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CFO presents fiscal forecast: FY25 deficit rises to $110M; administration proposes $32M in cuts and hiring/spending freezes
Summary
Interim CFO Katrina Montgomery told trustees the district’s projected FY25 operating deficit has grown to $110 million from the $78 million deficit the board approved in June 2024, explained drivers and proposed steps including hiring and spending freezes and further reductions to return to the earlier deficit level and maintain fund balance.
Interim CFO Katrina Montgomery presented the district’s 2025–2029 fiscal forecast at the Feb. 13 board meeting and reported that Austin ISD’s projected FY25 operating deficit has increased to approximately $110 million from the $78 million deficit the board adopted last summer.
Montgomery outlined factors driving the change: a sharper-than-expected property-value impact under TCAD (the district previously budgeted conservatively for property values), additional operating spending requests (special education, instructional materials, technology, service-center repairs), and reduced expected chargeback revenue. "Our projected deficit is $110,000,000," Montgomery said, and added that the administration is pursuing a combination of implemented reductions, pending reductions and new strategies to reduce the gap.
To restore the budget toward the originally approved $78 million deficit, Montgomery told trustees the administration is targeting $32 million in additional reductions now (in addition to previously identified strategies). Those actions include a hiring freeze for executive-level approved positions starting Feb. 28, a districtwide spending freeze for nonessential purchase orders and p-card usage, evaluating property monetization options for future fiscal years and other operational efficiency measures. Montgomery said the district’s payroll and campus spending remain the largest cost drivers: payroll accounts for roughly 89% of operating expenditures and the majority of that is campus-directed.
She outlined the fund-balance implications: returning to the $78 million deficit would yield an estimated unassigned fund balance of 17.2%; maintaining the larger $110 million gap would drop the fund balance to roughly 14.7%, which Montgomery and trustees said would negatively affect cash-flow planning and credit resilience. Achieving a 20% fund balance would require further cuts of about $33 million on top of the $32 million plan.
Trustees and the superintendent discussed the difficult tradeoffs ahead; the administration emphasized honesty and transparency in the budget process and said more detailed reduction proposals and potential campus impacts will be brought to upcoming budget meetings and the board retreat. Trustees praised community support for the recent tax-rate election that funded interventionists and other priorities but noted the district must now align operating plans precisely with projected revenues.
