2025-26 Budget Development FAQ

Part of the State accounting process each year is to project our beginning and ending fund balance, much like an individual might estimate their savings account goals. If the district spends less than our revenue in a given year, the remainder is fund balance.

The ending fund balance has two parts to it: reserved fund balance and unreserved fund balance:

• The reserved fund balance exists for assets we have for a specific purpose. This includes carryover – or unspent funds – from programs with inflexible expenditures. It also includes things such as our inventory of food items that have not yet been made into a meal and served/sold to students.

• The unreserved fund balance is liquid cash – available to use on any district expenditure and saved for other eventualities, such as lower enrollment than expected or an unexpected expense.

Board Policy 7130 states, in part: The budgeted unreserved fund balance is held to compensate for economic uncertainties and should be targeted at a range between 4.0% and 5.0% of budgeted General Fund expenditures.

Shoreline School District financial records are routinely reviewed by multiple third parties:

• The State Auditor's Office conducts three annual audits of the District: financial statements, accountability, and federal grants. Search Audit Reports 

• The Puget Sound Educational Service District (PSESD) reviews the district’s budget annually each summer, before submission to the Washington State Office of the Superintendent of Public Instruction.

• Shoreline Education Association (SEA) asks the Washington Education Association (their state office, known as WEA) to analyze Shoreline School District financial records. This analysis is conducted by Marie Cañas, WEA's finance research analyst.

• April 2025 review: The purpose of this report is to provide an independent review of the financial health of the Shoreline School District. Analysis and report provided by Sally D. McLean, April 2025. For Shoreline School District the most immediate question addressed in the report is: Does Shoreline School District need to reduce expenditures by an additional $6.5 million to maintain financial stability in the 2025-26 school year? 2025-26 and Beyond Budgetary Outlook Summary Report

• In March 2023, at the School Board’s request for independent financial review and outlook, Cal W. Brodie, Independent Consultant, former Deputy Superintendent of Business and Operations for the Educational Service District #113, former Director of School Apportionment, Financial Services and Education Funding Reform, formerly with the Puget Sound Educational Service District (PSESD), and former auditor for the Washington State Auditor’s Office. The report affirmed and supported the work of the district finance team for the 2022-23 school year reviewed, with no noted significant exceptions or dispute. The report encouraged expense reductions over multiple years and affirmed the urgency of the reduction process and targets. Report on Budgetary Outlook

• In spring 2022, Stephen Nielsen, Independent Consultant, former Chief Fiscal Officer at PSESD, and former Deputy Superintendent and CFO of Seattle Public Schools, reviewed Shoreline School District’s finances and concurred with the district’s recommendation at the time to begin making significant reductions to start balancing district expenditures and reductions. A written report was not prepared; rather, Nielsen worked alongside Shoreline School District's Deputy Superintendent in budget development.

Additionally, Assistant Superintendent of Business and Operations Angela Von Essen and Director of Business and Finance Art Clarke both worked for the Washington State Auditor’s Office. Angela was an auditor with the state for six years, and Art was an assistant auditor for seven years. Angela joined the school district in July 2023, and Art joined in July 2024, which has brought two fresh perspectives with deep school finance knowledge and background to Shoreline School District financial oversight.

Learn more about financial accountability and oversight

The most recent levy, passed in February 2022, did not allow for key factors to improve beyond OSPI’s forecast in October 2021. The district utilized the OSPI formula template to collect funds based on OSPI’s assumptions for enrollment and inflation at that time. There will be more options, clearer assumptions, and improved transparency when the next levy options (February 2026) are explored and presented for community feedback.

Proceeds from selling or leasing our facilities are directed by law to our Capital or Debt Service fund, which means they cannot be used to help support the General Fund, which is the area we need to align expenses and revenue now.
See the Washington State Legislature code that dictates this.

When the district decided to put bond and tech levy measures on the ballot for our voters, we specified within those legal descriptions of the ballot measures what the dollars can be used for, and we are limited to that scope of work. Bond money may not be reallocated. Technology levy money is able to help support in some specified areas, but we also remain committed to fulfilling our promises to our voters and complete the work we intended with the technology levy.

Some fees may be increased to help offset costs, but certain programs, like food services, have limitations in what we can charge. Another example of fees is preschool tuition; however preschool tuition that is collected goes to the preschool program’s costs, so this is not a revenue-generating opportunity for the district as a whole.

Further, we need to have a stable revenue stream that can be budgeted and relied upon, and additional fees may reduce participation.

At a School Board Study Session on Monday, December 2, Dr. Les Kendrick of Educational Data Solutions presented a report that included information that Shoreline Schools enrollment growth in the coming years will be greater and proceed at a faster pace compared to previous forecasts.

There are four main reasons for the prediction of higher enrollment gains in this report:

• Development is happening at a faster pace
• More student growth is anticipated from some of the two-and-three-bedroom units that are likely to be completed in the next couple of years
• The latest birth data for Lake Forest Park and Shoreline show a more stable birth trend compared to the overall county
• Based on data for Shoreline and the region, kindergarten market share is expected to return to pre-pandemic levels sometime around 2027 or 2028

Presentation | Video Recording

If Shoreline School District has insufficient cash to pay employees or vendors from our unreserved fund, we would have to borrow against ourselves to meet our obligations. The borrowed amount must be repaid with interest within the same fiscal year.

The school district could also borrow from OSPI's future apportionment payments (essentially, an advance on future revenue). Still, that amount would be reduced in future apportionment payments for that same fiscal year.

Learn more about binding conditions: WASA Binding Conditions FAQ

At the March 18, 2025, School Board Regular Meeting, Assistant Superintendent of Business and Operations Angela Von Essen and Director of Business and Finance Art Clarke presented a 2024-25 mid-year budget update that included information about state funding and district expenditures for staffing (slides 14-16).

Presentation | Recording

The consideration of a K-5 school closure was brought to a halt because of projected increases in student enrollment, not due to a balanced budget. Quite simply, if we closed an elementary school, our other buildings would not have the capacity to accommodate the additional students within the next few years.

And while the demographer has now projected an increase in student enrollment (rather than a decline in future years as previously projected), it does not change the fact that district expenditures continue to outpace revenues. Had we closed an elementary school, the district would realize the annual savings for a short time, before likely having to re-open a K-5 school to accommodate students within our boundaries.