Austin ISD closed the 2025-26 school year with a projected $95 million shortfall—more than four times the $19.7 million shortfall the board adopted last June—as trustees questioned whether they could vote on a budget that may already be underpowered before it takes effect.
The district's fund balance is projected to fall to 10.1% of operating expenditures by the end of June, according to a June 11 Austin ISD board meeting presentation. That figure is half the 20% that the board's own policy requires and below even the temporary 15% floor trustees set in 2025. The fund balance acts as the district's savings account, covering payroll and expenses during the months before property tax revenue arrives each year, according to the presentation.
The district expects to need a short-term loan in September or October to cover payroll—a repeat of the $19 million it borrowed last year at a cost of approximately $250,000 in interest and fees, AISD's Chief Financial Officer Katrina Montgomery said.
Breaking it down
Montgomery attributed the deeper shortfall to enrollment falling 4.02% from the budget projection, a drop of 3,062 students, alongside a larger-than-expected decline in property values and $28.1 million in anticipated property sale revenue that did not materialize, according to the presentation.
AISD Superintendent Matias Segura attributed part of the enrollment decline to federal immigration policy, saying the district knows where those students are and that immigration policies have impacted the community.
"As hard as we are trying, there are things that, simply, we just have to navigate through, and enrollment due to legislative changes tied to immigration policies is a big part of that," Segura said.
The district's proposed reduction package for fiscal year 2026-27 grew to $185 million at the June 11 session, up from the $181 million package presented June 4, after the district added $12 million in districtwide reductions as a separate line item, according to the presentation.
The package spans property sales, campus and department cuts, and districtwide staffing reductions, according to district presentations. The district is also proposing changes to bus routes and stops districtwide, according to previous Community Impact reporting.
What they're saying
Several trustees said they were not prepared to vote on the budget as presented.
Montgomery confirmed the reduction package was calculated assuming the district would end the year at a 15% fund balance. Because it is now projected to close at 10.1%, she said cuts would need to increase by an estimated $30 million to $50 million if the board wants to restore the fund balance to 15%—money Segura said would come from staffing.
"What is important to me is not that we have a pretty budget, but an accurate budget," trustee Arati Singh said. "I don't think there is any room for optimism."
Board President Lynn Boswell said she would rather consider additional school closures than cut direct student services further.
"I don't think I have something in front of me that I can trust and say yes to right now," Boswell said.
What's next
The board is scheduled to vote on the 2026-27 budget at its June 18 meeting, with June 25 posted as a backup date. Segura said he plans to bring a revised proposal before the vote.
Staff affected by $17 million in forced departmental reductions are expected to be notified by June 15, Montgomery said. Community members can submit written comments on the budget through June 18 at 5 p.m. at www.austinisd.org.
