Keller ISD grapples with potential $12.4M deficit as new split details emerge

For the third year in a row, Keller ISD leaders are asking themselves the same question: What do we cut?

The answer — for the second year in a row: not enough.

But before trustees could even begin discussing the district’s projected $12.4 million budget deficit for the 2025-26 school year — allocating for staff raises — concerns about an independent audit took center stage.

Following public comment at the Feb. 27 board meeting, trustee Chelsea Kelly attempted to add a last-minute agenda item to discuss the district’s ongoing efforts to split the district, citing community concerns about transparency.

Kelly said residents should know why an audit, conducted by RSM and presented during a previous board meeting, was paid for through the board’s legal counsel rather than face approval from trustees.

The audit, an independent review of the district’s finances and past administrative decisions, was critical of budgeting decisions by previous Keller ISD leadership and trustees.

“I think our community needs to hear about the $96,000 RSM audit, why it was paid through Jackson Walker, and why the public is receiving information before I do,” Kelly said.

Trustees ultimately voted 4-2 against adding the discussion to the agenda, with trustee Joni Shaw Smith and Kelly in support of the amendment. Board President Charles Randklev was absent.

“It is common practice to conduct such investigations within the context of attorney-client privilege to protect the confidentiality of the sources, the exchange of sensitive information and the relevant findings in the event of malfeasance,” board Vice President John Birt said.

As Keller ISD considers its financial future, district officials weigh another key decision — how to sell district-owned land that Fort Worth officials are considering rezoning.

The district intends to sell the 2.22-acre property next to Basswood Elementary that it bought for $3.2 million in April 2024 to prevent a Studio 6 extended-stay motel from being built near the school, Chief Financial Officer John Allison said.

The move was labeled a proactive step to safeguard students and maintain the integrity of the surrounding neighborhood. Randklev also said at the time that the land could be used for school expansions or converted into green space for students.

Following the district’s purchase, Fort Worth rezoned the land from industrial to intensive commercial, allowing for businesses such as car dealerships, nightclubs and restaurants to be built on the site.

To prevent that from happening at the Basswood property and other Keller ISD properties within the city, Fort Worth City Council initiated another rezoning measure that would change all Keller ISD-owned properties in Fort Worth to a community facilities designation — restricting future use to green space, churches, government offices, health services and other community-oriented purposes.

District officials are hesitant to support the rezoning, fearing that it would reduce the land’s resale value and limit potential buyers, making it harder to secure a competitive price in a sale, Allison said. Any revenue from the sale would go toward bolstering district reserves.

In a Feb. 27 email obtained by the Report, Fort Worth City Council member Charles Lauersdorf told the district the city is interested in buying the Basswood property to build a future park, a recreational space for families and students.

District officials said they prefer to sell land across the district for single-family residential development, believing that it would better align with Keller ISD’s long-term financial interests.

Single-family homes, they argue, would not only generate future tax revenue for the district but could also attract families with school-age children, potentially increasing enrollment.

With an estimated $12.4 million budget deficit for the 2025-26 school year, district officials are preparing to increase class sizes, close early learning centers and make further program reductions.

“We still have to realize these changes because, like I said, we have to be able to give teachers raises year over year,” interim Superintendent Cory Wilson said. “We cannot keep sitting at the end of every year and saying, ‘What do we want to cut?’ That’s too hard on staff, that’s too hard on parents, and that’s too hard on all of you.”

Keller ISD has already cut $45 million from its budget over the past two years. But with no new funding expected from the state, the district must now look further ahead, Allison said — it can no longer rely on reserves to fill budget gaps.

The district’s fund balance — its savings account — which stood at $83 million in 2020, dropped to $47 million in 2023, or 13.81% of Keller ISD’s budget. 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.

That means two things: More cuts are likely for next school year, and potential school closures are on the docket for 2026-27, he said.

While district leaders say Keller ISD faces a $9.4 million deficit, the estimated $12.4 million shortfall includes a 1% salary increase for teachers and staff — a commitment that would cost the district nearly $3 million, and one that trustees and officials said they fully intend to fund.

“$9.4 million is not what we need to be able to give our teachers at least the 1%,” Wilson said. “We need to do that. We need to do that and be able to put ourselves in a position to do that year over year.”

To offset the deficit, Allison proposed that the district could:

• Raise class size ratios at middle and high schools, saving $3 million.
• Close the district’s two early learning centers and move pre-kindergarten students into elementary schools.
• Eliminate bus routes that are not required under state law.
• Shut down the district’s employee wellness clinic, saving $760,000.
• Reduce intervention programs by consolidating instructional coaching and support services.

The Keller Early Enrichment Program, or KEEP, child care for current Keller ISD employees’ children between the ages of 6 weeks and 3 years, will also be cut, district spokesperson Bryce Nieman told the Report.

These changes would save the district $9.4 million, Allison said. Officials said no full-time teachers would be laid off under these cuts, as retirements and attrition should absorb most staffing changes.

Administrators are still trying to find ways to cut another $3 million from the 2025-26 budget, Allison said.

District leaders will also begin formal discussions next year about closing and consolidating campuses for the 2026-27 school year.

“We know that some of our elementary schools, in particular, have room,” Wilson said. “So the question out there is, do we close or consolidate some of them?”

Officials said enrollment trends and facility costs would guide the future decision-making process. Keller ISD has lost more than 1,000 students since 2019 and expects to lose 450 in enrollment next school year.

Closing a school doesn’t save as much money immediately, Wilson said, because staff follows students to their new schools. The district can’t afford to keep as many schools open long-term, he said.

Keller ISD will make those evaluations sometime next school year, Allison said.

But with another round of cuts on the horizon — and potential school closures looming — trustees will once again be asking themselves the same question next year: What’s on the chopping block?

The board is expected to finalize next year’s budget by June, officials said.

Matthew Sgroi is an education reporter for the Fort Worth Report. Contact him at matthew.sgroi@fortworthreport.org or @matthewsgroi1. 

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This article first appeared on Fort Worth Report and is republished here under a Creative Commons license.