AISD proposes $19.7 million 2025–26 general‑fund deficit after HB2; administration outlines central‑office cuts, property‑insurance savings and next steps

Austin Independent School District CFO (interim) Katrina Montgomery and Chief Government Relations Officer Jacob Breech (Dr. Reach) reported June 12 on the district’s fiscal condition and a proposed budget for fiscal year 2025–26. The presentation combined an update on closing projections for 2024–25 and a proposed 2025–26 general‑fund budget the administration plans to present for adoption on June 26.

Key figures and trajectory: - Projected FY 2024–25 gap: The district estimated the 2024–25 shortfall will be about $93 million after mid‑year reductions and tighter purchase controls; expected unassigned fund balance at fiscal year end is projected at 16.8% (below the board’s prior 20% target). - Proposed FY 2025–26: The administration proposed a budget with an estimated $19.7 million deficit that would yield an estimated 15.21% unassigned fund balance if the board adopts the package as presented.

Administration strategies and assumptions presented: - Revenue assumptions include October snapshot enrollment (72,003) and conservative property‑value estimates; the district used a 99% tax collection assumption in the fiscal model. - Identified savings and mitigation steps include: a central‑office staffing realignment (targeted to reduce executive and direct‑report layers), vacancy and hiring controls for non‑campus positions, master‑schedule efficiencies in campuses, a push to close PEIMS reporting issues that affect revenue, and potential land sales. - Property‑insurance options: staff proposed changing the district’s property insurance structure to increase the deductible (to $5 million) and either buy a lower‑cost layered policy or self‑insure up to a negotiated limit. Montgomery said a restructured approach could reduce premiums roughly 14–50% in model options the district is evaluating; the administration recommended the first option (a higher deductible with significant premium savings) as a plausible near‑term step.

State funding (HB2) impact: Chief government‑relations staff summarized the June 4 HB2 enactment and its likely effect on AISD. The bill creates several new allotments and a teacher‑retention component; the district’s financial advisors preliminarily estimate a net positive impact (after required uses and new staffing costs) of roughly $9 million available to help reduce the proposed budget gap. Staff cautioned rules and TEA guidance on certain new allotments (early‑education and staff‑allotment details) were still pending and could change estimates; TEA guidance was expected in the days after the presentation.

Governance, timing and next steps: The superintendent told trustees he would complete a central‑office reorganization and notify affected employees by mid‑June, with employment changes effective August 1. The administration said it will continue to refine estimates and return to the board with required amendments after final Travis County appraisal values and TEA guidance are received (late July–September windows). The board will vote on the proposed budget during the June 26 meeting; the administration said it will follow with quarterly amendments as new revenue or savings are confirmed.

Why this matters: The district is operating under large structural deficits tied to enrollment and funding patterns; the proposed 2025–26 budget packages combined planned cost reductions, use of one‑time resources and preliminary HB2 gains but still leaves the district below its previous fund‑balance target. Administrators said more work is needed to avoid deeper cuts and to protect classroom programs.

Trustee requests: Trustees asked for a clearer, versioned written summary of promised cuts and where they would be implemented (central office vs. campus), and asked for ongoing public transparency (a dashboard or “thermometer” tracking which promised reductions have been executed). Staff agreed to publish versioned documents and a summary of changes tied to any future amendment.