Katy ISD board adopts 2026-27 budget with $25.6M deficit, approves new health plan options

KATY — The Katy ISD Board of Trustees on Monday adopted a 2026-27 budget that projects a $25.6 million gap between revenue and expenditures — the fifth consecutive deficit budget for the district — while also approving a new slate of employee health plan options that add copay-based coverage for the first time.

The budget vote was not explicitly recorded as a separate roll call in the meeting record, but trustees approved the consent agenda items, which included budget-related action, on a 7-0 vote. Chief Financial Officer Chris Smith told the board the district must legally adopt its budget by Aug. 31 and that despite the projected deficit, Katy ISD expects to end the year with a healthy fund balance because departments historically underspend their allocations. The district’s general fund is starting the year with a $374 million fund balance, or roughly 34% of expenditures — about four months of operating costs, Smith said.

Smith attributed much of the projected shortfall to a planned second lump-sum payment to employees in December, on top of a 1% ongoing salary increase and an earlier lump-sum payment funded from the current year’s budget. He said the district is using a conservative 1.5% tax-base growth estimate — the lowest in years — and that maintenance and operations and interest-and-sinking tax rates will remain unchanged from recent years. Smith said 89% of the district’s spending goes to salaries and benefits, and about 83% of total spending is instruction or instruction-related.

Health plan changes approved 7-0

Trustees voted 7-0 to approve health plan options for plan year 2027 after board member Mr. Shipley pulled the item from the consent agenda to ask about pharmacy benefits. The new plans add copay options that district staff and public speakers said were a significant improvement, alongside a new Kelsey-Seybold plan.

District benefits staff, including Mr. Harris and Mr. Nama, told the board that Katy ISD’s HEB pharmacy program, now in its third year of a three-year contract, currently has no mail-order option. Shipley asked staff to research the cost implications of adding one, and Superintendent Gregorski said the district could reopen negotiations with HEB at any time without affecting the medical plan vote. The board did not delay its vote on the medical plan options to await that research.

Trustee Ms. Fox raised concerns about coverage for employees’ children away at college who live far from Kelsey-Seybold facilities; staff said the high-deductible or POS plans with national PPO networks, along with an Aetna wrap network for emergencies and telemedicine, remain the best options for those families. Trustee Ms. Taylor praised the district for beating health care inflation trends by about 4% compared with other state plans and for savings from moving to a fully insured model, while urging clear communication to staff about the new options. Staff said a phased rollout, including video explainers and a benefits fair, is planned for late September into open enrollment.

Two Katy ISD employees, Amy McBride of the Katy Texas AFT and new employee Martha Sepulveda, addressed the board during public comment on the health plans. McBride cited a union survey in which 68% of respondents said new copays would positively affect them, but only 47% were satisfied overall with the proposed plans; she asked the district to consider mail-order pharmacy options and a formal employee health insurance committee modeled on Alief ISD’s. Sepulveda, a breast cancer survivor, urged the district to expand preventive care programs, citing a workplace mammography screening that caught her cancer early.

Grievance denied 7-0

Following a closed session, the board voted 7-0 to deny a Level Three parent-student grievance, identified as FNG 2025-063, upholding decisions made at the first two grievance levels. No details of the underlying complaint were disclosed, consistent with state law restrictions on personnel and student-related closed-session matters.

Public comment dominated by tennis court fees, AI policy

The largest bloc of public speakers addressed newly proposed rental fees for district tennis courts, which multiple speakers said could total more than $100,000 a year for programs using multiple courts regularly. Speakers including academy operators, coaches, parents and students — among them Anna DiGenova, Gina Bragan Morris, Ashley Gardner, Andrew Maren, Julius Parthiban, Matt Caldwell and Sumit Patel — asked the board to pause or reduce the fees, arguing they could shutter youth tennis academies serving more than 1,000 Katy ISD students across 18 junior highs and 10 high schools. No board action was taken on the fee issue Monday.

Other speakers raised concerns about a new district AI-use framework restricting AI tools for students in sixth grade and below, arguing that Google’s Gemini assistant remains accessible on younger students’ Chromebooks despite the policy, with no clear district monitoring in place. Speakers from the group Schools Beyond Screens Katy asked for measurable, grade-level screen-time limits and stronger data privacy safeguards.

Other speakers addressed peanut allergy safety policies in secondary schools, new UIL heat-safety rules for outdoor athletic practices, school lunch nutrition, and a request for a school bus route for a Morton Ranch Junior High student whose family said the walking distance exceeds one mile and requires crossing busy intersections.

Katy ISD Council of PTAs President Kathleen Brennan reported the district maintains the highest PTA membership of any district in Texas, with more than 28,000 members across 71 local PTAs last year.

Also at this meeting:

• The board approved its consent agenda, items 8.1-8.9 excluding 8.7, on a 7-0 vote.
• No public speakers signed up to address the proposed 2026-27 budget and tax rate during the dedicated hearing item.
• Staff reported no new library acquisitions were posted to the district’s public dashboard for July.
• The board scheduled a special meeting for Aug. 31, a work study session for Sept. 14, and its next regular meeting for Sept. 21, 2026.
• Jordan High School’s marching band performed the national anthem to open the meeting.