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KIPP Texas board approves revised FY25 and FY26 budgets; FY26 shows $18M deficit to be managed with KTFF support
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Summary
The KIPP Texas board unanimously approved revised FY25 operating/capital budgets and the FY26 operating/capital budgets on June 5; management flagged an $18M projected FY26 deficit, three principal risks (SPED transportation, enrollment decline, unplanned expenses), and noted HB2 passage could materially change FY26 projections after TEA rulemaking.
KIPP Texas’ finance team presented revised financials and asked the board to approve both a FY25 revision and the FY26 operating and capital budgets at the June 5 meeting. The board voted unanimously to approve the FY25 revised budgets and later unanimously approved the FY26 budget, which currently projects an $18,000,000 deficit.
Chief Financial Officer Sun Han said the FY25 deficit was solved this year through a combination of ESSER funds, KIPP Texas Future Fund (KTFF) support and expense reductions. For FY26, Han and deputy chief Joe Heichel presented three principal risks to the budget: (1) special-education transportation costs and charge compliance, (2) potential continued net enrollment decline, and (3) material unplanned expenses. The management team is pursuing routing optimization, audits of transportation supplements, and other operational efficiencies.
Han and Joe noted that HB 2 passed the legislature and was signed by the governor the day before the meeting; TEA rulemaking and allocations will determine how much of that new funding will be unrestricted and therefore able to reduce the projected deficit. Finance said it assumed a conservative 0% unrestricted increase from the state in the FY26 budget because the TEA will not finalize allocations until October, but modeled conservative and aggressive scenarios (a 2% unrestricted increase could reduce the deficit to roughly $10M; a 4–5% shift would materially eliminate it).
Board members asked for clearer variance tables and a conservative estimate of HB2’s likely unrestricted impact; management committed to provide a budget-to-budget variance table and scenario analysis. The finance presentation also included capital plans (about $10M in maintenance CapEx next year, including modular building repairs) and contingency planning (aiming to maintain cash-on-hand, access to credit and KTFF support).
Votes at a glance: - FY25 revised operating and capital budgets — motion moved and seconded; passed unanimously. - FY26 operating and capital budgets — motion moved and seconded; passed unanimously. - Consent agenda (excluding student/family handbook) — approved unanimously.
The board did not direct immediate service reductions; management said the approved FY26 budget provides time to pursue the mitigation steps discussed and to return to the board with updates in the fall once TEA allocations are known.
