Austin ISD leaders now project a $49 million deficit by the end of the school year, more than double the shortfall board members approved just months ago, intensifying pressure on the district as it struggles with falling enrollment and rising costs.
Superintendent Matias Segura presented the revised forecast during Thursday night’s board meeting, attributing the worsening outlook to lower student enrollment, high operational costs, declining property values and weaker-than-expected revenue from property sales. The update comes months after trustees voted to close 10 schools and implemented a hiring freeze of central office positions to rein in expenses.
District administrators said the $49 million estimate assumes the district can cut $39 million in spending by June. However, if those reductions do not materialize, the deficit could grow. This $39 million target is also tied to the district’s requirement to keep a minimum fund balance.
Austin ISD policy calls for keeping at least 20% of operating expenditures in its general fund, but board members previously voted to temporarily lower that threshold to 15% from the 2024-25 school year through 2026-27.
“I feel very confident that with what we have done already, on our current trajectory, we will make up the majority of it,” Segura said.
Katrina Montgomery, the district’s chief financial officer, told trustees the district had reduced spending by $29 million between July and December 2025. She said the remaining $39 million reflects what still must be saved from January through June 2026 and does not automatically mean cuts.
Enrollment this year stands at 69,207, well below the 72,303 projected when the budget was adopted last June, according to the district’s presentation. Last school year, enrollment totaled 72,702. Segura has previously attributed enrollment declines to increased cost of living, housing costs, limited availability, demographic changes, school choice vouchers, immigration enforcement and federal funding changes.
Because Texas funds districts largely on a per-student basis, declining enrollment reduces state revenue. Funding losses and adjustments to recapture, which redistributes property tax revenue from wealthier districts to districts with lower property value, accounted for $23 million of the projected gap.
The forecast also reflects $15 million in additional funding requests and $28 million in property sales the district expected but did not complete this fiscal year.
District administrators project $823 million available for operating expenses against $989 million in costs. Planned and ongoing strategies include spending reductions, policy changes and future property sales.
“We can become more efficient, we can make hard decisions, we can grow enrollment,” Segura said. “But at the end of the day, we have to be really, really thoughtful about every dollar we spend.”