Austin officials are continuing an evaluation of spending on social services, which will likely face adjustments in 2027. (Ben Thompson/Community Impact)
Austin officials are continuing to evaluate the city's tens of millions of dollars of spending on social services through a "reset" process that could result in more significant changes next year.
The overview
By late 2025, city leaders and finance staff projected that Austin faced budgeting shortfalls and anticipated cutting nearly $17 million of social services funding to help bridge that gap. Staff continued to review the performance of Austin's extensive social service portfolio leading up to approval of the upcoming fiscal year 2026-27 budget, which was eventually modified to avoid some of the deeper reductions that were proposed.
During budgeting, City Council members agreed to maintain existing public service levels without disruption for the year ahead. However, officials also pressed for more scrutiny of that spending and Austin's relationship with its dozens of contractors and grant recipients that offer health, housing, homelessness, economic development and other supports.
Given funding constraints and a desire for more oversight, Austin's review of the more than $100 million in annual social services spending remains in progress. That includes an assessment of more than 130 grants and contracts and a recommendation for several to be modified; staff identified more than two dozen contracts with compliance or performance issues to address.
No immediate changes or cuts are being rolled out, but city leaders anticipate the current process will lead to a harder reset for the future fiscal year 2027-28 budget. Updates could realign how much funding is dedicated to different service areas, and the city anticipates re-soliciting most of its social services contracts—rather than simply extending with current vendors—in 2027.
“We’re not starting with the agreements we have and saying, ‘What should we change with those?’" Daniel Culotta, assistant director of Austin Budget and Organizational Excellence, told council Sept. 22. "We are starting from a more holistic and strategic standpoint to say, ‘What is the level of need in the community for these different types of services? How are these issues defined? How can the city best meet those needs along with our partners and other services?’ And then saying, ‘How can we fund to get there?’
Austin is moving to revamp its spending on social services in the months ahead.Courtesy city of Austin
The approach
Council members seemed generally supportive of the evaluation now being led by city staff and management, but also raised some reservations about keeping current funding and agreements in place while the review proceeds.
While stating a desire to fund "critical" public services, council member Ryan Alter pointed to staff recommendations that wouldn't cut any of the more than $48 million in agreements reviewed so far even after performance issues were found.
"I think it hurts the credibility of the city, it hurts the credibility of some of these organizations. Because everyone’s going to assume nothing’s changed, and so there’s this landscape that all these nonprofits are somehow not performing and we haven’t sifted out who the high performers are, or even just the adequate performers are, and who is not meeting the mark," he said.
City staff aren't recommending any cuts to Austin's social services spending while an evaluation and reset process continues.Courtesy city of Austin
Alter also noted that officials are scheduled to approve millions of dollars in social service spending on Sept. 24 without a full picture of which contracts might have been flagged for modifications. Staff said many of those items are needed to avoid service gaps in the upcoming FY 2026-27, which starts in October, and to maintain overall funding levels as desired by the council.
Mayor Kirk Watson, who sponsored the call for continued social service reviews, said Austin leaders should protect current levels of investment while reconsidering how some of that funding can be best used.
“The credibility that council member Alter is talking about I think is that the public has to assume that we’re not ever just going to take the position that there’s no better way of doing something, or there’s no cheaper way of doing something, or there’s no savings that we might find," he said. "We keep using the word ‘baseline’ as though it is the tail wagging the dog, and I want us to avoid that.”
Culotta said a memo with more in-depth findings of the evaluations so far is being prepared and should be available in the coming weeks. Staff will also continue to engage with vendors, residents, officials and other stakeholders as the reset continues. Discussions across several council committees are also expected in the coming months before decisions on any funding changes are made in 2027.
