{"id":420003,"date":"2026-08-29T07:04:42","date_gmt":"2026-08-29T07:04:42","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-tx\/420003\/"},"modified":"2026-08-29T07:04:42","modified_gmt":"2026-08-29T07:04:42","slug":"austin-isds-budget-deficit-grows-to-105-million","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-tx\/420003\/","title":{"rendered":"Austin ISD\u2019s budget deficit grows to $105 million"},"content":{"rendered":"

Audio recording is automated for accessibility. Humans wrote and edited the story. See our AI policy on our About page<\/a> and give us feedback<\/a>.<\/p>\n

The Austin school district ended the 2025-26 school year with a $105 million deficit<\/a>, $10 million deeper than district leaders estimated just two months ago and more than five times the shortfall trustees expected in June 2025.<\/a><\/p>\n

The latest figure, presented to trustees Thursday night by Chief Financial Officer Katrina Montgomery, is not yet audited. But it marks another significant revision to a deficit Austin ISD initially projected to be $19 million and underscores how quickly the district\u2019s financial position deteriorated<\/a> over the course of the year. <\/p>\n

The revision comes after months of financial turmoil that prompted Austin ISD to cut $205 million from this year\u2019s budget<\/a>, including reductions that reached classrooms, transportation and hundreds of positions<\/a>. Now, even with those cuts, the district expects to borrow $140 million this fall to cover operating expenses while it waits for property tax revenue and must find another $10 million to keep this year\u2019s deficit from growing. <\/p>\n

District leaders blamed much of the latest change to the timing of a $17 million real estate sale of the former Brooke Elementary property. The sale, once expected to count toward the 2025-26 fiscal year, is now expected to close in September and instead benefit this year\u2019s budget. The district also identified an additional $7 million in savings that kept last year\u2019s deficit from climbing even higher.<\/p>\n

The shifting projections prompted trustees to scrutinize the assumptions made for the 2026-27 school year as they sought to avoid more financial \u201csurprises.\u201d They also challenged a separate development: the Texas Education Agency\u2019s decision to lower Austin ISD\u2019s financial rating, in part because of its staffing levels.<\/p>\n

\u201cWe were having frank conversations about the unknown expenditures of June because it is always hard to tell when we are in the month where we are going to end up,\u201d said Superintendent Matias Segura. \u201cComing out $7 million to the better is a good thing.\u201d <\/p>\n

Here\u2019s what the latest numbers mean for Austin ISD: <\/p>\n

How did a $19 million deficit become $105 million? <\/p>\n

Austin ISD\u2019s deficit grew dramatically over the course of the 2025-26 fiscal year. Trustees adopted the budget in June 2025 expecting a $19 million<\/a> shortfall. By February, district leaders had raised that projection to $49 million<\/a>, citing declining enrollment, lower attendance and property values, and increased spending on academic needs.<\/p>\n

Then, in June, just weeks before the fiscal year ended, the projection nearly doubled again to $95 million<\/a>. The latest estimate puts the final shortfall at $105 million. <\/p>\n

Facing projections that the deficit could reach $181 million<\/a> by the end of the 2026-27 fiscal year without intervention, trustees this summer approved $205 million in budget cuts<\/a>. The reductions affected hundreds of positions, teacher planning time, bus routes and partnership programs, among other areas.<\/p>\n

What does this mean for this year\u2019s budget? <\/p>\n

The delayed Brooke Elementary sale does provide some relief for the current budget. With the expected $17 million sale now falling into the 2026-27 fiscal year, district leaders project reserves will end this current school year at just over 13%, slightly higher than previously expected. <\/p>\n

But those reserves remain low enough that the district expects to borrow $140 million in October to cover operating expenses, like payroll, while it waits for the bulk of its property tax revenue, typically received between November and January. District leaders expect to repay the short-term borrowing in January.<\/p>\n

Despite the $205 million in cuts already approved, district leaders said they still need to find about $10 million more to cover newly added projected expenses in 2026-27 for police, custodial and transportation positions, transportation changes and portable classrooms for Bailey Middle School, which recently received most of the students from the recently shuttered Paredes Middle School<\/a>.<\/p>\n

