The big picture
The proposed shortfall—$22 million of which is due to staff raises—will be covered by the district’s reserve fund balance. However, staff may also need to amend the budget throughout the year to lessen the impact to the fund, Chief Financial Officer Christopher Smith said.
“Our fund balances are healthy, and we’re in a good spot to be going through the weather that we’re going through with our economic environment,” he said.
The details
KISD staff will allocate $1.39 billion to expenditures this fiscal year, and staff anticipates receiving $1.35 billion in revenues, according to agenda documents. Between its general, food service and debt service funds, KISD will have a $44.08 million shortfall.
Additionally, staff is expecting a property tax base growth of 7.2% year over year and an enrollment growth of 1.4% new students, Smith said.
Most of the district’s general fund revenue, 56%, comes from state funding, while 43% comes from property tax revenues and 1% from federal funds. For next year, KISD is proposing a property tax rate of $1.1171 per $100 property valuation, a compressed rate of $0.0023, Smith said.
This is a 40-cent reduction since 2019, when Texas House Bill 3 required districts to compress, or reduce, their tax rate, Smith said. This was taken further with the passage of Senate Bill 2, a property tax relief bill, in the 2023 Texas Legislature, which required public school districts to compress their tax rates 18 cents.
SB 2 supplemented the local property tax revenue lost due to the tax rate compression, but it didn't provide additional revenue for classroom instruction, Smith said.
Zooming out
KISD leaders have said they hope the state will allocate more funding to public education in the upcoming 89th legislative session, which begins Jan. 14. However, KISD shouldn’t count on state funding when planning for the 2024-25 budget cycle, Smith said.
“We must plan under current law, and under current law you have a $27 million deficit. So in order for us to stay healthy, we’re going to need to find areas in which we can reduce that,” he said. “Because if nothing happens at the state level, and we find that out in June, it’s too late to make an impact—you’re stuck with it.”
Next steps
KISD should begin making amendments to the 2024-25 budget year in October to help offset the shortfall and rebuild the fund balance, Smith said. Additional revenue from a property tax value audit is expected to come out in the district’s favor.
“I am confident that we will break even and even add to fund balance when this audit is presented to you guys in January,” he said.
Trustees are set to approve the FY 2024-25 budget at the Aug. 26 board meeting.
