The Carvajal Group Blog

A.I.S.D financial crisis and what it could mean for Austin Real Estate Values

March 3rd, 2011

On Febrary 28th, 2011 the Austin independent School District declared a state of “financial exigency,” essentially financial emergency.  The declaration  allows them to terminate up to 1,153 teaching and other positions which are under contract.  The 2011-2012 proposed budget also calls for slashing athletic programs and other extracurricular activities.  Read the Austin American Statesman article here.

This decision was necessary because of a decrease in state funding due to the $27 Billion state budget deficit as well as a nearly 4% decline in taxable property values.  Property taxes and state and federal funding are the primary sources of revenue for Public Schools in Texas.

On separate but related topic, a task force that had been established early last year to help the district run more efficiently recommended closing 9 or more schools within the district.  This included closing two of the few elementary schools with exemplary ratings, Barton Hills and Zilker Elementary Schools.  The reasoning behind the plan was  that the schools were small and aging and it would save money to build larger centralized school serving these areas and others.  Had this plan been executed, it most certainly would have had an adverse effect on property values in the areas that feed into these schools.  There was a community uproar at the mere suggestion of closing thed schools and it seems as they will remain open at least for the time being.

One of the great things about Austin is that the public schools have been good enough that parents did not feel that they needed to send their kids to private schools, even if they had the means.  This is one thing helps keep the cost of living relatively low within the city of Austin.  However, with impending elimination of teachers and extracurricular programming, it will be a challenge to maintain the quality of education that Austinites have become used to with higher student to teacher ratios and less extracuricluar activities.

If the quality of schools do in deed suffer it seems reasonable that many parents that are homeowners would be forced to either move to suburban areas with better public schools(Leander, Round Rock, Eanes, Lake Travis) or move to less expensive homes so that they can afford to pay private school tuition.   Needless to say, if quality of education goes down in AISD, with all other things equal, real estate values in the areas served will also see a decline.  I sincerely hope that school board, parents, and remaining teachers can find away to keep quality of education high given their new challenges.

 

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