As Cy-Fair ISD trustees prepare to approve a budget for fiscal year 2025-26 this June, district leaders said they could struggle to maintain competitive salaries due to the limited funding they receive from the state.

CFISD Chief Financial Officer Karen Smith broke down the district’s budget outlook at the May 5 board meeting, including a comparison of neighboring districts’ teacher salaries and the average amount of revenue they receive from the state based on average student attendance.

“Less revenue than our competitors does make a difference in the ability to be able to compete,” Smith said.What it means

Employee salaries have a significant impact on the overall budget, 89.67% of which is dedicated to payroll, according to Smith’s May 5 presentation.

Trustee Julie Hinaman said CFISD used to consistently be one of the highest-paying districts in the region, but “[is] losing ground,” and is now ranked fourth or fifth compared to neighboring districts.The district is facing a $50 million shortfall in 2025-26, which accounts for no raises. Despite the projected funding gap, Superintendent Doug Killian said he would still like to see employees get raises in 2025-26.

“I think we should do a pay increase even though it will take us further into deficit. But that’s why we have that little bit of extra money in our fund balance. And then we make the hard decisions in [20]26,” he said.

How we got here

State funding is primarily based on average daily student attendance numbers, which Smith said is about 2% less than it was before the COVID-19 pandemic, resulting in a $15 million loss in state funding. Additionally, student enrollment is expected to decline by about 1,123 students for the 2025-26 school year.

When it comes to local property taxes, the state mandates school districts compress their property tax rates when property values increase more than 2.5% from the previous year. Data shows a projected 3.38% increase in the taxable property values for 2025-26.

Also, by offering district homeowners a local optional homestead exemption of 20%, the district lost out on $63 million in property tax revenue in 2024, Smith said.

For FY 2024-25, the CFISD board approved a $1.16 billion budget, which included a projected $77.5 million shortfall. While employees received a 1%-2% raise, several budget cuts were made, and the board approved a property tax rate increase last fall.

What's next

The board will hold a special-called budget workshop May 22, and the budget is expected to be adopted June 23.