Katy ISD officials project the fiscal year 2024-25 budget will have a shortfall of $7.8 million due to lack of state legislative action to increase public school funding and higher operating costs as a result of inflation, officials said.

At KISD’s May 6 board work session, Chief Financial Officer Christopher Smith cited multiple variables still uncertain at this point in the budget process, such as fluctuations in average daily attendance, local property tax valuations and possible raises for district teachers and staff.

The details

Going into the budget season, district staff worked to reduce the district’s projected $32.4 million shortfall down to $13 million reported in March, then to $7.8 million now, Smith said. However, Smith said the district can offset the shortfall by tapping into the general reserve fund balance.

This is the second consecutive year the district faced a shortfall, with KISD having a $8.1 million deficit in FY 2023-24, as previously reported.

A closer look

Trustee Rebecca Fox said Smith’s presentation didn’t include a projection for raises as it has in previous years, despite it being near the end of the school year when teachers and other staff are considering other opportunities.

“This is the time in May when [staff is] looking at, ‘What am I going to do next? Where am I going next? How am I going to pay my rent?’” Fox said. “So I know that they're very anxious to hear from us in May.”

Fox asked Superintendent Ken Gregorski if there had been a placeholder amount in past budgets for staff raises. Gregorski said yes and recommended a 2% raise but said anything more was unlikely.

“I think we could afford a modest raise of 2%,” he said. “I think that still puts us in a deficit. Any higher than 2% at this time would be maybe a little bit of a challenge and a stretch for us to try to close that next year.”

Smith said a 1% raise for staff would add roughly $7.3 million to the shortfall, which would need to be paid through the district’s reserve funds.

For the ongoing FY 2023-34, teacher salary increases were approved at $2,145 per teacher, which is approximately a 3% average increase, and starting teacher pay was increased to $62,400.

What’s next

Districts across the state will likely have to rely on reserve fund balances to absorb the shortfall, and Smith said the largest variable is $4 billion surplus in state education funds that can’t be paid out until it’s tied to new bills in the 89th legislative session, set to begin Jan. 14.

The district will finalize budget projections and prepare a budget proposal to be approved by the board in August, Smith said. This will follow additional budget meetings and public hearings to discuss tax rates.

The board will meet again May 13.