachers and was taken over by the TEA before it was ordered closed in November 2015.

It also struggled academically and earned the state’s lowest academic ratings in 2014, 2013 and 2011, and state ratings were not issued in 2012. Even though academics approved in 2015, it was not enough to overcome the district’s financial and enrollment challenges.

The Texas Education Agency also took over the Beaumont ISD, according to the Beaumont Enterprise, announcing it would a board of managers to replace its elected school board and install a new superintendent in 2014. The TEA conducted two investigations before that announcement, the Enterprise reported: a financial review that found multiple instances of “fraud, waste and abuse,” and another that substantiated complaints about how the district handled special education services.

Although La Marque and Beaumont ISDs were taken over by the state, and La Marque was ordered closed, that does not necessarily mean either fate awaits Crosby ISD.

Crosby Board President Carla Mills Windfont said she would do everything in her power to keep the district open and fix its finances. She quoted Crosby High’s fight song: “Onward to victory, never give in; Fight to the finish, that’s how to win.”

“Did we do everything right? No, and there were a lot of things we didn’t know about. But what you let it do is be a teachable moment,” Windfont said. “I’m here to say let’s put all this behind us. If there’s anything that was done wrong, we’re going to take care of that. Let’s think about the main thing - our children.”

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