Dozens attend a rally advocating against Austin Independent School District budget cuts outside the AISD building on June 11, 2026. KAYLEE GREENLEE FOR AUSTIN CURRENT
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The Austin school district’s budget crisis is deepening faster than district leaders projected, with its deficit now climbing from $19 million to $95 million in less than a year and threatening to swell to $181 million by next summer if cuts are not made.

The rapidly growing shortfall has turned the district’s finances into a moving target, driven by declining enrollment and attendance, weaker property values and spending pressures that have forced district leaders into increasingly-urgent decisions.

The fallout is already reaching classrooms and campuses. Trustees are expected to approve a budget later this month that will likely include cuts to hundreds of positions, including some librarians, while reducing spending on transportation, technology, policing and some districtwide arts and athletics programs.

Families and staff are pushing back, fighting to preserve bus routes and programs such as water polo, while demanding clearer answers about why the deficit keeps changing.

“Implementing budget reductions is no longer optional — it is essential,” said Superintendent Matias Segura in a statement Monday. “We must continue to structurally adjust our budget to meet our needs and we’re doing this work now. These budget reductions are incredibly difficult, but they are necessary to restore our financial strength.”

With the numbers are still shifting, community members are trying to understand how the district got here and what happens next. Here is what we know:

How the deficit ballooned

  • $19 million: What Austin ISD projected the deficit to be by June of this year when trustees passed the 2025-26 budget last summer.
  • $49 million: The updated deficit projection Segura and Chief Financial Officer Katrina Montgomery shared with board members in February. 
  • $95 million: The district’s latest estimate for the fiscal year ending June 30, which Segura and Montgomery shared with board members earlier this month.
  • $181 million: The projected shortfall by the end of the 2026-27 school year if the district does not make cuts. That figure could grow because it was based on the earlier $49 million estimate for this year. 

Why the hole keeps growing

The deficit grew to $95 million, five times what the district projected a year ago, because of declining attendance, enrollment and property values, along with increased spending tied to academic achievement needs, Segura said in the statement. The district also expected revenue from the sales of the former Brooke Elementary and Rosedale school properties that did not materialize as expected during the 2025-26 school year, according to a district presentation at last week’s board meeting.

Trustees pressed Segura during the June 11 board meeting over what warning signs the district saw earlier and what changed so late in the budget cycle to produce a much larger deficit than expected. Board members also asked how the larger 2025-56 deficit could increase the $181 million projected shortfall for next year. That remains unclear until June expenses are finalized.

What happens now

The $95 million deficit would leave Austin ISD ending the year with reserves equal to just 10% of operating costs, far below what the district has historically aimed to keep on hand. The fund balance functions as the district’s savings account, covering expenses such as payroll when property tax revenue is delayed, after annual recapture payments to the state and during emergencies such as a pandemic or severe weather, according to Segura’s statement.

Board policy typically calls for reserves equal to 20% of expenses. The board lowered that threshold to 15% last June because of the district’s financial strain. Ending this fiscal year at 10% will leave the district with little margin for future deficits and likely force it to take out a short-term loan to make payroll this fall.

“We did this last year; however, we’re now looking to borrow more funds earlier in the year, which may result in a high fee that includes interest payments,” Segura said in Monday’s statement. “Please be assured that our staff will be paid.”

Acacia Coronado is Austin Current's education reporter. She is a Texas native and has previously written for The Associated Press, The Texas Tribune and The Wall Street Journal, among others.