According to a recent survey from the Texas Association of School Business Officials (TASBO), nearly 63% of school districts across the state expect to end the 2025 fiscal year in a budget deficit.
The second annual School Finance Survey, which received responses from 190 districts serving 47% of the state’s total student population, paints a troubling picture for the future of Texas schools.
Roughly 42% of districts reported ending the 2024 fiscal year with a deficit, and many expect more growing financial challenges over the next few years.
Over three-quarters of those surveyed, approximately 80% of the sample group, indicated that big budget cuts may be necessary in 2026, highlighting the financial pressure facing local school systems throughout the Lone Star State.
According to TASBO, rising property insurance costs are a major contributor to these financial woes. This was the most commonly cited expense that districts find difficult to manage.
In response to tightening budgets, many school districts are contemplating a wide variety of cost-cutting initiatives. Some proposed reductions include cuts to overtime and substitute teachers’ funding by eliminating resident substitute teachers and reducing non-classroom support positions like assistant principals.
Some districts are even considering consolidating after-school or alternative programs onto fewer campuses, moving coaches back into the classroom in teaching roles, and eliminating underused subscription services to free up budget resources.
Despite these efforts and potential cuts, 42% of districts do not anticipate being able to provide staff raises without additional help from the Texas Legislature. Another 48% of responders said they could only offer raises by making other budget cuts to cover the costs.
As the survey shows, Texas school districts are facing increasing financial challenges, with many unsure of how they will balance their budgets going into 2026.