Preparing for Next Year's District Budget
Unprecedented financial times greet school districts in Washington State as they begin planning for next year’s and beyond operating budgets. Unfortunately, many districts statewide are facing challenging budget decisions and are planning for financial reductions. In Selah, the District is committed to proactive financial forecasting and preparing for the allocation of available resources, which, realistically, includes budgetary reductions.
As the District drafts its financial plan for the 2019-2020 school year, it values the commitment to transparent communication among its stakeholders.
Public education in Washington arrived at this unparalleled point as in 2018, a complex new school funding model was implemented by the State Legislature following the state Supreme Court ruling that it had not been meeting its paramount duty to fully fund basic education for decades. This is the ruling referred to as the McCleary Act. It is true that the new legislation resulted in an overall increase of state funding for education. However, the ability for Districts to fund education locally through levies and the collection of valuable levy dollars was dramatically reduced and ultimately contributes to a decreased bottom line for many districts. This is part of the reason why Washington school districts are currently experiencing financial challenges and are now faced with difficult budget reduction decisions. Specific to Selah, the District's levy collection rate was at $3.53 per $1,000 in assessed value prior to the legislative decision to cap collection rates at $1.50 per $1,000 effective in January 2019. This decrease resulted in a two-year reduction in local revenues of $3.2 million. The District's Levy and Levy Equalization Funding, which is projected to be $6 million in total, will comprise approximately 12% of its $50 million budget for the 2019-2020 school year. However, the percentage driven by Levy and Levy Equalization Funding as compared to total revenues has declined from approximately 17-18% in prior years. Raising the levy cap was one discussion during the recent legislative session.
Further financial challenges for the District resulted by providing salary increases to all employees through collective bargaining. As the Legislature presented its 2018 Operating Budget for school districts, it was emphasized that the additional funding to education was intended to better fund compensation, among other things. Beginning late last summer and continuing throughout this school year, statewide school employee bargaining associations have been negotiating salary increases because of the Legislature’s emphasis that additional District funding was intended for increases in compensation. In Selah, salary increases provided 10-18% growth depending on the employee classification and longevity. The District intentionally negotiated three-year contracts with all employee groups so that its financial forecasting would be more reliable moving forward as salary and benefit costs comprise 81% of its $50 million budget. Salary increases will continue for the next two years for each District bargaining group in the amount of 3%, or the Implicit Price Deflator (IPD), whichever is greater. The District is proud of its competitive salaries provided to employees, but needs to remain mindful of its budgeting practices to ensure it can maintain fiscal stability as it progresses through the upcoming years when it will receive less levy funding, while dealing with the new salary scales. In order to ensure financial stability, the District's efforts will include spending down its cash reserve over the next three years, which will soften the necessary budget reductions and help sustain the 8% minimum fund balance required by Board policy and recommended by both the ESD and OSPI.
Additionally, as the District began its proactive financial planning last fall, it convened a 30+ person Budget Advisory Committee comprised of staff, parents and patrons. The priority of the committee was to better understand the District’s finances, collaborate about the budget, and prioritize student and District educational needs, while providing input about potential reductions for the 2019-2020 school year. As budget decreases also loom into the 2020-2021 and 2021-2022 school years, the committee will continue its service of analyzing District needs, and providing financial recommendations that focus on students and quality learning opportunities.
Looking at the District's budget reduction plan, decisions were drafted after reviewing all programs and positions financed by both levy and basic education funds, and using the student centered approach focusing on learning, collaboration, results, and continuous improvement. As part of the District's draft plan, staffing will be affected, as administrative, certificated and classified positions will be reduced, in addition to other building and district level decreases. Some staffing reductions will be satisfied through natural attrition. Other positions and reduction in hours will equate to current employees. However, it is important to recognize that the state legislature recently adjourned its 105-day session on April 28. Public education for K-12 is always an important element to the state's financial discussions and as information on the state's budget is released, the District should know the potential impacts to its current funding structure. The District's reduction plan will be finalized and adopted by the Selah School Board in July, when its final budget is set.
Chris Scacco, Associate Superintendent for District Operations, said the funding challenges for Washington Schools are historically unmatched, but the District has instituted a proactive planning approach to not only identify budget reductions, but to ensure fiscal stability while meeting the needs of students.
"Funding for K-12 schools in Washington State, which includes decreasing the levy cap, has reached extraordinarily challenging times," said Scacco. "With the new funding model approved by the Legislature, school districts are forecasting multimillion-dollar shortfalls for years to come.
“It is important for the District to be proactive in its planning to ensure financial stability for the next three years and beyond. We need to remain mindful of our financial practices and responsibilities and continue to modify our plans and commit to transparent communication as we build a budget which focuses on the priorities to meet the educational needs of Selah students."
For more information on the District's draft budget reduction plan, please access https://drive.google.com/file/d/1826RfWRYY11zFuaOXJ5PkPXz9rXAnaMk/view.