Austin spending under review From the cover
Social services
How it works
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 nd other ways to roll out improvements. A new city audit in March also revealed issues with Austin’s frequent use of third-party contrac- tors, including unclear justi cations 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.
Last year, City Council originally passed a $6.34 billion scal year 2025-26 budget with signi cant 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 o cials have called a social services “reset.” The exact cuts are in the 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 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 o ce is tasked with starting an ongoing “comprehensive e ciency 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 nancial comparisons to peer cities. Public progress reports will be made at least semiannually, and all project information will be posted online. Given the broad scope of a citywide assessment, Hadavi said a multiyear process would likely yield the best results. The audit doesn’t have a set price tag.
Auditing process The city’s program will be handled internally by the city auditor’s o ce with support from an outside consultant to conduct:
Spending comparison Austin’s general fund pays for more social services than other cities, which tend to rely more on grants or taxes.
An overall analysis of Austin’s organization, programs, services, policies and operations
Social spending from general fund Grants/tax
Totals $0 $20M $40M $60M $80M $100M
$83.9M $30.5M $63.4M $52M
A review of city contracting practices
Cost savings and performance improvement recommendations
85%
Comparisons to peer cities on e ciency and nancial benchmarks
Dallas 52%
Houston 5%
San Antonio 66%
Austin
SOURCE: CITY OF AUSTIN COMMUNITY IMPACT
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