Austin ISD trustees hear multiyear forecast showing near‑term $39 million gap and larger cuts ahead

Austin Independent School District trustees on Feb. 26 heard a multiyear fiscal forecast that projects a widening gap between revenues and operating expenditures and requires near‑term reductions to meet board fund‑balance policy.

Katrina Montgomery, who led the forecast presentation, said the district’s adopted budget showed a $19 million deficit when adopted in June but the latest projection for FY25–26 reflects a larger shortfall, driven by enrollment declines, lower property values and other changes. Montgomery said the district must find an additional $39,000,000 in reductions during the current fiscal year to meet the board’s interim targets.

“The fund balance policy is increasing to 20% by FY27–28,” Montgomery said in her presentation, and the district’s targets for the next two years are 15% for FY25–26 and 17% for FY26–27. She told trustees the district had used property monetizations and pending strategies in prior budgets and is evaluating additional reductions, including vacancy management and other expense controls.

Superintendent Segura told trustees much of the $39 million would come from reduced spending already visible in year‑to‑date results: “In the months from July 1 through December, we have picked up $29,000,000” through lower spending, hiring freezes and process changes, he said, adding that the district is confident it can make up a large portion of the gap but that larger, strategic reductions will be required for FY26–27 and beyond.

Trustees pressed for specifics. Trustee Singh asked where the $39 million would be cut; Montgomery and Segura said staff are developing a plan and that some of the savings will come from current underspending, a hiring freeze that began in January, tighter preapproval and purchasing controls, and contract adjustments. Montgomery warned that deeper cuts or relying on one‑time measures can create timing risks if anticipated property or other revenue shifts arrive in later years.

Board members and staff framed the current situation as a combination of structural pressures and cyclical factors: declines in average daily attendance and enrollment, a projected 5% drop in property values in modeling, reduced grant funding and the ongoing recapture payment to the state all contribute to a multi‑year deficit that cannot be solved with one‑year fixes.

Trustee Foster described the environment as a longer contraction rather than a temporary shock and urged the board to consider visioning for a smaller fiscal footprint. Segura said the district must be “hyper thoughtful” about each dollar as it plans staffing, program investments and system improvements.

The presentation concluded with an invitation for the community to attend a virtual engagement session on Feb. 28 and a commitment from staff to provide more detailed narratives and updated materials to trustees ahead of budget decisions.

What’s next: trustees asked staff to provide clearer narrative context and the slide materials; the district committed to follow‑up updates as the budget season proceeds.