Austin spending under review From the cover
Social services
How it works
process of being determined but are expected to total about $16.8 million in FY 2026-27. “That was heartbreaking for me personally, to know that subsequent to [the] failure of Prop Q that we essentially balanced our budget on the backs of our social safety net,” council member Vanessa Fuentes said. The city is also looking to cut down its informa- tion technology department to reduce expenses by eliminating duplicated systems and centralizing operations. But the public employees’ union AFSCME Local 1624 opposed this and asked Austin to find other ways to roll out improvements.
Last year, City Council originally passed a $6.34 billion fiscal year 2025-26 budget with significant investments in social services. However, most of the funding anticipated by council was stripped away in a budget rewrite after voters rejected the Proposition Q tax measure, which would have generated about $100 million for the FY 2025-26 budget. After the election, City Manager T.C. Broadnax outlined how those millions of dollars would be removed. Further cuts are on the horizon as Austin works toward what several officials have called a social services “reset.” The exact cuts are in the Top spending The city expects to cut almost $17 million from social spending in FY 2026-27. Of the $74 million currently budgeted for social services, the top spending categories include: $34.9M Homelessness strategy and operations Crisis response (court diversion, case management) $10.5M $9.2M Children and youth (early childhood, youth development programs)
As part of the audit process, the city auditor’s office is tasked with starting an ongoing “comprehensive efficiency assessment” program. City Auditor Jason Hadavi will oversee the initiative, to be handled independently by an external consultant. The audit will analyze Austin’s overall city government organization, public programs and services, third-party contracting practices, and financial comparisons to peer cities. Public progress reports will be made at least semiannually, and all project recommendations, results and other information will be posted online. As improvements are suggested throughout the review, city management and department leaders will have to detail how those changes will be made—or why they disagree. Given the broad scope of a citywide assessment, Hadavi said a multiyear process would likely yield the best results. The work is set to repeat indefinitely into the future, although the council-approved ordinance calls for at least three-year gaps between each full audit cycle. The audit doesn’t have a set price tag, and Hadavi said early cost estimates likely wouldn’t be released to keep bidding competitive. The Save Austin Now political action committee, which contributed to anti- Proposition Q efforts last fall, is now running a petition campaign for a ballot measure to mandate third-party city auditing. Its petition calls to enshrine that requirement in Austin’s charter, which would eventually require voter approval if the petition gains enough signatures.
Spending comparison Austin’s general fund pays for more social services than other cities, which tend to rely more on grants or taxes.
Social spending from general fund Grants/tax
Totals $0 $20M $40M $60M $80M $100M
$83.9M $30.5M $63.4M $52M
85%
Dallas 52%
Houston 5%
San Antonio 66%
Austin
Contractors
Nearly $300 million was spent on city consultant services across nearly every department over less than three years. Consultant costs
Auditing process The city’s program will be handled internally by the city auditor’s office with support from an outside consultant to conduct:
A new city audit in March also revealed issues with Austin’s frequent use of third-party contrac- tors, including unclear justifications and reporting on work that recently cost nearly $300 million and increased by about 25% in less than three years. “The city may not be able to show why consultant services were needed or how they were used,” Audit Manager Keith Salas said. Contracting with consultants is common in Austin, with Salas noting that “virtually all” city departments are spending on third-party support. The practice grew increasingly expensive in the less- than-three-year period covered by the March audit. The finance department plans to update its processes in line with new recommendations by October, according to the audit. Financial Services Director Kim Olivares said the adjustments tie in well with other citywide
$120M
$102.6M
$100M
An overall analysis of Austin’s organization, programs, services, policies and operations
$81.9M
$94.7M
$80M
$0
A review of city contracting practices
2022-23
2023-24 2024-25
Fiscal year
Cost savings and performance improvement recommendations
NOTE: CITY FISCAL YEARS RUN FROM OCTOBER-SEPTEMBER. FY 2024-25 DATA IS THROUGH JULY ONLY.
Comparisons to peer cities on efficiency and financial benchmarks
efficiency updates, including the new audit program.
SOURCE: CITY OF AUSTIN/COMMUNITY IMPACT
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