Austin ISD projects $129M preliminary general-fund deficit for FY26; district presses for cuts and new revenue

Austin ISD’s interim chief financial officer, Katrina Montgomery, presented the board April 24 with a preliminary FY2025–26 financial plan showing a large operating gap and the actions the district is pursuing to stabilize its fund balance.

Topline numbers: Montgomery said the district’s preliminary FY26 general-fund expenditure budget would be about $999 million with projected local, state and federal revenue totaling roughly $1.58 billion and a projected net change in fund balance of a $144 million deficit before vacancy savings. Montgomery said the budget team is estimating roughly $15 million in vacancy savings, bringing an adjusted projected shortfall of about $129 million, and described additional identified strategies totaling about $19 million and possible land-sale proceeds of roughly $45 million as partial mitigations.

Why it matters: Montgomery and trustees repeatedly framed the projection as an urgent challenge that requires a combination of expenditure reductions, possible asset sales, and advocacy for state funding. Montgomery noted that some recent, one‑time revenue and lower-than-expected reimbursements (for example, an adjustment to certain SHARS reimbursements in the current year) and property-value changes reduced the district’s reserves in the most recent cycle.

Board Q&A and process notes: - Trustees asked about the sensitivity of the forecast to Travis Central Appraisal District (TCAD) preliminary property values; Montgomery showed the preliminary TCAD number and explained certified values typically arrive in July and can change the outlook. - The administration said it would present a proposed budget to the board May 22 and an adopted budget in June, with the board adopting a final budget in late June; certified TCAD values will be available after that timeline and could require an amended budget in July. - Montgomery reiterated the district’s policy goal to maintain a 20% unassigned fund balance as a multi-month operating cushion and showed scenarios in which the fund balance would fall below that level in coming years unless corrective steps are taken.

Ending: Trustees asked for more detail on particular line items and the debt-service drawdown Montgomery flagged; staff said they would prepare supplemental detail and return with a balanced budget proposal and additional community engagement before adoption.