A handful of Yakima County school districts expect to go into the red in the next four school years if current budget projections hold true, while three others will hover just above the line.
School districts statewide are finalizing annual budgets for the 2019-20 school year as their fiscal year draws to an end this month. This is the second year that districts are also required to create four-year budget projections.
The four-year projections look at the ending fund balance of a district at the end of each school year after revenue, expenditures and beginning fund balances — including reserve funds — are added up.
This requirement was likely added so that lawmakers can better weigh districts’ fiscal sustainability, according to financial services officials for the state Office of the Superintendent of Public Instruction.
The four-year plans are projections, local district officials emphasized — meaning they’re based on factors that can shift.
“Not just in Yakima Valley, but across the state, you’re probably seeing a lot of red, because we’re budgeting for the unknown,” said Kevin McKay, superintendent of the Sunnyside School District.
But many local districts are already finding ways to cut spending in response to the projections.
Districts heading toward the red
The Yakima School District is the first in Yakima County expected to see its general fund balance go into the red, facing a deficit of roughly $2.9 million in the 2020-21 school year if district projections are correct.
The following year, the Sunnyside, Naches Valley and Mt. Adams school districts are also projected to find themselves underwater. Sunnyside is expected to be roughly $12,000 in the red, while Naches Valley and Mt. Adams anticipate deficits of about $100,000 and $290,000, respectively.
By the end of the 2022-23 school year, Zillah will join the group with a $220,000 shortfall, based on district numbers.
West Valley, Toppenish and Mabton school districts will remain in the black by roughly half a million dollars or less at the end of the same school year.
Some factors impacting budgets are restrictions on how local funds can be used — with local levy funds now strictly used for enrichment programs rather than things like teacher salaries; the elimination of a statewide teacher salary guide; and a new health care system for school employees that increases the number of employees eligible for full-time coverage but requires districts to pay the cost of coverage for employees outside state-mandated positions.
In Sunnyside, the four-year projections were based on a worst-case scenario, McKay said.
“If we were to continue to operate the way that we currently operate and increase our expenses — because we know expenses in most cases are going to increase — then, yeah, we’re going to probably go into the red,” he said.
Costs such as utilities and insurance are expected to increase, while revenue remains unknown, he said. Only
20 percent of any district’s expenditures can be adjusted easily, he added, as most districts spend roughly 80 percent of their funds each year on salaries and benefits.
At the same time, budget projections could be dramatically impacted by factors such as student enrollment, which determines state funding and staffing requirements, but can be hard to predict.
In Yakima, the district has already begun cutting costs where possible, with the mentality that state revenue will not improve, said Superintendent Trevor Greene.
“It would be wonderful to be able to count on the Legislature intervening in this process, however we have to move forward and be realistic that this is a situation that we have to face regardless of outside support,” he said. “We will hope for the best, lobby for the best.”
In the meantime, the district brought food services in-house this year to address a $1.1 million deficit in that area alone. Legal services were also brought in-house, assistant superintendent positions were left vacant and four elementary schools will start the school year with part-time assistant principals instead of full-time assistants.
Cuts across the board
Even districts that appear to be solvent and sustainable on paper report a need to cut costs to make ends meet.
The Grandview, East Valley, Highland and Union Gap school districts all expect a decline in ending balance funds over the course of the four years, but by much smaller margins than other local districts. At the end of the 2019-20 school year, for example, Grandview expects to have a fund balance of $6.9 million, slipping to $5 million at the end of the 2022-23 school year.
In Union Gap, this school year should end with roughly $2.7 million in ending fund budgets, compared to $2.3 million in three years. But unassigned funds that can be spent on anything — as opposed to local levy funds, which can only be spent on enrichment programs — will shrink from roughly $850,000 this school year to roughly $300,000 in the 2022-23 school year, said Stefanie Jesperson, business manager of Union Gap School District.
“We’re just kind of doing our best to keep us from going insolvent, but at the same time, we have to maintain our instructional integrity,” she said.
In East Valley, the sentiment is similar. The school district cut over $1 million in expenditures going into this school year to help sustain a balanced budget, said business manager Justin Scully. But things such as capital projects, building maintenance and repairs, and technology took a hit in doing so. Over time that isn’t sustainable, Scully said, as repairs can only be delayed for so long.
“Our ultimate goal is not to impact instruction, because obviously that’s the business that we’re in,” he said. “The reality is that we will have to make additional cuts to maintain that balanced budget that we want.”
While district projections show declining funds, the state is funding public education at an unprecedented rate, with $4 billion of the state’s 2019-21 operating budget going toward a continued effort to fully fund basic education.
“Our schools are receiving more state funds than ever before,” said Rich Wood, a spokesman for the Washington Education Association. “That’s not to say that everything is fully funded, because we still do have a lot of work to do when it comes to funding public education, but we know that we’ve made tremendous progress.”
Some local districts have the opportunity to ask voters for more local funds to help with enrichment programs, for example, after lawmakers lifted a cap on local funding earlier this year. But they also need to continue communicating their needs to lawmakers to prevent these four-year projections from occurring, he said.
“Parents and voters in the Yakima area should be talking to their legislators to make sure that the state continues to fulfill its obligations and commitments to our students,” Wood said.
“The state has made those investments, but we need to continue those investments and build on them,” he continued. “So that’s my way of saying that those district budgets are based on estimates and guesses right now, but what the voters do and the Legislature does in the future will affect those estimates and projections.”