Tuesday, September 17, 2024
In a special called meeting Sept. 9, the Granbury Independent School District board of trustees voted 3:2 to approve the 2025 Hood Central Appraisal District budget — despite disapproval from other taxing entities.
HCAD has faced scrutiny in recent months over its financial management and past expenditures, with many taxing entities considering a forensic audit for the district.
The Hood County Commissioners Court, Granbury City Council and Tolar City Council each passed resolutions urging HCAD to undergo a forensic audit of the prior five fiscal years. The GISD board voted to suspend the resolution for an audit indefinitely due to cost concerns, while Lipan ISD chose to refrain from taking any action.
In a similar move, Hood County and the cities of Granbury and Tolar have also recently chosen to disapprove HCAD’s 2025 budget, citing concerns over excessive spending, lack of transparency and over-budgeting.
During GISD’s special meeting earlier this week, Mayor Jim Jarratt spoke during citizen comments and expressed concerns about the HCAD budget. He noted that while the district detailed 25% of its budget, it did not adequately itemize salaries, benefits and other expenses as required by the tax code. Jarratt compared HCAD’s expenses to those of neighboring Erath County, which he said has managed its budget at one-third of HCAD's cost despite similar responsibilities.
“It's been said, ‘This is personal. This is political.’ I'm going to assure you it's not political. It is very personal,” Jarratt said. “It's personal because I'm a taxpayer. It's personal because I took an oath to uphold the Texas Constitution, and it's personal because I took an oath to serve the citizens of the City of Granbury.”
Resident Jim Brown expressed gratitude to the board for its efforts in scrutinizing the budget, emphasizing the importance of fiscal responsibility. He reminded board members that taxpayers elect them to manage finances wisely and urged them to carefully review all budgets, particularly those affecting Granbury ISD.
Brown stressed that, given the current financial demands from various taxing entities, it is crucial to thoroughly evaluate spending to ensure efficient use of funds. He suggested that more resources be allocated to the Maintenance and Operations budget and reiterated the need for careful consideration in managing HCAD’s budget.
Resident Monica Brown told the GISD board that discussing HCAD’s budget is a “step in the right direction.” She applauded the board for listening to Jarratt and applauded the mayor himself for his research and his consistent effort to step up and to speak out. She encouraged the board to maintain its commitment to accountability, honesty and integrity, urging the directtors to adhere to their policies and avoid past issues of misconduct.
“Here I am today to applaud you,” Brown said. “Hopefully you will disapprove that budget because it's the right thing to do. It doesn't mean you're being mean to anyone; it means you're doing what responsible people do. You've been called elected officials, and that's true, but you're also public servants, and that's hard. Being a servant is a hard thing. Being a professional is a hard thing. Stepping up and doing what is right here is really important, and it's going to benefit everybody. It will benefit the children, public school, private school, homeschool, all of them, so I appreciate you listening to what this good man says.”
The board launched into discussion regarding the resolution, which states the board would be disapproving the budget, as it must include proposed positions, salaries, benefits, capital expenditures and an allocation estimate for each taxing unit.
The resolution also states that if a majority of the taxing units disapprove the budget and file resolutions within 30 days, the budget will not take effect, and a new budget must be adopted within 30 days of disapproval.
Board Vice President Courtney Gore, who presided over the meeting, explained that she met with HCAD Chief Appraiser Jeff Law, HCAD board of directors Chairman Eddie Rodriquez and Jarratt to go over the budget. She said after watching the two-hour meeting from Granbury City Council, she was left with several questions, which led to a need for further clarification and a special meeting.
In going over the data, Gore highlighted a significant spike in the 2022 budget, which was due to a return of funds related to a building project that had been shared between HCAD and TxDOT. She clarified that this return of funds was not an expense but a refund of funds previously allocated.
Gore also addressed concerns about certain expenditures, specifically payments to architectural firms. She asserted the expenses had been approved in open sessions and were properly documented in public meeting minutes, although she said there appear to be disagreements among taxing entities regarding their approval.
“As far as the HCAD budget goes ... they were putting money aside for that building fund (for a home office), which we were all aware of,” Gore said. “I think there may be some disagreement there between the mayor and the HCAD on how that had gone about, but it was all done in open session. All the meetings were posted. It was all taken in a public meeting — the vote was — and it's in their minutes, so whether people agree with the way it was spent or not, is neither here nor there. It was all done legally, as far as the HCAD budget goes.”
She acknowledged that the HCAD budget does not provide detailed line items for employee salaries and benefits, but includes overall totals. Gore also proposed implementing a regulation to ensure that excess revenue at the end of the fiscal year is credited back to taxing entities.
FUND BALANCE CONCERNS
Law addressed the board and acknowledged that the appraisal district has long been advised to maintain a fund balance. He explained that while auditors suggest maintaining a balance equivalent to one to two months of operational costs, some recommend up to three to four months. For Hood County’s district, he proposed that two months' worth of fund balance is appropriate.
He noted that, according to state law, any excess funds must either be refunded or credited to the taxing entities. Currently, he said, the appraisal district has $426,000 in excess funds, with $110,000 earmarked for obligations such as litigation and building maintenance. He said this leaves $316,000 unassigned, which equates to about 1.2 months of reserve.
Gore clarified that the appraisal district currently has about $316,000 in its fund balance. She asked if the plan is to retain those funds to help manage the budget.
Law confirmed the intention is to keep the funds as a reserve for emergencies, such as catastrophic events like a tornado that could damage the building. He explained that the fund balance is crucial for immediate needs, like making repairs or covering payroll if a taxing entity fails to make a payment.
