Despite the shortfall, the district is proposing to maintain its tax rate at $1.12 per $100 of property valuation for the third consecutive year. Smith maintains the actual shortfall figure will be smaller, if not a surplus entirely, due to the district’s history of underspending and property value audit recoveries.
"Nobody spends their entire budget,” he said. “As the year moves on, we’ll likely end close to break-even, if not a surplus."
The gist
In June, board members approved raises for all staff, partially subsidized by the $28.9 million granted to the district by the 89th Texas Legislature’s House Bill 2, although the bill only covered raises for experienced teachers and a 1.3% raise for non-administrative staff. The district footed the bill for newer teachers and contributed to boosting the non-teaching staff raise by 3%
"We're in a hole, and we got a step ladder,” Smith said. “A much-appreciated step ladder because it was able to do some raises, but it did not get us out of the hole."
The breakdown
Smith said the budget estimate is based on a 0.5% enrollment growth, the operating costs of the new Boudny and Cross elementary schools and a tax base decrease of 2.1% anticipating the passage of higher homestead exemptions by voters in November.
There are expected to be $1.15 billion in expenditures, with over 89% associated with payroll costs, according to the presentation. However, revenues are only expected to come in at about $1.13 billion, with 60% from state sources, 39% from local sources and less than 1% from federal sources.
With another $3 million expected to be transferred out to the employee health fund to maintain its self-insured health fund, which officials said is the largest operating expense for KISD outside of salaries, the deficit rises to nearly $25 million, Smith said.
The financials
Smith said the budget maintains the same total tax rate—$1.12 per $100 of property valuation—since the 2023-24 school year, which includes:
- Maintenance and operations, or M&O, for a rate of $0.73
- Interest and sinking, or I&S, rate of $0.39
Read about how KISD breaks down school funding.
Important to note
Superintendent Ken Gregorski said when the state passed HB 2, not all funding—particularly for special education—was distributed this year due to formula changes. He said additional funds are expected to arrive next year.
Moving forward
The board is expected to vote on tax rate budget adoption at its Aug. 26 meeting, per district documents.
Smith said administrators will propose budget amendments based on changing enrollment, property values and updated guidance from the Texas Education Agency as it comes.
