Austin ISD projects $95 million FY25–26 shortfall; trustees debate deeper cuts versus amending budget later

Austin Independent School District officials on Thursday told trustees the district’s FY25–26 revenue outlook has worsened and now shows a projected $95,000,000 deficit, prompting an extended board debate about whether to approve a recommended FY26–27 budget that assumes a 15% fund balance or to require more immediate, painful reductions.

"As of today... our projection will we will have a deficit of $95,000,000," Finance Chief Katrina Montgomery told the board during an information session that doubled as a budget preview.

Administrators faulted a combination of factors: declining average daily attendance and enrollment, property‑value declines that increase recapture payments, and roughly $28.1 million in expected property‑sale revenue that did not close this fiscal year. Montgomery said the recommended FY26–27 plan assumes monetizing four properties to generate $60 million and a set of reductions that together would return the fund balance to about 15.5% under current assumptions.

Trustees pressed staff on the realism of counting $60 million in property monetization within the fiscal timeline and on the implications of starting the new fiscal year with a lower fund balance. Trustee Singh said the board needs "an accurate budget rather than a pretty budget," calling for conservative assumptions and scenario figures showing how deep additional cuts would need to be if the district started FY26–27 below 15%.

Several trustees argued for adopting a cautious, amendable budget now and returning in August with verified June/July numbers; others urged "ripping the bandage off" and moving immediately to deeper cuts to avoid mid‑year reductions that could disrupt the school year.

Administration described a menu of options staff can present to move the district closer to the 15% target, emphasizing that payroll is the largest driver of the budget and that most near‑term savings will affect staffing. The district also proposed tighter monthly reporting and earlier decisions in the budget calendar to reduce future surprises.

Next steps: trustees plan a formal hearing June 18 and possible adoption; staff said they will return with scenarios and prioritized cuts to clarify the path to the fund‑balance goal and to allow trustees to decide whether to adopt now and amend later or require immediate larger reductions.