Austin ISD facing deeper budget cuts as deficit continues to grow

AISD budget deficit continues to grow

Austin ISD is facing even deeper budget cuts as its deficit continues to grow. Now we’re taking a closer look at just how big that shortfall has become and what's driving it.

AUSTIN, Texas - Austin ISD is facing even deeper budget cuts as its deficit continues to grow.

Now we’re taking a closer look at just how big that shortfall has become and what's driving it.

The significant budget reductions come as the district grapples with the perfect storm: declining property values, falling enrollment, rising costs and delays in real estate deals. 

Together, those factors have added another $30 million to this year’s deficit.

By the numbers:

Austin ISD is projected to close out the current budget year with a $49 million deficit and head into the 2026-27 budget year with a staggering $181 million deficit. But how exactly did the district get here?

"The problem we have here is that we don't know what we're doing, what numbers we're calculating, because the numbers we had last year are completely different than the numbers that we have this year," said Ken Zarafis, president of Education Austin.

PREVIOUS COVERAGE: AISD school improvement plans

Austin ISD is continuing to develop its state-mandated plans for more than two dozen failing schools. The district hosted a board public hearing on it on Thursday.

The district passed its 2025-26 budget last June with an expected $19.7 million deficit. That plan relied on about $45 million in real estate revenue, but one of those major deals has been delayed and won’t close in time for this fiscal year.

At the same time, property values also dipped more than expected, leaving the district with less money than anticipated.

"I know property values are much less than what they anticipated and what they anticipated was very conservative. So that we've made such a huge drop and such a large portion of it, it really impacts the district," said Zarafis.

The backstory:

In November 2025, the board of trustees voted to close 10 campuses, consolidating those students into other schools for the 2026-27 school year. 

The district says that move could save around $21 million for next year's budget. However, $17 million of those savings will be reinvested into school improvement work at campuses.

PREVIOUS COVERAGE: AISD releases final consolidation plan

Austin ISD has released its recommendation plan for school closures after nine months of work and several changes. FOX 7 Austin’s Bryanna Carroll reports.

Officials say they’ve already taken steps to cut costs, including a major central office restructuring, an external hiring freeze, and tighter spending controls to limit non-essential purchases.

"We're just seeing a lot of people being put against each other about a position being put against each other. We don't want that because that undermines our district. We don't want to do that internally. We've got to make sure that we address the issue," said Zarafis.

What's next:

Looking ahead, the district says closing the gap may require tougher decisions, including possible cuts to staffing and schedules, changes to administrative ratios, reductions in stipends, and 15 percent cuts to non-staffing budgets.

Some programs could also be reduced or eliminated altogether.

To help offset the deficit, the district is also exploring ways to generate new revenue, including facility naming rights, billboard advertising, and reducing charter bus costs, among others.

PREVIOUS COVERAGE: Parents react to AISD's approval of school closures

After months of parent protests, Austin ISD has finally adopted a school consolidation plan that may be shutting down schools.

"We want people to go out, we want people to write letters, we want people to sign the petition that we have out. We want people to be involved, and we want more than just union people. We want union people, we want more union people, but we want people that are concerned about schools to write, to say what's happening to their child, what their child needs and what they need the district to do to support them," said Zarafis.

A preliminary 2026-27 budget will be presented to the board of trustees on Thursday, April 23.

As Austin ISD grapples with a growing deficit this year, the district is still on the hook to send a staggering $715.5 million in property tax revenue back to the state as part of its Robin Hood plan.