Austin ISD Budget Woes Take a Turn for the Worse

photo by John Anderson

Austin ISD officials promised the community last month that they would do everything in their power to spare classrooms from the district’s planned budget cuts. But that was before they learned that next year’s deficit had increased a whopping 50%.

The district announced on May 9 that its estimate of the 2024-25 budget deficit skyrocketed from $60 million to $89 million. School officials had used the $60 million figure as the basis for a package of cuts designed to halve the deficit to $30 million, which is about as much debt as the district can carry without damaging its credit rating. Now, if those same $30 million in cuts are approved, the deficit will only come down to $59 million, essentially the same number the district started with.

As AISD Trustee Noelita Lugo said, “Damn, we are really in a tight spot.”

Two things account for the increase in the deficit, AISD CFO Eduardo Ramos explained to the trustees at their recent board meeting. First, his office had predicted a 14% growth in property values this year, but figures from Travis County released in mid-April show that values have increased only 5%. Then, within a week of the release of those figures, the Texas Education Agency calculated that the number of students who will attend AISD next year – the “average daily attendance” formula that determines how much funding the district receives from the state – will be lower than district estimates. TEA predicts 64,250 average daily attendance next year. The district had expected attendance of 67,786 students. Together, the lower property values and attendance will cost the district $30 million in revenue.

The trustees expressed shock at the sudden turn of events and blamed state leaders for refusing to increase school funding in the 2023 legislative session. Trustee Candace Hunter raised a worst-case scenario. “There’s a lot of hard decisions coming up,” she said and turned to address Superintendent Matias Segura. “Mr. Superintendent, I’m going to throw this out to you live on TV: What’s the probability down the road, knowing what we know about our Legislature, of us having to do what some smaller school districts are doing, which is closing schools?”

“This is a tough conversation,” Segura responded. “I do not want to explore school closures until we have gotten through our community saying they will not support a VATRE, until we’ve gotten through cuts that we can make internally and also exploring creative solutions around real estate and long-term revenue streams that will make us less reliant on state funding.”

VATRE stands for Voter-Approved Tax Rate Election, a possible solution to the budget crunch that the district has mulled over the last month. If the board approves a VATRE, voters will be asked to decide at a November election whether to support an increase in the rate at which properties are taxed. If the community supports the higher rate, the board estimates it will receive an additional $41 million in revenue. The average homeowner’s taxes would increase about $421 a year, or $35 a month.

The trustees seemed to reluctantly back a VATRE in previous meetings. But the deepening budget hole complicates that support. Another complicating factor is the reality that at least 75% of the taxes raised by the rate increase would, because of Texas’ school finance laws, go back to the state for use by other school districts and, possibly, Republican priorities like militarizing the border and providing public school funding to private religious schools. Three weeks ago, trustees Kevin Foster and David Kauffman questioned whether Austinites would support a VATRE if they understood its ramifications. On Thursday, Foster led what appeared to be a frontal assault on the proposal.

“I want to be clear that what we will be doing with a VATRE is feeding the beast,” Foster said. “We’re talking about collecting $1 from our residents and giving 75% of it to people that will hurt us, that will do voucher [schemes], that will do all sorts of machinations that will continue the pain. I see it as part of our demise. I see it as something that’s going to hurt us even more.”

Foster also amplified Segura’s suggestion that the district find ways to reduce its reliance on state funding. “I think it’s time for us to adopt the vision of autonomy, for us to reduce our dependence on the state wherever and whenever we can,” he said. “We have got to think immediate cuts, but we have got to pivot, even in this moment, to envisioning ... autonomy from the state.”

In subsequent discussion, the trustees noted that whatever choices they make with the VATRE, expanded budget cuts, and possible sales or leases of AISD real estate will have to happen soon. They expect to vote on next year’s budget within 30 days.