KATY, Texas — Katy Independent School District administration presented the proposed 2025–26 budget and the related tax-rate discussion Monday, telling trustees that updated revenue estimates have reduced an earlier projected deficit but that the district still plans to use a portion of fund balance.

Chris Smith, presenting the budget highlights, said the proposed 2025–26 general fund revenues total $1,128,720,787 with expenditures budgeted at $1,150,584,181 and a planned use of fund balance of $24,863,394 in the proposed fiscal 2025–26 budget. He said the district began projections for the current year with an estimated beginning fund balance of about $357,000,000 and that an updated, more-conservative estimate of net change had been applied to the final amended 2024–25 figures.

Smith explained the budget assumes the district will open two new elementary campuses and that certain changes in statewide homestead exemptions and state funding (described by staff as funds from House Bill 2) affected the tax base and revenue calculations. He said Katy ISD remains at a maintenance-and-operations compressed tax rate of 0.6169 plus other pennies and the district’s historic debt rate, and that the district’s maximum compressed rate data are those required by TEA forms.

Jamie Hines, Assistant Superintendent of Finance, presented the district’s final amended 2024–25 budget update and said updated revenues reduced the previously projected 2024–25 general fund deficit from roughly $25,260,000 to about $7,000,000 after recognizing additional revenues (including special-education and CTE-related ADA adjustments and interest income). Hines said the district expects continued underspending across many object codes and that payroll — roughly 89% of general-fund spending — remains the largest cost driver.

Hines and Smith described the food-service and debt-service funds as follows: the proposed food-service budget shows revenues of $51,981,752 and expenditures of $51,184,484 with a planned use of approximately $9,122,732 of fund balance in 2025–26; the debt-service fund shows revenues budgeted at $248,056,023 with expenditures of $256,388,095 including recent bond sales and an arbitrage liability that affected accounting. Smith said the district sold bonds in July (approximately $450 million, per staff comment) to maximize state aid tied to homestead exemption computations and that those bond proceeds and related interest income factor into multi-year planning for facilities and debt service.

Trustees asked multiple technical questions about the composition of the revenue adjustments, the timing of enrollment snapshots, and the treatment of federal one-time funds. Dr. Grigorski and Smith explained the district uses demographer projections (the district quoted a budget projection of 97,161 students for planning), that day‑one enrollment typically lags the projection but often catches up by Labor Day and the October snapshot, and that several federal program funds were temporarily available for the year but are not being counted as ongoing revenue for future budgets.

Trustees also discussed the tax-rate display in the public notice: staff explained the notice compares last year’s rate to the rate that would be needed to maintain the same maintenance-and-operations revenue level; because the state provided additional funding, the theoretical rate to raise the same dollar amount would be lower than last year’s rate but staff emphasized that the district is not proposing a lower tax rate because the district’s revenue and service levels have changed.

Administration told the board it will continue to monitor expenditures and will bring timing budget amendments if necessary. Staff said the board will consider final budget adoption in accordance with state deadlines.