In a nutshell
During the board work study meeting March 18, district staff told KISD trustees the district could face a projected $13 million shortfall in the fiscal year 2024-25 budget.
“Katy ISD is recognized as a state-acclaimed school district for fiscal integrity and responsibility,” Gregorski said in the email. “Though, like many other school districts, our district is approaching an increasingly difficult task of maintaining balanced budgets year after year. The state’s inaction on school funding has compelled districts throughout Texas to operate on deficit budgets.”
This comes after trustees penned a resolution in December calling for state lawmakers to increase the basic allotment, which is the base amount of money schools receive per student.
The context
Going into the budget season, district staff worked to reduce the district’s projected $32.4 million shortfall down to $13 million, KISD Chief Financial Officer Christopher Smith said at the meeting. The projected shortfall does not account for employee raises.
However, Smith said district staff can offset the shortfall with the general fund balance.
“That does not give [me] any heartburn, because I know that when in doubt, we’re conservative and have been, and I would not lose sleep over it,” Smith said.
This is the second consecutive year the district faced a shortfall, with KISD having a $8.1 million deficit in FY 2023-24, Smith said. However, Smith said he's hopeful the district will recover that deficit and even have a surplus after a property value audit is completed.
Zooming in
Gregorski said in the email district staff plan to take several measures to offset rising expenditures, including:
- Modifying some program models to create greater efficiencies
- Phasing out programs that have shown limited return on investment
- Retaining all teachers and staff
- Protecting core student programs and services
- Ensuring standards for student academic performance remain intact
In Texas' 88th legislative session, lawmakers failed to agree on a bill to address school funding. A core piece of school-related legislation was centered around increasing the basic allotment, which was last increased during the 2019 Legislature.
However, some proposed bills tied public school funding to an effort to offer education savings accounts, a voucher-like proposal that would give families public funds to pay for private education. Gov. Greg Abbott said passing the vouchers were a top priority for him going into special sessions.
What else
In addition to state funding, KISD faces budget challenges due to inflationary pressures on expenditures, federal Elementary and Secondary School Emergency Relief funding expiring, enrollment growth and changes to state program funding, Gregorski said in the email.
Smith said school districts are limited in ways officials can increase revenue, as it’s largely dependent on property tax values. Additionally, the district’s bid for a voter-approval tax rate election, or VATRE, in November 2022 failed to garner voter support.
Quote of note
“The only meaningful way to impact our revenue is [for] the state Legislature to do something,” Smith said. “If the state doesn’t do anything, we really cannot ... materially affect our revenue.”
What’s next
KISD trustees will meet over the next few months regarding the 2024-25 budget. Trustees will adopt the budget in August after holding public meetings for the budget and property tax rate. The next KISD board meeting is set for March 25.