Abbott questions Austin ISD\u2019s spending<\/p>\n

Austin ISD\u2019s finances have also drawn scrutiny from Gov. Greg Abbott, who singled out the district this month while calling for an investigation into administrative spending at Texas school districts<\/a>. <\/p>\n

Abbott said Austin ISD\u2019s enrollment declined 14% from 2015 to 2025 while administrative spending per student increased 75%. He has asked the state comptroller to review the finances of up to four school districts for potential administrative bloat, although the districts have not yet been named, and proposed requiring districts to spend at least 70% of their funds in the classroom. <\/p>\n

Austin ISD has previously acknowledged its administrative staffing did not keep pace with declining enrollment. <\/p>\n

Ahead of the 2025-26 school year, the district restructured its central office to reduce administrative costs relative to its declining student population and made additional reductions this summer.<\/p>\n

Segura said Thursday the district didn\u2019t have a direct response to Abbott\u2019s criticism but noted that more than three-fourths of Austin ISD\u2019s general fund in its adopted 2026-27 budget already is directed to classroom-level spending.<\/p>\n

\u201cThe data set that was used by the governor was over a 10-year period and certainly when you use that duration things can be presented a certain way,\u201d Segura said.<\/p>\n

Why did TEA lower Austin ISD\u2019s financial rating? <\/p>\n

Abbot\u2019s proposed review would add another layer of scrutiny to a financial accountability system already administered by TEA. Through its annual Financial Integrity Rating System of Texas, or FIRST, the state evaluates districts on measures including administrative costs and changes in student-to-staff ratios.<\/p>\n

Montogmery also told trustees that Austin ISD\u2019s 2026 financial rating fell to a B after the district received consecutive \u201csuperior achievement\u201d ratings for 21 years from the Texas Education Agency<\/a>. The ratings are based on 2024-25 financial data. <\/p>\n

The primary reason for the decline was the district\u2019s staff-to-student ratio. The district received zero of 10 possible points on that measure. <\/p>\n

Trustees questioned that measure, arguing the district increased staffing in response to meet requirements imposed during TEA\u2019s recent oversight of the district\u2019s special education services<\/a>. <\/p>\n

The state rating also looks backward: Because it relied on 2024-25 data, it doesn\u2019t reflect the hundreds of positions Austin ISD eliminated through school consolidations and budget cuts this summer. Students, educators and community members testified for hours against some of those reductions, including cuts affecting librarians and school counselors.<\/p>\n

\u201cI am pretty sure our families don\u2019t agree with TEA as far as the decline in staffing,\u201d said Trustee Fernando de Urioste. \u201cI don\u2019t think they want that, but I understand that is what TEA is scoring us on for our rating. I just want to highlight that fact that we are being motivated to adjust the staffing.\u201d<\/p>\n

Trustee Kevin Foster offered another interpretation: a lower score on staffing could reflect the district\u2019s decision to preserve jobs rather than cut employees at the same time enrollment declined. Foster said cutting jobs that quickly could create instability and potentially affect the district\u2019s high bond rating, an independent measure of its ability to repay its debt. <\/p>\n

\u201cI look at our first rating and I don\u2019t see ill intent but I do see a blunt instrument,\u201d Foster said. \u201cIt is inhumane and we are already engaging in unavoidably damaging actions as we are in this moment of, at best, long-term contraction.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Audio recording is automated for accessibility. Humans wrote and edited the story. See our AI policy on our…\n","protected":false},"author":2,"featured_media":420004,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[132,134,1685,133,2050,392,2810],"class_list":["post-420003","post","type-post","status-publish","format-standard","has-post-thumbnail","category-austin","tag-austin","tag-austin-headlines","tag-austin-isd","tag-austin-news","tag-budget","tag-greg-abbott","tag-texas-education-agency"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/420003","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/comments?post=420003"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/posts\/420003\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media\/420004"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/media?parent=420003"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/categories?post=420003"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-tx\/wp-json\/wp\/v2\/tags?post=420003"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}