AISD Board of Trustees reckons with mounting constraints in preliminary budget outline

The Austin ISD Board of Trustees was up late last Thursday bracing for a challenging budget cycle in coming months.

Chief Financial Officer Eduardo Ramos closed the marathon information session with a presentation outlining preliminary revenues and expenditures for the 2022-23 school year. With little room left to dip into reserves, staff said they were forced to make difficult decisions to ensure a balanced budget.

“Keep in mind that word preliminary,” Ramos said. “There are still some key data points that we are waiting to receive.”

Assuming enrollment targets and tax revenue match their projections, AISD anticipates budget increases and cuts amounting to $25.4 million and $51.9 million, respectively. Recapture payments and payroll will constitute the lion’s share of expenditures.

Among the budget reductions are significant cuts to personnel throughout the district, though staff members say this will not affect teachers or the majority of on-campus employees. Of the 632 total position cuts, most will come from AISD’s central office, with many vacancies phased out entirely to cut compensation costs.

Such cuts should come as no surprise to those following the district, which for two years has been forced to dip into reserves to weather the impact of the Covid-19 pandemic. While these savings have come in handy thus far, the district is on the precipice of extending below the 20 percent minimum of operational costs necessary to maintain the AAA bond rating critical to its financial infrastructure.

While undoubtedly a strain to administrative operations, Ramos said the cuts will allow the district to balance its budget while raising pay grades for hourly employees and teachers. Between an additional $1,000 in base pay and 2 percent raise in salary, staff expects that teachers will see an average 3.7 percent increase in compensation. Support staff such as security guards, cafeteria workers and custodians will also see a new minimum wage of $16 per hour, with bus driver wages climbing to $21 per hour.

“We wanted to cut deep enough that we can take better care of our employees,” Ramos said. “The goal is to be competitive … to be one of the top-paying districts in Central Texas.”

AISD also plans to set aside a $2 million investment in a new equity allotment program, which will compensate campuses with a higher percentage of economically disadvantaged students beyond existing federal funding. “What we’ve seen is that these campuses are unable to raise the funds for activities outside of the classroom in the ways others in the district can,” Ramos said. Such funds will provide additional resources for co-curricular and extracurricular programs such as UIL competitions and after-school clubs.

The district will also benefit from $31.2 million in Elementary and Secondary School Emergency Relief funds, which it can use to supplant pandemic-related spending. Still, the amount is a drop in the bucket compared to the $798.6 million staff anticipates they will return to the state in recapture payments, a total that constitutes 49 percent of expenditures and makes AISD the single largest source of revenue for the state of Texas.

Currently, Ramos says the district is suffering from a “perfect storm” of declining enrollment and skyrocketing property values that work in tandem to increase recapture via a formula determined by the state. While House Bill 3 temporarily flattened the curve, Austin’s increasing taxable property values are once again outrunning this temporary fix.

“The recapture program originated based on property wealth and not personal wealth, and there’s a huge difference,” Ramos said. “In AISD, 52 percent of our students are economically disadvantaged, so we are one of the districts this was designed to help … instead we are the highest-paying in the state.”

In coming weeks, the district’s financial office will meet with the Travis Central Appraisal District to secure the data it needs to analyze projected tax revenues. With the median value of homes now at $624,000 according to the Austin Board of Realtors, staff anticipates property value increases in the neighborhood of 8 to 15 percent, with some estimates as high as 20 percent. As per state law, AISD will need to cut the tax rate to historic lows to level out the burden placed on homeowners.

The district’s financial office will return before the board with a more finalized budget outline in May.

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