Editor's note: This story was updated at 2:37 p.m. to provide additional information that Katy ISD provided after the article published at 1:12 p.m.

The Texas Education Agency notified Katy ISD that it will reduce the district’s state funding by $513,754.56.

This is according to a May 31, 2019, letter from the TEA to the district that Community Impact Newspaper obtained March 3. The agency decreased the state funding because of the severance payment the district issued to former Superintendent Lance Hindt, whose resignation was effective Jan. 1, 2019.

A copy of the letter—provided by TEA—is available at the end of the article.

A district cannot pay a superintendent severance of more than one year's salary and benefits under the terminated contract or else the TEA commissioner will reduce the district's funds, according to the Texas Education Code and Texas Administration Code.

Hindt’s base salary for the 2018-19 school year was $394,587, according to the TEA. Previous Community Impact Newspaper reporting states KISD paid Hindt more than $750,000 in a severance package. Community Impact Newspaper has reached out to the TEA for a copy of the superintendent payment disclosure form KISD submitted, but the request was not immediately fulfilled.

Maria Dipetta, KISD's media relations and multimedia manager, said in an email that Hindt's contract included a two-year separation clause. The district informed the TEA in 2018 about the severance payment, and the TEA, subsequently informed KISD that state funding would be reduced.

“In 2018 the Katy ISD board and former superintendent made a decision to separate,” Dipetta said. “As required by the former superintendent’s contract, a separation payment was paid.”

According to the TEA website about superintendent severance packages, state funding reductions occur in the school year following the school year incurring the first severance payment. Community Impact Newspaper has reached out to the TEA to confirm which fiscal year the funding reduction will occur.

DiPetta said KISD expected the funds to be reduced for the 2018-19 budget year—the same year Hindt resigned—and there has been no funding reduction for the 2019-20 school year. She added that the district developed a balanced budget for the 2018-19 school year in anticipation of the reduced funds and no district programs lost funding during that school year.

At $245.8 million, state funding accounted for 34.4% of KISD’s 2018-19 general fund budget, according to the latest Public Education Information Management System District Financial Budget Reports on the TEA’s website. Due to House Bill 3—the school finance reform bill passed during the 86th Texas legislative session—the district expected to receive additional funding from the state for the 2019-20 school budget, KISD Chief Financial Officer Christoper J. Smith said in 2019.

Hindt announced his resignation as KISD superintendent in May 2018 after community members accused him of bullying in his teenage years and plagiarizing his doctorate dissertation. Hindt had served as KISD superintendent since August 2016.

Ken Gregorski was appointed as KISD’s new superintendent in January 2019. After a year on the job, the board of trustees increased Gregorski’s annual base salary from $300,000 to $324,000.