Austin ISD hears plan to draw $19.7M from reserves, lower fund‑balance target to 15% as administrators outline $44M in reductions

The Austin Independent School District Board of Trustees held a public hearing on June 26 to review the district's proposed fiscal 2025–26 budget, during which administration said the plan would draw $19.7 million from reserves, leave a 15.21% fund balance and rely on $44 million in identified reductions including a central‑office restructuring and possible centralized special‑education placements.

Katrina Montgomery, interim chief financial officer, told trustees the district is using conservative enrollment and property‑value estimates drawn from a snapshot showing 72,003 students and an average daily attendance of about 64,100. Montgomery said proposed general‑fund figures include $1.58 billion in revenue, $715.5 million in state recapture, and $984.1 million in operating expenditures; the budget also highlights $8 million labeled for school improvement.

The draft budget would use $19.7 million of fund balance in FY2025–26, leaving the district at 15.21% of operating expenditures. Montgomery said the administration is "committed to trying to reduce this deficit" and characterized the 15% level as a time‑limited change: the policy would allow a fund balance as low as 15% for up to three years in extenuating circumstances, with a plan to return to a 20% target by the end of fiscal 2028.

Why it matters

Board members and administrators framed the hearing as a tradeoff among protecting staff and classroom resources, avoiding borrowing for cashflow, and making deep operational cuts. Trustees repeatedly pressed for clarity on which reductions are fixed and which are "TBD" and asked for a clear timeline and quarterly updates showing measurable progress toward restoring the fund balance.

Key strategies and timeline

Montgomery and Superintendent Segura laid out the principal strategies the administration says will yield the $44 million reduction target for FY2025–26: - Central office restructure: administration identified up to $10 million in total reductions across funds; $9.6 million was listed as a total savings recently identified and roughly $6 million of that is a general‑fund impact. Montgomery said employment changes related to this restructure would take effect Aug. 1 if approved. - Centralized special‑education placements: administration proposed reducing reliance on high‑cost outside contracts by shifting some students to district‑provided placements; the presentation listed $7 million as a target reduction in contracted special‑education services and identified $2 million now with additional amounts marked TBD. Montgomery said the approach is an estimate and that implementation will require planning and family notification if pursued. - State funding projections: the administration projected approximately $35.9 million from recent state actions but said only an estimated $9.0 million of that would be "net" and unconstrained by legislative requirements. Trustees were told those numbers remain estimates until final receipts (HB2 and other state actions) are certified. - Other items: vacancy savings of $15.3 million; land sales projected at $45 million (two properties); a projected $3 million property‑insurance savings; a proposed 10% cut to campus non‑staff budgets (estimated $800,000) and a 5% reduction to department non‑staff budgets (about $3 million); a $1 million reconciliation line (reclassifying an existing salary line), and a benefits contribution hold of approximately $4 million for the coming year (administration said it had previously held two months last year totaling $9 million).

Compensation and teacher pay

Montgomery discussed expected state compensation dollars and how the district plans to allocate them. Administration projected $17.4 million in HB2‑related funding and described a distribution under discussion: $2,500 for classroom teachers with three to five years of experience (estimated ~600 teachers) and $5,000 for teachers with five or more years (estimated ~3,000 teachers). The district also expects $5.3 million under the Teacher Incentive Allotment (TIA) and estimated that would reach about 600 teachers. Montgomery said consultation with EdAustIN (consultants) will occur in July, with a board vote on a compensation agreement scheduled for Aug. 21, compensation letters issued Sept. 15, and new rates and retroactive pay processed by Sept. 30.

Special education and implementation concerns

Trustees pressed administration for detail about how centralized special‑education placements would work, how many students might be affected, and when families would be notified. Montgomery said some campuses have special‑education populations above 30%, that the district has vacancies affecting service delivery, and that centralized placements would be used only where a district placement with certified staff could provide required services. She said the administration will spend the summer building an implementation plan and, if needed, would notify families in early August.

Policy change and governance

Discussion repeatedly returned to the fund‑balance policy. The administration recommended changing the board's formal policy from a 20% minimum to allow a 15% minimum (15.21% shown) in the near term; Montgomery and Superintendent Segura described the change as a temporary measure tied to a multi‑year restoration plan. Board members said they wanted a formal restoration plan and regular updates; administration committed to at least quarterly reporting on progress.

Public comment

A single recorded public comment was played during the hearing. Raul Longoria, identified as an Austin Up Close graduate, urged trustees to reverse a decision to lay off a parent‑support specialist, calling her "a connector, problem solver, and a fierce advocate of public education" and saying her absence "will leave a noticeable void in how this district builds trust with its community." Longoria noted the specialist had secured more than $1 million for the parent‑support role and helped provide live in‑person interpretation at graduations.

Next steps and votes

Montgomery noted several upcoming dates that will affect the budget: final certified property values from the Travis Central Appraisal District (TCAD) will be available in late July (presentation identified July 25), HB2 final estimates will be available later, and the board is scheduled to vote on the budget as part of its regular meeting later the same evening. Montgomery said the administration expects to bring an amended budget in September after TCAD and HB2 numbers are final and to present additional amendments in December, March and May if needed.

The public hearing adjourned at 6:12 p.m.; the full board moved into a short break before returning to the regular agenda where the budget will be considered for final action.