As Katy ISD leaders worked to slow the spread of the coronavirus during the past year, they have faced another challenge: a financial hit to the district’s general fund budget.

Like districts across the nation, when the pandemic hit, KISD officials quickly found themselves juggling an increase in unforeseen expenses with a decrease in revenue—largely due to a drop in student enrollment. Student enrollment increased by 753 students between the 2019-20 and 2020-21 school years, according to the Texas Education Agency, but increased by more than 3,500 students the year prior.

Budget documents show as of May 17, the district’s general fund—which makes up the vast majority of the district’s total budget—was operating at about a $27.52 million deficit. The general fund budget deficit hit in October and has grown every month since.

KISD Superintendent Ken Gregorski acknowledged the deficit during a financial update hosted by the Katy Area Chamber of Commerce in April but said federal funding could provide some much-needed financial relief. Gov. Greg Abbott in late April announced the release of $11.2 billion in federal funds for Texas public schools—$67.18 million of which is slated for KISD.

While waiting for those funds, however, the district is calling on legislators to prioritize pandemic funding for public education.

Despite the hurdles, KISD Chief Financial Officer Chris Smith said the district expects to pass a balanced budget for the 2021-22 school year and is equipped to overcome the deficit because it went into the pandemic in a healthy financial position.

Additionally, the influx of funding on the horizon—including both the $67.18 million in federal dollars and an expected increase in state funding from an anticipated return to prepandemic enrollment levels—will help KISD overcome the financial loss caused by COVID-19.

“When the pandemic hit, it didn’t have to be, ‘Oh my gosh, how are we going to afford all this?’” Smith said. “We were positioned for that rainy day.”

Unforeseen challenges

KISD is projecting enrollment to reach 100,000 by 2027, making it the fastest-growing large school district in Texas, according to KISD. But when the pandemic hit, it became clear enrollment would be affected, Smith said.

The district had budgeted for an increase in enrollment of about 4,200 students between fall 2019 and fall 2020, Smith said. KISD did see an increase in enrollment, but it was not as high as expected at 753 students. Since Texas state funding of public schools is largely based on enrollment, districts can lose funding when student enrollment drops.

In October, the KISD board of trustees voted to reduce the district’s revenue budget by about $15.3 million to account for the lower enrollment.

Analysts with Raise Your Hand Texas, an Austin-based nonprofit working to improve public education, estimated on average school districts have spent an additional $485 per student for pandemic-related expenses, said Robert Long, regional advocacy director for the group in the West Houston area.

Those expenses have included social distancing barriers, cleaning supplies, internet hot spots and other equipment districts have purchased but did not originally account for in their budgets.

In addition, Long said districts have had to take on unforeseen costs to support students and teachers. For example, the federal government mandated districts give teachers time off when they needed to take care of COVID-19-related issues, such as caring for quarantined family members.

“However, the district was left responsible for paying for these costs even though that was a federally mandated policy,” Long said.

As of May 12, KISD’s COVID-19-related expenditures totaled about $11.8 million, Smith said. Still, he said, the total cost is hard to quantify.

“There’s no way to know just how much we’ve spent,” he said.

Calls for action

District officials are now planning for the use of the $67.18 million in federal funds, which will help offset pandemic-related expenses.

The one-time funds are intended to support a comprehensive learning recovery effort in Texas over the next three years. Two-thirds of the funding, or about $44.79 million, became available immediately through grants administered by the TEA, and the remaining $22.39 million will be released at a later date.

KISD is seeking input on the grant application for the first two-thirds of funding and will present its application plans at a June board meeting, Smith said.

State Sen. Lois Kolkhorst, R-Brenham, oversees part of the Katy area. She said in a statement she is pleased with the funding KISD received.

“While funding alone cannot solve the pandemic woes, these additional dollars should help in the recovery for the students, teachers and taxpayers within the district,” she said.

Despite federal help, district officials said more financial support is needed. District leaders have pointed to the basic allotment, a legislatively mandated amount meant to represent the basic cost of educating a single student, as a point of concern.

At the April event, Gregorski said the basic allotment has not kept pace with inflation. The allotment has been set at $6,160 per student since the 2019-2020 school year. Before that, it stood at $5,140 for four years.

“If they don’t change the basic allotment, there’s no more money,” he said. “People need to understand that unless that basic allotment changes, where is the new money coming from?”

Smith, too, said the stagnant number creates challenges for the district.

“We’re kind of at the mercy of the Legislature for that number to change,” Smith said.

Legislative role

Hundreds of bills related to public education issues were filed in the 87th Texas legislative session, which began in January and ended May 31.

In the weeks before the session ended, KISD board member Ashley Vann said she hoped legislators would take pride in public education and take action to make funding for schools more accessible.

“Our legislation needs to take a harder look and take seriously the funding provided for public education,” she said. “In my opinion, it’s never enough. And it seems to keep getting smaller.”

Still, even when promising bills pass, they are often unfunded, which leaves districts asking where the money is going to come from, Gregorski said.

“It happens every session. We’re not saying they’re bad bills. There’s a lot of good stuff in there—but who’s going to pay for it?” he asked.

Raise Your Hand Texas does not advocate for any specific bills, Long said, but was watching nearly 300 bills closely during the session. While combating the pandemic, Long said, public schools need more support than ever.

Conversations about KISD’s 2021-22 budget kicked off in January. There are several key budget considerations, Smith said, including watching what happens with enrollment; how to address learning lag; and prioritizing student social, emotional and mental health. Thankfully, he said, those can be addressed through the coming funds.

“Over the next couple of years, you could take that $67 million and use it to beef up these kinds of things and recalibrate where we should be had it not been for COVID,” he said.

KISD’s 2021-22 budget will be approved this summer and go into effect Sept. 1. KISD does not anticipate raising the tax rate and expects a balanced budget, Smith said. Amid challenges, KISD will prioritize operating in a healthy financial position, supporting staff and fostering student success, he said.

“Everyone is working to do the right thing for kids, period,” he said.