Inflation, enrollment decline impacting Cy-Fair ISD’s budget shortfall

CFISD saw a 2.7% decrease in enrollment as of October 2025 from the 2024-2025 school year. Smith attributed this decline to a combination of homeowners with adult children continuing to live within the district boundaries.

The specifics

The district’s 20% homestead exemption offered to residents decreased its property tax revenue by $72 million for FY 2025-26, per the presentation.

Smith said district officials are working with legislators to see how this change could be recognized in state funding formulas, as CFISD by law cannot remove or reduce the exemption until January 2028.

“The local optional homestead exemption is not the best way to generate money,” Superintendent Doug Killian said. “It is the best way to help our homeowners in our district, but when it’s not paid for then it’s also costing us.”

Similarly, Smith said a statewide 24% inflation increase from September 2019 through August 2025 has not been properly factored into the funding formulas. Smith said while private schools are able to increase tuition costs to catch up with inflation, public schools don’t have that option.

Also of note

Cy-Fair ISD's proposed budget for FY 2026-27 projects a $73.9 million shortfall, according to an April 13 presentation to the board of trustees.

Smith told district officials to expect several expenditure increases including:

• $4.6 million for Virtual Pathways implementation
• $3.7 million for miscellaneous expenditures
• $2 million for textbooks not covered by the Instruction Materials Technology Allotment
• $2 million for preventative chiller maintenance
• $1.1 million due to fuel inflation

A $8.7 million decrease in teacher incentive allocations from the state is expected as a result of the decreased student enrollment as well as a $4 million decrease in department budgets, the presentation showed.

District officials said employee raises are not currently included in the expenditure projections.

Next steps

A special-called board meeting to further workshop the district’s budget will be held May 21, and the board is scheduled to adopt the FY 2026-27 budget in June.

“That’s when we are literally going to take off our jackets and roll up our sleeves,” trustee Justin Ray said. “It’s going to be a deep dive into what we need to do to fund this school district.”