Austin ISD is aiming to reduce its expenses over time and increase its savings, known as fund balance.
The district is planning to make $39 million in cuts this fiscal year and $125 million in reductions in FY 2026-27, according to AISD documents. The FY 2025-26 cuts come as the district works to lower a projected $49 million shortfall.
“We’ve been reducing our deficit by controlling our expenses,” Chief Financial Officer Katrina Montgomery said at a Feb. 26 board meeting. “We’ve been doing a good job reducing expenses, but we have to start making permanent cuts or reducing the budget.”
The update
AISD was initially working to lower a projected $111 million shortfall for FY 2025-26 to $19 million. The district was expected to sell two properties for $45 million and cut $47 million through additional strategies.
In January, the board of trustees approved selling the former Brooke Elementary campus in Southeast Austin to Trammell Crow Company and High Street Residential. The development is slated to serve as a multifamily apartment complex.
The projected shortfall has since increased to $136 million after a $26 million land sale failed to go through this fiscal year, Montgomery said.
Community pushback and pending litigation has slowed AISD’s plans to sell the former Rosedale School campus in North Central Austin to OHT Partners. The developer has proposed building a 435-unit, market-rate apartment complex spanning six stories with a parking garage.
The district now plans to cut $2 million in special education contracts and make $39 million in additional reductions to lower its projected budget shortfall to $49 million in FY 2025-26.
Last summer, the district cut $10 million from its central office through eliminating positions, reassignments and new reporting structures. AISD implemented a hiring freeze for external candidates in January.
Looking ahead
For FY 2026-27, the district is aiming to realize a $5 million budget surplus to increase its fund balance. To do so, AISD would need to lower a projected $166 million shortfall through $125 million in budget cuts. Additionally, the district expects to execute the $26 million property sale and save $20 million through eliminating department vacancies, Montgomery said.
(Courtesy Austin ISD)How it works
Under typical board policy, the district must maintain a fund balance amount that equals at least 20% of its operating expenditures. Over the past three fiscal years, the board has allowed the district to lower this threshold to 15%, but that exception will expire in FY 2027-28, Montgomery said.
The planned budget cuts are expected to help AISD generate savings that will increase its fund balance back up to the 20% threshold, which is around $202 million, according to AISD information.
Stay tuned
Beginning March 9, AISD will hold community meetings to discuss the future of several district properties, including 10 campuses that are closing this summer.
The district may choose to sell or reuse these campuses as educational facilities either now or in the future, AISD’s website states.