The district has five budgeted funds, one of which is our General Fund. This is the main fund for our state and local revenue and expenses.

District expenses for our current programs are budgeted to exceed our available revenue in our General Fund. Over time, the district has experienced reduced resources through lost enrollment and regionalization dollars. During the COVID-19 pandemic, relief monies helped to stabilize the district at a time when budget reductions would have otherwise been necessary.

For the current budget year, which runs September through August, we are spending down our “rainy day” funds, which is referred to as fund balance. This is similar to a home savings account. At the end of this budget year, we projected the district would only have .6%, or just over $1 million dollars left in reserves. District policy requires the available cash reserves to be 4%.

The below table shows our budgeted enrollment compared to actual student enrollment and the difference over the past several years. Our student enrollment decreased substantially in 2015 and again during the first two years of the COVID-19 pandemic. While this year we have welcomed more students than expected, the enrollment outlook does not look robust. Student enrollment is affected by low birth rates, affordability of housing for families in the district, and alternative choices for education.

As a general calculation, the district receives about $1 million dollars in funding for every 100 students.

Student enrollment is the first cornerstone of building our budget. In February or March of each year, we estimate how many students we will have in September and build our budget around serving those students and based on the revenue that is generated by that enrollment. We don’t know if our projection, and therefore our revenue, is correct until we see our students in September.

In 2018, when the Washington State Legislature provided resources in response to the McCleary lawsuit related to school funding, a number of steps were taken to equalize the resources available to schools across the state, so that one area would not have as many financial advantages over others in a less economically robust area.

In the process of making those changes, the Legislature was aware that there would be Districts who would have a difficult time attracting a quality workforce without paying regionally competitive wages, so they created “regionalization” which provided added resources to Districts situated in higher cost of living areas. For Shoreline, this started at 24% more in resources from the State. This has been reduced by 2% a year to our current level of 18%. This results in about $7 million dollars a year less in resources for Shoreline Schools.

Regionalization funding loss has been difficult for Shoreline during a time of increasing costs due to the pandemic, inflation, and inflationary increases provided by the legislature intended for “cost of living” adjustments outpacing the forecasted rates.

The IPD is an inflationary adjustment based on the implicit price deflator (IPD). Many refer to the IPD as a cost-of-living adjustment, or COLA. In the past, Washington voters approved a COLA increase for educators, but the legislature first suspended that due to their fiscal outlook and then replaced the COLA with an inflationary adjustment based on the IPD. 

Last year, due to high inflation, the State allocated additional monies beyond the IPD to fund an adjustment of 5.5%. Whatever the IPD adjustment is, that amount is added to the amount the state pays us for the salaries they fund – meaning they do not provide the full IPD amount for the staff we have funded by local levy, positions that are federally funded, or salaries that exceed state allocations to be competitive.

The State created a Prototypical School Model, which details out how many school staff are allocated based on student enrollment. This model also sets the State-funded salary rate for each type of position, plus the 18% regionalization we receive.

The Shoreline model is more robust than the Prototypical School Model. Our local levy enhances the Prototypical School Model by increasing the number of staff we have, ensuring we provide competitive compensation, and completely funding things the State doesn’t pay for at all, such as athletic programs.

For example, the Prototypical School Model provides for less than 6 school nurses for Shoreline, less than 2 school security staff, and less than 6 technology staff to support and administer all the technology in the district. With the support of the local levy, we have been able to increase the number of staff available to support our schools.

Yes. The district received just over $14 million dollars in pandemic relief monies from the federal and state level. These dollars were used to stave off the reductions that would have been necessary with less student enrollment – by keeping our educators and support staff in Shoreline and supporting our students. Other dollars were spent for personal protective equipment, our food service program, and facility maintenance items in response to the pandemic.

Our federal relief monies have been fully expended and are not expected to be replenished.

Last spring, some projections were made about available revenue and anticipated expenses. At that time, it was anticipated we would be overspending our revenue and using some of our fund balance, or savings account, to get through the current year. Ultimately, as we completed the budget over the summer, the projections for revenue were found to be too high, and the projections about how much money we would spend were too low. 

It was too late to make significant budget reductions in the summer, so additional fund balance had to be used to balance the current year budget. This will leave our savings largely depleted unless we are able to mitigate expenditures. We’ve been working on that since August.

The budget for September 2023 through August 2024 is in the very early stages of development. There are still unknowns about that budget, including the outcomes of the current state legislative session. We anticipate with what we know/forecast right now that we will overspend our revenue by approximately $12 million dollars, leaving the district significantly in the “red” unless we make other adjustments. 

In October, the district started a Budget Advisory Team, composed of a diverse cross section of staff, students, parents, and community members. This group spent their first few meetings learning about the problem and how school finance works, and are continuing to work on making recommendations to the district about how we should proceed. We are also utilizing the skills of our District leadership team, seeking input from school staff, students, community members, and community partners.

There are several important landmarks along the way to budget development:

• Enrollment projection – estimates the number of students we will have in the fall of 2023 and builds the revenue outlook from that forecast. A preliminary, early projection was completed in December. This projection will continue to be adjusted/informed through the spring as we see registrations or any other indicators of increased student enrollment

• End of the legislative session, scheduled for April 24, sets the state budget and resources for schools. 

• May 15th – the date by which all of our certificated staff (teachers & principals) are guaranteed to know their contract status for September. If we need to reduce staff, they must be notified by May 15.

• July 10th (adjusted for weekends) – the district must have a draft budget available for review by the public and submitted to our educational service district for review. See the Washington State Legislature code that dictates this.

• By August 31 – the final budget must be adopted. See the Washington State Legislature code that dictates this.

The district cannot wait for the end of the legislative session to project our budget and make adjustments before the May 15 deadline, which is why we have started so early and why we are having to project revenue and expenditures as best we can.

The budget planning cycle typically starts in February with the enrollment projection for the next school year. Enrollment is the cornerstone building block for projecting revenue for the next year. 

We started the budget process earlier than ever this year, in October when we started meeting with the Budget Advisory Team. In December, we made an early projection of our potential shortfall.

The work ahead includes:

• Monitoring the legislature for changes that affect our funding, either positively or negatively

• Monitoring registrations and reviewing the work of our contracted demographer to help inform our enrollment projection for 2023-24

• Continuing to work with our Budget Advisory Team, District Leadership Team, bargaining group partners, and community to define and prioritize reductions to balance the budget

• Completion of a draft budget by July 10, as is required by law.

Due to the number of external factors affecting the District budget, it is difficult to project far out in advance. We will need to continue to rebuild and maintain financial integrity for the District.

In August, we instituted the following mitigation measures, which will continue until fiscal health is restored:

• Strategic freeze on hiring – each and every position, when vacant, is reviewed to determine if it can be paused.

• Slow or halt all discretionary expenditures when possible.

• Limited overtime, no travel unless grant funded.

It is difficult to project future years due to our revenue being based on enrollment and legislative action that is difficult to predict. We anticipate that if enrollment is projected to decrease, or if IPD continues to outpace our funding, or if costs continue to rise exponentially, we will have to adjust our budget further. If our projections are accurate and our ending fund balance is all but depleted, we will also need to work to restore that.