The numbers didn’t add up for Keller ISD trustee Joni Shaw Smith.
During the district’s Jan. 30 board meeting — punctuated by the exit of Superintendent Tracy Johnson, presentations outlining financial crises and 150-plus public speakers — trustees received a financial report from Austin-based school finance firm Moak Casey. It showed dividing Keller ISD into two districts would result in revenues that “very closely mirror combined state and local revenues” if no split were to occur.
“So, then why would we want to split?” Smith asked, drawing cheers from an anxious audience of parents, students and alumni.
Facing a projected $10 million budget deficit for the 2025-26 school year, Keller ISD leaders are grappling with a list of controversial options, including a potential division of the district that first became public in January. Hundreds of parents have spoken out against the move, criticizing board members for lack of transparency. Nearly 30 speakers supported it Thursday night.
At the meeting, Chief Operating Officer John Allison, accountants from RSM US and representatives from Moak Casey laid out the district’s ongoing financial struggles, including declining enrollment, state funding shortfalls and the impact of unfunded mandates.
Over the past two years, the district has reduced its budget by nearly $45 million — almost 15% of its overall operating budget — through cost-cutting measures, staffing reductions and program consolidations, Allison told trustees.
All of that has not been enough to lift the district out of its financial struggles, board President Charles Randklev, a central force behind the split proposal, said.
“We must find a way to keep our tax dollars local, keep our schools open, support our excellent teachers and ensure all students receive the high quality education they deserve,” Randklev said.
The Moak Casey study found that funding levels would remain largely the same, but did not account for the increased costs of running two independent districts. The missing details didn’t sit well with Smith.
“This doesn’t seem like a very smart thing to do,” she said.
Trustee Chelsea Kelly, too, pressed for clarity. She noted that without an expenditure analysis, trustees had no real way to assess whether a split would leave either district financially viable.
The response from a Moak Casey representative was simple: Analyzing expenditures, capital assets and debt service wasn’t part of the assignment. The board had only asked the firm for a revenue projection, Josh Haney, Moak Casey’s senior vice president of finance, said. The analysis also did not address the impact a potential split would have on federal revenues, according to the board presentation.
Speakers pointed to incomplete information and the board’s lack of transparency as reasons for opposing the split. Ryan Wells, a certified public accountant, told trustees the report did not address assets, expenses or efficiencies that would result from a district division.
“It looks like there’s a lot more work to be done,” Wells said. “Is the plan to split and then figure out whether or not it’s good or bad after the fact?”
Board hears report critical of previous administrators’ spending
Keller ISD officials placed much of the blame for their woes on Texas’ school finance system, which has not increased its basic allotment for public schools since 2019 amid Gov. Greg Abbott’s push for a voucher-like program. Inflation, rising operational costs and an outdated funding formula have left the district in a precarious financial position, Allison said.
Enrollment trends also paint a concerning picture, he said. Keller ISD has seen a steady decline of several hundred students per year, a trend projected to continue for at least the next decade.
This drop, attributed to declining birth rates and shifting migration patterns, directly affects state funding.
“We are no longer replacing the number of students we graduate,” Allison said. “Texas is no longer among the top three states for in-migration, and statewide enrollment growth has flattened or declined in many regions.”
Despite these trends, previous district leaders budgeted under the assumption that student attendance would rebound post-pandemic. A financial review conducted by RSM US, an independent auditor, found that past revenue projections were overly optimistic and failed to account for the reality of declining enrollment.
Even without the revenue projections, trustee Micah Young saw enough during RSM US’ presentation — an audit critical of previous budgeting by administrators and board members — that he’s certain something must change.
The report detailed how past leadership overestimated revenues, failed to adjust spending, and relied on budget amendments to keep the district afloat. The audit claimed that from 2021 to 2023, Keller ISD overspent by $35 million, draining its reserves.
“I remember coming on the board for that fiscal year ‘23 and we fought really hard to get toward a balanced budget,” Young said. “So, seeing what took place that year was really a struggle.”
The district’s fund balance — essentially its savings account — has fallen from $83 million in 2020 to $47 million in 2023. The state recommends school districts maintain at least three months of operating expenses in their fund balances, or 25% of their budgets. Trustees approved a $340.3 million 2024-25 budget in June 2024.
To address the projected deficit, the district could pursue a variety of changes, Allison said. He estimated they may need to cut another $9.4 million from next year’s budget through staff reductions, department budget cuts, real estate sales and campus consolidations.
Young cautioned that while selling real estate could help in the short term, it is not a long-term financial solution.
“It can help bridge a gap, but it’s not a sustainable fix,” he said, emphasizing a focus on structural changes.
The split is one of those proposals. The Moak Casey report officially designated Denton Highway as the potential divider between the two districts.
The report found that if the district were divided along those lines, the western side would receive more per-student funding due to higher concentrations of students in special education and compensatory programs.
Meanwhile, the eastern side of Denton Highway would retain more property tax revenue, but would continue paying millions in recapture payments to the state under the “Robin Hood” system. According to Moak Casey, the western side would not send the state recapture payments — and would be home to 10,060, or 88%, of the current district’s low-income students, according to a Fort Worth Report analysis.
Still, trustees and community members raised concerns about the hidden costs of a split, such as increased administrative expenses and challenges in dividing debt and assets.
Residents — and Tarrant County leaders — demanded their voices be heard. They called for an election.
“Let these people vote,” Tarrant County Commissioner Alisa Simmons, the 180th speaker of the night, told trustees.
Commissioners divided over whether election is necessary to split district
Since the proposal became public in early January, residents and officials have debated whether an election would be necessary for the board to move forward with dividing the district.
At a Jan. 28 Tarrant County Commissioners Court meeting, Mark Kratovil, an attorney with the Tarrant County District Attorney’s civil division, briefed commissioners on the statutory framework for school district detachment. He explained the two primary methods for initiating the process.
First, a group of at least 10% of registered voters in the affected area could sign a petition requesting detachment. If validated by the Commissioners Court, the school board would be required to hold an election. If the measure passes, the court then orders the creation of a new school district.
The second, less clear method, states a school board may pass a resolution initiating detachment.
However, legal experts, including Kratovil, acknowledged uncertainty over whether a resolution alone is sufficient to create a new district or if it merely triggers an election.
“The statutes are not a picture of clarity on this front,” he admitted. “There is very little to no guidance in Texas law as to which one of these processes controls (detachment).”
Kratovil noted that no prior cases of detachment have been identified in Texas legal history, making this a new legal issue for the courts.
Commissioner Matt Krause, a Republican who represents northeast Tarrant County and the Keller area, has publicly argued that a school board resolution alone is sufficient to initiate detachment without requiring an election.
Commissioner Manny Ramirez, a Republican who has previously called for transparency in the process, said that residents should have the right to vote on such a consequential matter. That’s a position supported by Fort Worth Mayor Mattie Parker and Republican state legislators like Rep. David Lowe and Rep. Nate Schatzline.
“It’s still unclear to me if residents of the proposed new district will ultimately have the opportunity to vote on the plan to split,” Parker said in a Jan. 17 statement. “But it is abundantly clear to me that they should have that opportunity.”
Addressing trustees Thursday night, Simmons, a Democrat who represents southeast Tarrant County, encouraged residents to take their opinions to elected officials.
"To deny citizens the opportunity to decide the fate of their kids through election only furthers distrust and suspicion that agendas are at play without consideration of all families and all students," she said. “Y’all better come to Commissioners Court. It’s going to fall on our laps next.”
Matthew Sgroi is an education reporter for the Fort Worth Report. Contact him at matthew.sgroi@fortworthreport.org or @matthewsgroi1.
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