Katy ISD projects $15.7M shortfall for fiscal year 2026-27

While the general operating fund balance has gone up over the years because of an overall rise in enrollment along with expenditures, the general fund balance as a percentage of expenses has done a better job at staying stagnant.

“If that goes up, we’re not putting the money to work for our staff and for our students,” Smith said. “If it goes down, we’re overspending even though we may be gaining fund balance. We’re not gaining it at a healthy level.”

Diving in deeper

The district is set to benefit from several revenue drivers including basic allotment and formulas in the foundation school programs, enrollment, property values and the tax rate, Smith said.

Other budgetary items still pending or outstanding include:

• Property tax compression
• Special education funding
• Effect of education savings accounts
• Virtual school and out-of-district enrollment

Also of note

After a multiyear delay, Katy ISD’s 2023 property value audit was approved in March, bringing in a one-time payment of $34 million.

Smith pinpointed less state funding and federal revenue as the main reasons the district’s total estimated revenues for FY 2026-27 is projected to go down $3.6 million from the previous year.

This is due to an increase in tax revenues, a decrease in enrollment and the district not opening any new schools next year.

When discussing the district’s debt service, Smith said district officials are in the process of refunding $165 million-$175 million in callable bonds, which will produce an 8% present value savings or "several million dollars in cash savings.”

The district will find out future property values in “about six weeks,” Smith said.

Next steps

Another budget update will take place in July before the board adopts the budget and sets the tax rate in August.