Katy ISD projects $26.7M budget gap but says state funding from HB2 narrows shortfall

KATY, Texas — Katy Independent School District officials on Monday presented a draft 2025–26 budget that shows a $26.7 million deficit in the general fund but says the district expects to reduce that gap through underspending, property‑value audit receipts and state funding tied to House Bill 2. The presentation by district presenter Chris Smith and budget staff laid out how HB2’s new funding streams — including a large teacher compensation allotment, an enrollment‑based “ABC” fixed‑cost allotment, higher school safety and modest transportation funding — will change Katy ISD’s revenue and expense picture for next year. District staff said HB2 increases state funding to Katy ISD by roughly $50 million (their consultants’ estimate and the district’s models range around $50–53 million) but noted much of that money is restricted: roughly $28.9 million must be used for classroom teacher pay increases, and other allotments are tied to particular uses or to future rulemaking by the Texas Education Agency. Smith told trustees that HB2 creates a new basic cost (ABC) allotment that the district estimates at $106 per enrolled student, and that HB2 also uses…