AISD stalls on employee raises

Austin Independent School District board members heard better budgeting news Monday but still could not come to an agreement on employee raises. The wrong decision could mean “draconian” cuts in future years.

Chief Financial Officer Nicole Conley presented board members with the revised budget, which is a step away from August’s recommended budget, and asked the board’s direction so she could better prepare.

Due to increased property values, AISD is taking in more revenue than expected, Conley said. The district took in an additional $15.5 million after state recapture, offsetting an expected revenue loss of $12.5 million and giving the district $3 million in additional revenue, she explained.

That and an added financial bump from House Bill 1 brings AISD’s preliminary general fund operating revenue to $709.1 million, but its operating expenses still hang around $726.8 million.

“We expect to utilize about $17.7 million in reserves to balance the budget,” Conley said. “Originally we were projected $32 million, so this has come down substantially.”

AISD’s interest and the sinking portion of its tax rate will also drop 2 cents this year, bringing the total cost to taxpayers down from $1.22 to $1.20 per $100 of taxable value. The rate has dropped 4 cents in the past two years.

But the good news will not equate to higher wages for AISD employees, despite a plea made to offset Austin’s rising cost of living.

Three across-the-board raise scenarios worked their way around the table during board members’ discussion: a 5 percent wage increase next year; a 3 percent increase next year and subsequent 2 percent increase a year later; or a 3 percent increase and another 3 percent increase a year later.

All scenarios left AISD with an estimated reoccurring budget gap between $22 million and more than $37 million in the next year or two, even as some board members tried to exclude employees who make more than $100,000 annually from getting raises.

“I’m willing to roll the dice, but we are going to back ourselves into a corner with a 3 percent or 2 percent raise?” said At-Large Board Member Kendall Pace, referring to a possible $37 million budget shortfall. “So my question is: What’s the worst-case scenario?”

Conley said AISD’s projected budgets assume the district will lose an estimated 500 students each year, but after two years, if AISD’s financial situation doesn’t improve, the options are either cutting expenses — such as eliminating 600-900 full-time positions — or going for a tax increase.

“We would really have to consider those hard options that we hadn’t considered previously,” said Conley. “But I would have to say we’d be looking at cutting substantial positions.”

Pace added that the fund balance would dwindle to 10 percent of its total revenue within two years.

Literally going to the drawing board, President Gina Hinojosa tried to brainstorm ways to make up a $37 million gap with potential revenue-generating options, such as boosting enrollment, using money from the district’s educational foundation, developing partnerships with Travis County and the city, leasing AISD’s underutilized properties and possibly getting the city to implement a tax rate for AISD to avoid state recapture, among others.

A city-implemented, 1-cent tax increase aimed at families would bring in $8.5 million for the district, compared to $3.5 million if implemented by AISD. The district pays the highest amount in state recaptured property taxes.

With time lags and the various schemes’ uncertainty, though, Hinojosa was able to fill in only $19.5 million of the $37 million gap.

“So, that’s how we didn’t get to $37 million for 3 or 2 percent (raises),” she said, capping her marker.

Vice President Amber Elenz recommended going to voters for a tax-ratified election in November to get additional revenue.

“If framed correctly to the public, what we’d be asking for is sort of offsetting what we gave back,” Elenz said.

After Hinojosa and another board member jokingly threatened to curse about Texas’ school finance system in Spanish at the televised meeting, Hinojosa said the board would hold another board retreat about employee raises in the hope of finding a consensus.

Photo by Ken Teegardin made available through a Creative Commons 2.0 license.