Austin ISD plans to cut at least $30 million from its next budget

The Austin Independent School District is working on ways to cut its $60 million budget deficit in half during the next school year, while trying to limit the impact it will have on classrooms.

Austin ISD is one of the many Central Texas districts facing tough choices because the state’s spending on public education has not kept up with inflation. The Texas Legislature has not increased the minimum amount it spends per student, also known as the basic allotment, since 2019. And, while lawmakers last year did increase school safety funding, they also required school districts to put at least one armed officer at every school, which costs significantly more than the $15,000 per campus the state allocated.

“School districts are now facing some serious budget challenges, and you’ll start seeing that across the state as school districts are trying to remain financially stable, and in doing so they’re going to have to cut their budgets,” Ed Ramos, AISD’s chief financial officer, said.

Austin ISD officials have outlined a preliminary plan to cut $30 million in expenses from the 2024-25 budget, but even with those cuts, the district will still have a $30 million deficit. Ramos said preventing the budget deficit from exceeding $30 million is key to ensuring the district’s financial stability over the next three years.

If the deficit gets too large, it will start to eat into Austin ISD’s savings account, also called its fund balance. Ramos said the district has a policy that requires the fund balance, which currently sits at more than $200 million, to have enough money to cover 20 percent of its operational costs, including payroll, at all times.

“The best practice is to at least have three months’ worth of your operational expenditures in fund balance – in your savings account – so that helps us meet our cash flow requirements,” he said.

Austin ISD’s plan to cut its spending by $30 million includes slashing spending on contracts with outside vendors by $14 million and reducing overtime by 30 percent. The proposal also includes a plan to cut 42 positions from the district’s central office. Thirty of those positions are currently vacant.

“When we talk about the $30 million in budget cuts that we are making in Austin ISD, 100 percent of those cuts are away from the campus,” Ramos said. “So they are taking place at the central office and the operational level.”

Deeper cuts needed to offer raises

If Austin ISD wants to be able to offer employees raises during the next school year, the $30 million in cuts is only the tip of the iceberg.

“If we do move forward with any type of investments as a district, whether that’s compensation, additional services (or) additional positions, we would have to find even larger offsets in the budget, so we would have to cut deeper,” Ramos said.

In addition to identifying more budget cuts to free up money for raises, Ramos said the school board has asked the district to explore the impact of holding a Voter-Approval Tax Rate Election (VATRE) that could generate about $44 million to $46 million per year if voters agreed to increase the tax rate by about 9 cents.

“If we move forward with a tax rate election, that would occur in November during the general election,” he said.

Other school districts in Central Texas have taken this step within the last year. During the November 2023 election, Pflugerville ISD and Lockhart ISD voters approved new tax rates so that each of those districts could offer pay increases to employees.

Ken Zarifis is the president of Education Austin, a union representing Austin ISD employees. He said he thinks a VATRE is going to be necessary because there are only so many places the district can cut before it starts to affect campus staff.

“There’s really no other option when you have a state that refuses to invest in public education; districts will have to do everything they can possibly do before they start cutting in the classroom,” he said.

Zarifis said Austin ISD must offer a pay increase for the upcoming school year, though he understands it won’t be as high as the 2023-24 school year. The school board ended up approving a $52 million deficit budget last year to be able to offer more competitive pay increases.

Education Austin negotiated a $4 an hour raise for classified staff, such as bus drivers and custodial workers, bringing the hourly minimum wage to $20. Teachers, counselors and librarians received at least 7 percent raises as Austin ISD tried to stem the tide of turnovers it had been dealing with after the pandemic.

“I think people understand the environment this year is different than last year. The budget – it ebbs and flows over the course of time,” Zarifis said. “So I believe people will be patient, but we’ve got to show some type of financial support for employees.”

Education Austin is negotiating raises with Austin ISD and hopes to reach an agreement within the next 30 days. Zarifis said the district needs to offer even a slight raise, and that no increase amounts to a pay cut because of inflation. However, there are other ways the district can show employees they are valued, he said.

“Being valued by the district isn’t just monetary – it’s also about how people are respected in the workplace, how they’re treated by their supervisor, how they’re respected as a professional regardless of the job they have in the district,” he said. “That will go a long way.”

Most districts are in similar budget deficit boats

Zarifis said the financial crisis at Austin ISD is a result of state leaders focusing on introducing school vouchers in Texas.

“This is a crisis that has been created by our Legislature and by our governor by holding (public education) funding hostage for vouchers,” he said.

Last year, Gov. Greg Abbott tried unsuccessfully to pressure the Legislature to approve a plan to give families taxpayer money to send their kids to private and religious schools. Abbott also refused to consider increasing teacher pay or public school funding without a deal on vouchers, which the Texas House repeatedly blocked.

Amanda Brownson, deputy executive director of the Texas Association of Business Officials (TASBO), said the group surveyed districts this year to see how they were doing financially after hearing anecdotally that many were struggling.

TASBO heard back from 313 districts that educate about half of the state’s 5.5 million public school students. More than 50 percent of the districts that participated in the survey said they plan to cut spending and dip into their fund balances for next year’s budgets. Only 10 percent of respondents said they did not have to take either of these steps.

Brownson said the prevalence of the financial challenges districts are facing demonstrates that they’re simply not getting enough resources to meet their needs, like paying teachers enough to keep them in the classroom.

“What districts need is a commitment to long-term sustainable funding that they can use to pay adequate salaries to keep people employed,” she said.

Brownson said since the Legislature last increased the basic allotment five years ago, inflation has increased by at least 19 percent. That means supplies that schools must purchase like food, fuel and paper are more expensive.

“But most importantly that inflation has hit staff’s family budgets, and so what that means is the purchasing power of that … salary is down,” she said.

Brownson said TASBO is telling school districts that small trims to their budgets will likely not be enough, and that they should not count on state lawmakers to save them when they reconvene in 2025.

“We are counseling that districts try to take their fate into their own hands, and if they’re in a deficit situation, go ahead and do the hard, difficult work of making those cuts even though it’s painful,” she said.

Austin ISD officials plan to present the district’s recommended 2024-25 budget during the May 9 school board meeting. Trustees are expected to adopt the budget on June 20.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT.

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