Katy ISD projects budget gap for 2025–26 as state, federal shifts cut aid and special education remains underfunded

Katy Independent School District Chief Financial Officer Chris Smith told the board during a March 24 work study that the district is projecting a budget deficit for 2025–26 driven by slower enrollment growth, reductions in some federal reimbursements and capped state allotments.

Smith said the district’s present estimate for next year’s enrollment is about 96,655 students and that, under current law, state funding elements such as the basic allotment and the “golden penny” yield add revenue but do not eliminate a projected gap. “We adopted a $27 million deficit,” Smith said, adding that recent budget amendments will improve that by “about $2.5 million.”

The presentation framed several state- and federal-level uncertainties that affect district revenue. Smith said federal reimbursements tied to indirect costs on grants (the district’s “SARS” or similar reimbursement) were reduced by roughly $5 million in December 2023 and by about another $5 million in December 2024, and that the district expects continued pressure on those revenue streams. He also…