Law also explained that if the money were refunded to the taxing entities, there would be no reserve left, except for $110,000 already allocated for specific expenditures. He confirmed that the $316,000 represents the only uncommitted portion of the fund balance.
Interim Superintendent Ann Dixon expressed gratitude to everyone involved for addressing an important issue that has been neglected for years. She pointed out that the budget for the appraisal district includes several overlapping sources of funds for contingencies, which she said seems excessive. She noted the budget contains line items for technology, building maintenance and litigation, but also includes a separate contingency fund, effectively creating multiple sources of money for emergencies.
Law explained that while the appraisal district does have specific line items for technology, building renovations and litigation, those funds are intended for different purposes. He said the technology funds were delayed from 2023 due to staff changes, and building maintenance and renovations are necessary for an outdated facility. He added that the litigation budget is stretched thin due to numerous ongoing lawsuits, necessitating additional funds.
Dixon questioned the purpose of the contingency line item, suggesting it might function like a reserve fund, which is not allowed in school districts. Law clarified that the contingency fund was reduced to $40,000 in the 2025 budget, down from $100,000 in 2023. He added that this fund acts as a “catch-all” for unexpected expenses.
HCAD BUDGET INCREASE
Gore also asked Law to explain why the HCAD budget increased by 7.4% when Granbury ISD's budget only went up by 0.85%.
Law attributed the budget increase to several factors. He pointed out that, like many other entities, HCAD has been affected by inflation. He said a significant portion of the budget — about 75% — is allocated to personnel expenses. He explained that the increase includes a proposed 4% merit raise for employees and the reinstatement of the deputy chief appraiser position, which had been eliminated in previous budgets.
“I believe it is a necessary position for the district, just like you all have deputy superintendents, and the cities have deputy city managers and things of that nature,” Law said. “I think the appraisal district needs a position like that as well, so I reintroduced that position, but I left the current staff as it was, with 20 employees, and I added a position to take us to 21, so that's the two main items.”
He said another item that was added straight to the budget is a $65,000 line item for building renovations, as the board decided to improve the current facility rather than pursue a new building. Law explained that these factors collectively contributed to the substantial increase in the budget.
Gore also expressed some concern about the 4% raise included in the HCAD budget, noting it would be challenging for her to approve when Granbury ISD has not given raises this year.
"It's given me a little bit of heartburn, but I understand also having to be competitive with surrounding appraisal districts. That was one of the reasons why we had to give raises, because we were not competitive enough," she explained.
Law confirmed that the increase is partly due to the need to stay competitive. He noted the appraisal district recently lost an employee to Somervell County that offered a significant raise. Law explained that appraisal districts must prepare their budgets well in advance of other taxing entities, which can create timing issues when setting competitive salaries. He mentioned he had proposed a 4% raise based on early information about salary trends, which varied from 2% to 9% across other districts, with the average around 3% to 4%. He said this advance planning and variability in surrounding districts influenced his decision to include a 4% raise in their budget.
HCAD’S RESPONSE TO BUDGET DISAPPROVAL
“The reason we're concerned is our bill is $1.9 million, and we can't buy a bus because we're buying something else with that," Dixon said. “Where does our money go? What does our people want us to do with that? I guess the bottom line is, and what all my colleagues up here are wondering, if we disapprove this budget, what are you going to do?"
Law explained that if a majority of the taxing entities disapprove the budget, the board would need to revise it. He said he would likely reduce some budget items, such as lowering the proposed 4% raise to 3% and reassessing the need for the deputy chief appraiser position.
Law also expressed frustration over the lack of prior discussions about the budget, noting that such conversations could have occurred during the two months between the budget's submission and adoption.
Gore agreed with Law and took responsibility for the oversight, admitting she only reviewed the budget recently. Law added that although state law requires him to send the budget to the presiding officer, he also tries to provide copies to key individuals like the superintendent to ensure thorough review.
BOARD DISCUSSION AND VOTE
Following more discussion, Gore summarized that the board needed to decide whether to pass the resolution regarding the HCAD budget. She explained that passing the resolution would mean disapproving the budget, while not passing it would automatically approve the budget.
“Essentially, you're agreeing to the 4% raises, adding the deputy chief appraiser and allowing them to keep that $316,000 fund balance,” Gore explained. “If you're OK with them keeping that for their fund balance, and you're OK with the 4% raises, and you're OK with adding the chief deputy appraiser, then there would be no reason to pass this resolution. If you want them to go back and redo their budget and look at those items more closely and see where they can make some cuts or possibly refund some of that money, that would be one of the reasons to disapprove this budget or approve the resolution.”
Gore also explained that if the board disapproves the budget, it would be reclaiming the excess fund balance mentioned by Law. She said this would mean HCAD would not retain any fund balance beyond what is already committed for contingency, technology and litigation. In this scenario, Gore explained, HCAD would have to return all the excess funds to the taxing entities and would need to seek approval from the board for any additional funds required in the future for expenses such as building maintenance or salary adjustments.
With 11 taxing entities in total, six would have to disapprove the budget for the action to take effect. Law confirmed that he has received resolutions from three already: Hood County, the city of Granbury and the city of Tolar.
Place 3 Trustee Melanie Graft made a motion to approve the resolution created by the GISD board of trustees to disapprove the 2025 HCAD Budget. Place 2 Trustee Nancy Alana seconded the motion.
The vote concluded 3:2, with Place 1 Trustee Mike Moore, Secretary Billy Wimberly and Gore voting against the resolution, meaning HCAD’s budget was approved by a majority vote. President Barbara Townsend and Place 7 Trustee Karen Lowery were absent during the meeting.
