AISD Says HB 3 Boosted Its Funding by $46M, New Students Add $6.6M

The Austin Independent School District (AISD) issued a statement Saturday night saying that recently enacted school finance legislation (HB 3) has boosted the district’s finances by an estimated $46 million, while enrollment growth will add $6.6 million in new revenue.

“Our current budget was adopted with a deficit of just over $3 million, well under the estimated $49 million deficit that would have occurred if HB 3 wasn’t placed into law,” the statement says.

AISD had been experiencing declining enrollment for several years, but this school year it broke that trend, adding nearly 700 new students.

That will result in an estimated $6.6 million windfall for the district, the statement says, because under the state’s school finance system, a base level of state funding is allocated on a per-student basis to school districts, supplementing funds raised through local property tax levies.

In addition to rising state funding, AISD also could see property tax revenues rise as the tax base continues to grow. The FY 2020 rate is now set at $1.122 per $100 of taxable value, and property values continue to rise.

Still, AISD says that next year it could still have a “substantial deficit ranging from $24-48 million,” depending on whether or not it goes ahead with certain planned initiatives. 

These include $27 million spending associated with the “School Changes” plan, which involves not only the proposed closure of four elementary schools but also expanded after-school hours, districtwide cultural-proficiency training for thousands of district staff, and the creation of a social justice center at one of the shuttered elementary schools. 

Additionally, the district says it expects to see $12 million in “baseline cost increases” for such things as employee healthcare, insurance, fuel, and HB 3 compliance. It also wants to spend another $12 million for “cost of living adjustment (2%) for employees.” 

If the district is faced with a deficit next year, it says it still has financial reserve to draw on that will allow it “buy time” before it needs to make budget cuts. 

The statement points to a number of uncertainties around AISD’s financial outlook in coming years. These include the lack of clarity around wither state legislators will continue to cover the costs of HB 3 in future years and the failure of HB 3 to cover inflationary costs.

Why It Matters

  • AISD staff are seeking board approval for the closure of four elementary schools — a move that the staff believe would result in significant savings on maintenance and operations.
  • The plan has come under attack, and AISD leaders have defended it by arguing that the closures are necessary because the district faces declining enrollment and a squeeze on its finances. Disclosures in AISD’s latest statement undercut that narrative, since both of those dynamics are no longer at play to the same extent.
  • However, AISD’s latest statement also could be read as offering an alternative justification as to why school closures are needed. It attempts to temper optimism around the state funding bump while simultaneously pointing to cost pressures that could push the district budget into the red. The statement was titled, “On HB 3 and our complex challenges ahead.”

Photo Credit: AISD Superintendent Paul Cruz / Twitter