AISD’s Financial Quagmire – Is This Their Perfect Storm?

By Bill Oakey

October 6, 2013

You have probably seen the news reports that AISD has lost student enrollment this year.  They lost around 1,200 students for a variety of reasons, most notably the lack of home affordability in Austin.  The median home price here is the highest of any major city in the state, at $227,600.  That figure is very misleading however, since so many central city neighborhoods haven’t seen home prices that low in about 20 years.

Where Have Urban Austin’s Children Gone?

District officials should have seen the enrollment drop coming, but instead their demographer predicted a 250 student enrollment increase.  Perhaps AISD bureaucrats should consider reading an Austin affordability blog.  The migration of families with children to the outskirts of Austin is nothing new.  We all witnessed the plans for closing Zilker Elementary and some other schools just two and a half years ago.  At that time, the Austin American-Statesman ran a captivating story entitled, “Where Have Urban Austin’s Children Gone?”

Neighborhood parents rose up to successfully protest the school closings, but the handwriting was on the wall.  Then there is the whole question of the reputation of Austin schools and where people choose to live in hopes of finding the highest quality schools.  Affordability plays a wicked role in that battle, since some of the most affordable homes are in sections of town with low student achievement. On top of that, there has been a growing trend of low-income families fleeing to the suburbs because of high inner-city housing costs and high property taxes. But increasingly, more and more middle class families are leaving for the same reasons. Austin is fast becoming a destination for luxury homeowners, with fancy condos and townhouses mixed in with oversized McMansions.

A Legacy of High Spending and Top-Heavy Administration

In my taxpayer advocacy days of the 1980’s, I ofter referred to AISD as the Austin Inefficient School District.  I clearly remember that they typically maintained the highest per student costs in 8 out of 11 categories among the largest districts in the state.  Just four years ago in 2009, I met with then superintendent Pat Forgione and a couple of the board members to discuss AISD’s property tax rates.  That year they called for a “tax ratification election,” which is a State sanctioned local option for school districts to ask voters for a supplemental property tax increase.  This brings the total annual increase above the normally allowed cap.

In my meeting with the superintendent, I was told that the tax increase was necessary to keep teacher salaries competitive.  And that if those salaries ever fell too far behind,  it would be nearly impossible to catch up, given that the State Legislature does not fund schools adequately.  The local tax increase option passed with no organized opposition.

Fast forward to 2013.  We are clearly not living in the same Austin anymore.  The voters’ surprising defeat of two out of four school bond propositions in the spring was not the first cost related AISD issue to hit the newspapers this year.  Back in January, the American-Statesman reported that the number of administrators with six-figure incomes has increased 63% in the last five years.  A large chunk of that occurred in a single year, when the number of six-figure bureaucrats jumped 25% between 2012 and 2013.  It’s as if AISD feels compelled to join the private sector in extending the ever widening gap between rank and file workers and the privileged executives at the top.

The Winds Gather for the Perfect Storm

AISD teachers and staff did receive a pay raise for the new 2014 fiscal year that began this month.  However, the raises are not permanent since the funds were drawn from reserves.  So, how can the district restore funds for teacher pay raises next year?  The answer is another tax increase election on top of whatever regular tax increase would come in the 2015 budget. Nothing much will be happening to spook taxpayers next fall, other than three overlapping bond proposals totaling at or above a billion dollars.

AISD faces a daunting financial quagmire in the coming years.  If student enrollment continues to decline, the revenue loss of $7,400 per student would trigger a confounding question.  What could they do abut it?  This year alone, the district stands to lose $8.6 million.  If high living costs and high taxes are driving families away, raising taxes even higher to cover their losses would only make the problem worse.

District Judge John Dietz, who presides over the highly complex Texas school finance lawsuit will resume the trial in January, based on new evidence.  The Legislature restored much of the school funding that had been cut in the 2011 legislative session.  The State has vowed to appeal any court decision that awards more money to the schools.  In fact, the school funding bill that passed in this year’s session was crafted precisely in a manner that would help win the appeal.

If AISD finds itself back to square one, with declining student enrollment and no local appetite for increasing property taxes, they could be headed for financial trouble.  This is not a good time for that to happen, especially since the recently elected school board ran in opposition to the management decisions and personality of Superintendent Maria Carstarphen.

We can only hope that the new board can muster the gumption to steer the district in a direction of leaner spending.  At the same time, they need to restore the confidence of parents that their children will receive a quality education, while fostering an administrative attitude that welcomes citizen input instead of arrogantly rejecting it.

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