By Bill Oakey, January 12, 2018, Updated January 15, 2018

Two years ago, KXAN’s Kylie McGivern reported that AISD was projected to lose 6,140 students over the next decade. Since then, the school district has struggled to try to slow down this trend. Last year they implemented a new policy to allow out-of-district students to transfer free to AISD. That effort yielded some positive results, but not enough to change the fact that significant enrollment declines will continue. In an upcoming blog piece, I will delve into the latest numbers and discuss the demographics and housing aspects. Why is all of this happening? Most of it comes down to one word:

Affordability!

Austin’s precarious real estate boom is bringing lots of young hipsters and couples without children to town, who are living in multi-unit housing complexes. Families with children, living in single-family homes, are being taxed out of their homes in alarming numbers. See the KXAN news story for some perspective on what one of those families is going through. They do not want to leave Austin, and it’s a crying shame that so many are being forced out.

To add insult to injury, the second highest cost impact on family budgets, next to housing, is transportation. Most of the new roads being built for commuters are planned as toll roads. And nearly all of those will have so-called “managed lanes.” Those are the ones where the toll rates rise as the traffic increases. Longtime residents who have paid their taxes and contributed to their community for most of their lives will be forced to pay high monthly toll bills. Or else, they’ll be confined to the slow lanes, as they watch the wealthy zip by them in the express lanes. The deck is stacked against the very people who worked to make Austin the prime destination that it has become.

What Are the Implications for Taxpayers and AISD?

The financial impact of the big enrollment drop on AISD will be devastating. We need only to look to Portland to see what that trend looks like. Portland saw a massive school enrollment drop in the 1980’s, as they transitioned into a wealthy enclave. The big difference is that today Portland has a very efficient public transportation system that includes rail.

It is highly unlikely that Austin will ever be able to afford a citywide rail system. That’s because the City already has a daunting list of over $8 billion worth of plans. Rail is not on that list. Voters have already approved bond packages totaling $1.7 billion in City and AISD bonds in the last two years. And hundreds of millions in additional bond projects are in the pipeline. The City is on a scary path toward raising property taxes to the legal maximum of 8% every year. Where is all that money supposed to come from?  Do they think we all have sacks full of money just lying around? How much debt can the City handle? And most importantly, is this kind of cost spiral even sustainable. I think not!

As for AISD, they are most likely headed for an “affordability perfect storm.” The State’s Robin Hood school finance system, known as “recapture,” diverts hundreds of millions of dollars of our local tax money into other school districts across Texas. Consider this quote from AISD’s website:

“Austin ISD is the single largest payer of recapture in the state. Our payment alone comprises 13 percent of all state collections. During the next five years—between fiscal years 2016 and 2020—Austin ISD is projected to pay almost $2.6 billion in recapture payments to the state. By 2019, more than half of every tax dollar collected in Austin will go to the state.”

AISD’s projected student enrollment drop only exacerbates the problem. Fewer students generate less State revenue. AISD receives $7,390 annually for each student enrolled. It’s easy to see that declines of several hundred students per year translate into millions of dollars lost.

Whenever district officials recommend consolidating or closing under-enrolled schools, parents complain and slow down the inevitable transition. The delays lead to costly expenses to operate and maintain those schools. Meanwhile, as home property appraisals, school operating costs and bond payments escalate, taxpayers get slammed with a cost spiral that forces them to leave Austin. That generates further enrollment declines. The only way out of this vicious cycle would be school finance reform at the State Legislature. We need much more public focus on that issue, along with a coordinated effort by City, County and AISD officials to push for reform. Failure to achieve that goal could imperil Austin’s hopes for continued economic success.