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Austin school district adopts budget with $19.7 million deficit

Austin school officials plan to continue making spending cuts next year and are exploring other cost-saving ideas.

Published June 27, 2025 at 8:12pm


The Austin school board on Thursday adopted a $984.1 million budget with a $19.7 million deficit for the 2025-26 school year. The budget, which will kick off in the red, came after officials significantly slashed costs and reduced spending during the just-ended school year.

This is the third year in a row the district adopted a deficit budget, and officials plan to implement additional cost-cutting measures for the upcoming year, including possible school closures and consolidations.

Like other urban or large suburban districts across the state, the Austin district has struggled with inflationary cost increases since 2019.

The approved budget reflects efforts to keep funding cuts away from the district's student experience as much as possible, Superintendent Matias Segura said.

“Over the last 18 months, we have desperately tried to reduce costs that are furthest away from the classroom,” Segura said.

Though the school board adopted the $19.7 million deficit during a regular meeting Thursday night, interim Chief Financial Officer Katrina Montgomery said there was more work to be done. Officials will need to slash an additional $44 million next year to keep cash flows stable, but, Montgomery said, $33 million in cuts have already been identified.

The budget calls for a 92.53-cent tax rate per $100 of property valuation, compared with last year's rate of 95.05 cents.

The district expects to send $715.5 million of its revenue to the state as part of the recapture system, compared with $821.1 million last year.

Recapture, known as “Robin Hood,” collects money from districts like Austin that raise more money through local property tax revenue than its state-determined need. That excess money is handed over to the state to fill in the gaps for less property-wealthy districts.

To reach a $19.7 million deficit, the school board adopted a new policy to temporarily allow itself to maintain a 15% fund balance, rather than its standard 20%. A fund balance is the district’s cash-on-hand, used for emergencies and to help cover certain large payments, such as recapture.

“To get to 20% we would effectively have to do things that would bring harm to the schools,” Segura said. “The one thing that comes to mind is to go through a reduction in force.”

Although the board approved the lower fund balance, it vowed to return to its 20% standard by June 2028.

The budget includes a pay bump for teachers.

The Austin district will receive almost $20 million for staff raises from House Bill 2, an $8.5 billion funding package the Legislature approved this year.

Teachers with three to five years of experience — about 600 people at the Austin district — will get a $2,500 bump, and those with five or more years of experience — about 3,000 people — will receive a $5,000 salary increase.

Budget cutting

Officials cut approximately $63 million in costs this past school year by freezing spending, selling property and reducing the district's reliance on contractors.

The district also received an additional $41 million in revenue when Austin voters in November agreed to raise the tax rate from 85.95 cents per $100 of property valuation to 95.95 cents. About half that revenue went to staff raises.

On June 18, Segura also announced 170 central office employees were affected by layoffs, salary reductions or job changes, though the district didn’t specify those figures. Officials estimate this will save $9.6 million.

Additionally, the district has increased spending on special education to clear a chronic backlog of evaluations and has grappled with declining enrollment for nearly a decade, though numbers have flattened recently.

The district is estimating it will have 72,303 students next year, compared with 72,739 in the 2023-24 school year. The district’s student population has declined by about 10% since 2019.

Texas funds school districts per student in attendance.