By Rye Druzin
As oil inventories continued to rise this week with new U.S. Energy Information Administration data, the effects of the ongoing downturn continue to be felt far and wide, but especially in oil play towns.
Local school districts such as Cuero ISD are facing budget shortfalls as the downturn in oil revenue and valuations hits a revenue stream that had seen years of record growth. Adopted budgets show that local and intermediate revenues for Cuero ISD increased from about $6 million in 2009 to $22 million in 2013. Board President B.J. Drehr said the district faces an estimated $5 million fall in revenues to about $16 million, which will force the district to cut personnel and services it added during the roughly five years of an Eagle Ford boom.
Interim superintendent Dr. Ben Colwell, who came on with the resignation of Jim Haley as he moved to West Texas, said he already has found $3 million in cuts in the budget. These cuts will include personnel and some services, and he added the administration and board is looking at other places to save money.
The Eagle Ford shale oil boom undoubtedly gave small towns such as Cuero the opportunity to undertake projects that it otherwise would not be able to - such as the $76 million bond measure for the under construction Performing Arts Center and two new elementary schools. Colwell said such a bond measure, even a $10 million bond, would not have passed muster prior to the boom.
On top of the fall in revenues, school districts in towns such as Cuero, Yorktown and Karnes City are now facing a second hit because they are considered Chapter 41 or "property rich" for the past few years. The Texas Education Agency is now requiring them to repay state dollars that previously flowed to them. For Cuero, Colwell does not believe that is an issue; the school district owes the state $5.3 million, but it has $18 million in its general fund. But for other districts, such as Yorktown, the TEA is looking to recapture at least $15 million.
Neighboring Karnes City ISD is facing a $48 million recapture.
Drehr said he believes these recapture rates, especially as school districts like his own are going through periods of significant devaluations, are a glaring example of how Texas' school funding is in need of overhaul. He pointed to a case in front of the Texas Supreme Court, where more than 600 Texas school districts are suing the state over school finance laws, as a place where he is looking for relief from the current formulations.
The boom was beneficial for local school districts without a doubt, and the legacy of it in the form of new buildings and infrastructure will not go away. But the costs of tying budgets to inflating revenues, and what turned out to be inaccurate estimations of the length of the boom, will require some pain in the short term.
Rye Druzin is a reporter for the Victoria Advocate covering the oil industry in addition to DeWitt and Lavaca counties. He can be reached at 361-580-6511, or firstname.lastname@example.org.