Austin ISD officials approved a fiscal year 2024-25 operating budget of $953.99 million and took on a deficit of $41.25 million June 20—with the assumption that voters will approve a tax rate increase in November.

Breaking it down

The district generated $1.69 billion in revenue from local tax dollars for the upcoming fiscal year. After the district loses $821.06 million to recapture—when the state takes local property tax dollars from a district to redistribute to other public school districts—AISD is operating at $953.99 million with a deficit of $78.2 million.

However, if vacancy savings and a tax rate increase occur, the deficit is reduced to $41.25 million; without these, the $78 million deficit will be the largest in the district’s history.

The new budget was drafted under the following assumptions that impact funding:

• An enrollment of 73,100 students and an average daily attendance of 64,100 students
• A property value growth of 6%
• A proposed tax rate of $0.9287 per $100 of property value, pending voter approval

Officials made about $29 million in cuts to central office positions, overtime costs and more throughout this spring for FY 2024-25 in order to avoid a deficit as large as $89 million. Additionally, a hiring freeze for vacant central office positions began June 1.

The board also adopted a food service fund at $47.42 million and a debt service fund of $241.25 million June 20.

How we got here

In mid-April, AISD officials discovered property value growth and average daily attendance rates were lower than they expected, resulting in less revenue and raising the initial projection of a $60 million shortfall to a potential $89 million.

AISD officials are pointing to the following financial constraints, resulting in the deficit, including:

• House Bill 3, passed during the 88th legislative session, mandating an armed security guard at every campus which incurs more costs for the AISD Police Department
• Allocation of more resources toward the special education department while under a state-appointed monitor
• A loss of $7.8 million promised in Medicaid reimbursements for special education students after the findings of a federal audit
• Stagnant basic student allotment, the amount school districts receive from the state based on student enrollment and attendance
• Slow growth of property values due to Senate Bill 2, passed during the 88th legislative session, in which homeowners receive a $100,000 tax exemption

“AISD did not put the [district] here; the state not supporting public education by way of funding has really exacerbated this problem that we have,” AISD superintendent Matias Segura said. “My hope is that our legislators are paying attention to the pain that school districts are going through right now.”

What it means

Education Austin, the district labor union, advocated for another pay increase this year for staff. The FY 2023-24 budget included pay increases for staff, but this year's will not.

The compensation agreement for the 2024-25 academic year, created in consultation with Education Austin, includes adjusting the pay of employees to compare with other districts and a $0.25 per hour increase for hourly employees. The pay increases will only go into effect if the community agrees to raising the tax rate in November.

To increase teacher salaries even further, district officials said cuts would have to be made to the classroom, something Segura has emphasized is a last resort.

Going forward

AISD officials will likely go for a Voter Approved Tax Ratification Election, or VATRE, which will ask the community to vote on a tax rate increase on the November ballot.

If approved, officials predict a VATRE would generate $42 million in additional revenue for the district under a proposed tax rate of $0.9287 per $100 of property value. This would be an increase of about $35 per month to homeowners.

Members of Education Austin rallied at a June 6 board meeting in support of a VATRE.

“Our community has the ability to make a decision on taxes; their dollars can support our schools,” Education Austin president Ken Zarifis said. “Every stone needs to be turned before cuts are made at schools.”

If a VATRE is not approved, all full-time employees would receive a one-time incentive payment of $500, AISD officials said, as opposed to a pay increase.

“I never thought that I could come anywhere near supporting this VATRE,” Board member Kevin Foster said. “[But] I'm deeply committed to compensation and to pushing wages of teachers and staff.”

Other avenues district officials will continue to look at to offset the deficit include increasing class sizes, monetizing real estate and potentially eliminating more positions.

"The goal is to identify additional cuts for the 2025-26 school year before the 2025 legislative session, so that we won't be caught off guard if additional funding does not materialize from that legislative session," AISD Chief Financial Officer Eduardo Ramos said.

The board will take up the VATRE for vote at a future board meeting. For more information, visit www.austinisd.org.