KATY – At its August 25 meeting, the Katy ISD Board of Trustees approved a $1.15 billion operating budget for the 2025–2026 fiscal year. The budget is supported by a proposed tax rate of $1.12, which the Board reviewed earlier in the month and is set for formal approval in September.While House Bill 2 from the 89th legislative session provided new funding for school districts, its impact has been significantly diminished by inflation, fast-paced growth and the absence of state-funded cost adjustments in recent years. As a result, Katy ISD is currently projecting a $24.9 million budget deficit. However, district officials report that this shortfall is expected to be reduced, or potentially eliminated, through strategic cost savings, underspending and other efficiencies over the course of the school year. Katy ISD Chief Financial Officer Christopher Smith explained that the budget is a spending backstop, and the district does not typically spend the entire budget.
HB2’s state support for salary increases boosted pay for some teachers this school year, though early-career educators were not awarded state-funded pay increases. To support those teachers, Katy ISD funded salary increases with local dollars. In addition, other employees, excluding administrators, received a 3% pay increase with 1.3% funded by HB2 and the remaining 1.7% funded by Katy ISD. Administrators were provided with a 3% increase, funded entirely by Katy ISD.
“As our district grows and costs continue to rise, we remain committed to being responsible with our resources, supporting our dedicated teachers and staff, and ensuring students continue to receive the high-quality education our community expects,” said Katy ISD Board President Lance Redmon.
This fall, the District successfully opened Boudny and Cross elementary schools in the fast-growing northwest quadrant of the District, expanding the District to 80 campuses. Budgeted student enrollment increased by more than 500 children (0.5 percent) compared to the 2024-2025 school year, while the tax base declined by 2.1 percent. Despite those challenges, the District maintains a competitive compensation plan and healthcare plans for employees and projects to decrease or eliminate its budget deficit through calculated underspending.During the August Work Study Board meeting, Smith explained that the state’s funding towards tax compression and property tax relief is designed to ease the burden of rising appraisal values set by county appraisal districts. In addition, the expected increase in the state’s homestead exemption should further decrease tax bills this school year. The increase in the homestead exemption from $100,000 to $140,000 ($200,000 for seniors and disabled homeowners) as approved by the state legislature, will be on the November ballot.
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Proposed Tax Rate: 2025-26
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Maintenance & Operations/General Operating (M&O)
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$0.7271
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Interest & Sinking/Debt Service
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$0.3900
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Total Tax Rate
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$1.1171
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