Austin ISD proposes 2025–26 budget with $19.7M deficit; HB 2 expected to reduce gap as staff pursue further savings

Austin ISD presented a proposed 2025–26 budget on June 12 that would leave the district with a projected $19.7 million shortfall and an estimated unassigned fund balance of about 15.2 percent if the board approves the proposal at its June 26 meeting.

Interim Chief Financial Officer Katrina Montgomery walked the board through changes since the district adopted the FY2024–25 budget, including a recent Travis Central Appraisal District report that trimmed expected property value growth from 6 percent to roughly 1 percent — a swing that reduced the district’s revenue outlook by about $14 million. The district also reported improved spending controls and purchase‑order freezes that have reduced an earlier projected shortfall from more than $100 million down to an estimated $93 million for the current fiscal year, and then the proposed approach for FY2026 would reduce next year’s shortfall to the $19.7 million level with identified strategies.

Montgomery summarized the administration’s proposed mitigations including a central‑office reorganization, vacancies and hiring controls, targeted supplemental program reductions, a plan to review special‑education contract costs and centralized special‑education placement to reduce outsized contract spending, and other efficiency measures. The administration also identified potential non‑recurring revenue sources — most prominently two land sales — and noted that bond modernization projects will proceed, with those scheduled projects factored into the facilities assessment rubric.

Chief of Staff / Government Relations Jacob Reich outlined the impact of House Bill 2 (the 2025 public education funding bill). Reich said the district expects an estimated $9 million net in the first year after accounting for mandated costs, primarily because the bill both raises certain allotments and changes special‑education funding to a student‑need model. Officials said they expect more detailed TEA guidance within days and a fuller revenue update in July after TEA posts final numbers.

Trustees pressed staff for a clearer, verifiable accounting of proposed cuts and offsets. Trustee Singh asked for a level of certainty or a “high/medium/low” confidence column for each strategy so trustees and the public can tell which reductions are essentially locked in and which remain contingent on state guidance or final property values. Trustee Hunter asked for versioned change logs that show when and how community input altered the district’s assumptions.

Montgomery and the superintendent said the administration will produce quarterly budget amendments and that a final compensation letter and some HB2‑related salary adjustments will be addressed in coming weeks, consistent with the state law timeline and the district’s bargaining partner. The board will hold a final budget hearing and is scheduled to adopt the FY2025–26 budget on June 26.