The Austin ISD Board of Trustees on Thursday OK'd a 2025-26 budget that has a projected deficit of $19.7 million. The new fiscal year begins July 1.
Austin ISD interim Chief Financial Officer Katrina Montgomery told trustees that while they were asked to approve a deficit budget, the district will continue working on ways to reduce it.
鈥淲e didn鈥檛 get where we wanted to this year having a balanced budget," she said, "but that is still something that we are going to work hard at, is making sure we have a balanced budget year over year over year."
The plan trustees approved includes for the district鈥檚 general fund, which is used to pay for things like salaries, school maintenance, transportation and utility bills. More than $715 million of that will also be used for Austin ISD鈥檚 recapture payment.
The Texas Legislature in the early 1990s to redistribute money from districts with high property values to those with lower ones. According to the state鈥檚 current school finance formulas, Austin ISD collects more in local property tax revenue than it needs to operate. That鈥檚 why it has to send a big chunk of its general fund revenue to the state.
The budget's approval was coupled with a vote to change the on the district鈥檚 fund balance, which is the cash it has on hand to cover expenses such as payroll. Austin ISD has been required to maintain a 20% fund balance, giving it the ability to cover several months' worth of operating expenses without having to borrow money.
Trustees voted to lower that threshold to 15% 鈥� a policy that will be in place until the 2027-28 fiscal year. Superintendent Matias Segura said 15% amounts to about two months of the district鈥檚 expenditures, and he would never want to go below that threshold.
鈥淥ur preference is 20%, we want to get up to 20%, but we already cut a lot in [the 2025-26 budget],鈥� he said.
Part of the plan to get back to a 20% fund balance in the next few years is making additional spending cuts by doing things such as consolidating schools.
What budget cuts is the district making?
The projected $19.7 million shortfall is much lower than the $78 million deficit budget the school board adopted last year. Austin ISD鈥檚 deficit ballooned to over $100 million during the last fiscal year, though. The district has said a variety of factors increased the deficit, such as lower than expected growth in property values, a loss of federal funding for certain special education services and additional expenses for things like instructional materials.
Austin ISD officials said they had to significantly reduce the budget deficit for the 2025-26 school year to prevent the fund balance from getting too low. To get to $19.7 million, the district identified $44 million in cuts. Among them are slashing the central administrative office staff by 20% and requiring departments to reduce their budgets.
Trustee Kevin Foster thanked Austin ISD administrators for their work on the budget in the face of significant challenges.
"We're being put to the test right now, probably like never before," he said.
In addition to spending cuts, Austin ISD will also rely on new sources of revenue to chip away at its budget shortfall. It鈥檚 anticipating an influx of $45 million from selling district properties. An $8.5 billion school funding bill the Texas Legislature passed this year also means more money for the district.
Will teachers get raises under the new budget?
Austin ISD estimates it will receive $36 million in funding under the new legislation 鈥� House Bill 2. But the bulk of that must be spent in specific ways. HB 2, for example, requires large school districts to give teachers with three to five years of experience a $2,500 raise. Those with five or more years of experience will get a $5,000 pay bump.
鈥淥ur preliminary estimates from HB 2 is that we will receive $17.4 million [for raises],鈥� Montgomery told trustees.
She said approximately 600 teachers will receive the $2,500 raise. Another 3,000 are expected to get the $5,000 increase. Last year, Austin ISD relied on a tax rate election to cover the cost of making market adjustments to teacher salaries.
Montgomery said the district will meet with Education Austin, a union representing Austin ISD employees, to finalize the compensation plan in July.
The school board is slated to vote on that plan on Aug. 21. The district will send letters out on Sept. 15 to employees getting pay increases.
