Texas Senate Bill 4 proposes increase in homestead exemption and impacts school funding

Katy ISD is poised for significant financial adjustments following a recent board meeting that highlighted the implications of new legislation on property taxes and school funding. A proposed increase in the homestead exemption from $100,000 to $140,000, along with an expansion for seniors and individuals with disabilities, could result in a loss of approximately $22 million for the district's debt service fund. This change is expected to reduce taxable property value by about $5.4 billion in Katy, raising concerns about the district's financial stability.

To mitigate these losses, Katy ISD plans to conduct a bond transaction next week, selling $450 million in bonds that will qualify for Additional State Aid for Homestead Exemption (ASI). This strategic move aims to offset potential revenue declines and ensure continued funding for essential services. The board expressed confidence that the state would cover the losses in maintenance and operations funding, although the impact on the Interest and Sinking (INS) fund remains a concern.

In addition to property tax discussions, the board addressed other budget-related matters, including the potential for increased insurance liability costs due to new legislation. The procurement threshold for legal purchases has been raised from $50,000 to $100,000, streamlining administrative processes.

The meeting also touched on the state's commitment to increasing funding for special education and safety measures, although the district will still face challenges in fully covering these expenses. The board anticipates a modest increase in student enrollment and property values, which will be factored into the upcoming budget.

As Katy ISD navigates these financial changes, the board remains focused on ensuring that educational quality and resources are maintained for students and staff. The next steps will involve careful monitoring of enrollment trends and property values, with adjustments to the budget expected as new data becomes available.