Budget FAQ

The following bargaining meetings have taken place or were scheduled to take place since January 1, 2023 (as of July 1, 2023)

Administrators

March 29, 2023

March 30, 2023

March 31, 2023

Confidentials

July 11, 2023

Maintenance

May 8, 2023

May 19, 2023

Mechanics

January 19, 2023

February 7, 2023

February 10, 2023

February 15, 2023

February 22, 2023

March 21, 2023

April 7, 2023

April 20, 2023

May 4, 2023

Prof/Tech

April 12, 2023

May 5, 2023

June 1, 2023

SEIU - Food Service

March 15, 2023

March 22, 2023

April 5, 2023

April 12, 2023

April 18, 2023

May 25, 2023

SEIU - Transportation

May 10, 2023

May 24, 2023

June 22, 2023

July 7, 2023

July 10, 2023

July 12, 2023

SEA

February 7, 2023

February 14, 2023

March 1, 2023

March 2, 2023

March 3, 2023

March 14, 2023

March 16, 2023

March 27, 2023

June 7, 2023

June 14, 2023

June 26, 2023

SESPA

May 9, 2023

May 10, 2023

May 11, 2023

June 6, 2023

June 15, 2023

June 20, 2023

June 23, 2023

June 26, 2023

June 28, 2023

July 1, 2023

Shoreline Children's Center

January 12, 2023

March 23, 2023

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. As of May 23, 2023, at the end of this budget year, we are projecting the district will have only approximately $4.3 million dollars left in reserves, which is about 2.3% of this year’s budgeted expenditures. This number may change with end-of-year expenditures, and it will not be finalized until we complete year-end accounting procedures in November.

District policy requires the available cash reserves (fund balance policy 7130 and 7130P) to be between 4% and 5%. However, as discussed at spring board meetings, the School Board plans to waive the current ending funding balance policy for an additional year, authorizing district leadership to develop and execute a balanced budget for the upcoming year with fewer spending reductions. Rather than target an ending fund balance of 4-5% unrestricted funds in the next school year, the district will target a total ending fund balance of 2-3%, which will have fewer effects on staffing and the learning environment for the 2023-24 school year but still allows for some measure of protection against the variations in school district finances and unforeseen expenses that may arise.

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.

 

School Year	Actual Annual Average Enrollment	Difference From Previous Year
2018-19	9545	78
2019-20	9635	90
2020-21	9282	353
2021-22	9074	208
2022-23	9180*	106
Net Difference:		-443

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.

It is very likely that additional reductions will be needed in order to continue to strengthen District financial health, achieve the 4-5% unreserved ending fund balance in board policy, and continue to adjust if enrollment declines. If inflation and other costs continue to remain high or rise, we must continue to adjust to live within our means.

With declining birth rates and high housing costs, the enrollment outlook has not looked favorable. To support our work on this, the district has contracted with a local demographer. This demographer will take a deeper look at building permits, housing, and the number of students in the Shoreline boundaries relative to the number in our schools. We expect to see this report by March 1.

The ending fund balance is a bit like a savings account. There are two parts to it, reserved fund balance and unreserved fund balance.

If the district spends less than our revenue in a given year, the remainder is 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 like 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.

Here’s a look at our ending fund balance over time:

Ending fund balance is supposed to be at least 4% unreserved by School Board Policy. It is important to have funds available for unexpected expenses, such as decreased enrollment or unforeseen circumstances. It can also be used, if it grows high enough, to make investments in our school system with something like new curriculum or other one-time cost items. Fund balance does not renew, so it should not be spent on ongoing cost items.

As we think about fund balance and what our “savings” should be able to support, here are a couple of ways to think about it if we end the 2022-23 school year at $1,040,000 as projected:

• Our ending fund balance does not cover the cost of one month’s payroll expenses unless it exceeds $12.5 million dollars. 

• Based on our current expenditure level in this year’s budget, divided by 260 working days, a $1,040,000 ending fund balance would not cover even 2 days of operations.

Nearly all of the money we receive from the federal government is provided for a specific purpose and may only be spent in accordance with those rules. Money we receive from the State is generally more flexible, but there are a number of requirements of things we must do that utilize those dollars. Our local enhancement levy dollars may only be used to enhance the state funding model.

The General Fund revenue we receive from the State is based wholly on student enrollment. The State pays the district during September through December based on the student enrollment we projected and reported to the State with our budget, adopted in August. We report actual student enrollment to the State monthly, and from January through August the State catches up with actual enrollment – increasing our payments if we had more students Sept-Dec and decreasing our payments if we had fewer students than anticipated.

Non-tax related revenue accounts for about $7,000,000 in the current budget year. The District can examine ways to potentially expand revenue-generating programs, however we do need to have resources we can rely on. 

Fundraising is not allowable within the General Fund outside of our local enhancement levy. Most fundraisers are Associated Student Body related so that students can participate in various activities and athletics beyond what is funded by the District.

Some fees may be increased to help offset costs, but certain programs, like food services, have limitations in what we can charge. Further, we need to have a stable revenue stream that can be budgeted and relied upon, and additional fees may reduce participation. 

In our current year, we have budgeted for 46.04% for certificated staff salaries, 18.91% for classified staff salaries, and 23.19% for all staff benefits and payroll taxes. This totals over 88% of our budget, or about $149,000,000 of our budgeted revenue of $158,547,000.

As we align our expenditures to our available revenue, there will be reductions across the district, and staff will be affected. The district expends over 88 cents of every dollar on salaries and benefits – all of our valued staff who work directly with students or support our schools. The remaining funds pay for some things over which we have limited control, such as insurance and utility costs, as well as school supplies. Here’s a look at how our expenditures are distributed:

 

The graphs below show how our spending compares to 16 other districts* and the WA State averages over the last six years.

Shoreline Schools spending is represented by the blue line, and you can see a list of the types of spending that’s included in each graph, to the bottom right of each visual, to understand what it represents.

 

Total District Dollars Spent per Student:

Teaching Dollars Spent per Student:

 Teaching Support Dollars Spent per Student:

Administrative Dollars Spent per Student:

*Districts included in comparison:

Seattle

Mercer Island

Highline

Renton

Bellevue

Tukwila

Issaquah

Lake Washington

Northshore

Everett

Lake Stevens

Mukilteo

Edmonds

Marysville

Monroe

Snohomish

Source: https://www.k12.wa.us/policy-funding/school-apportionment/school-publications/financial-reporting-summary

Budget alignment will need to happen across the organization, and this will affect the program we currently deliver.

The work of the Budget Advisory Team and feedback and input from staff, students, and community will inform these decisions.

Budget alignment will need to happen across the organization, and this will potentially affect sports and activities that are supported by the general fund.

The work of the Budget Advisory Team and feedback and input from staff, students, and community will inform these decisions.

It is estimated that the general overhead for operating an elementary school is about $1.5 million dollars. Closing a school means the students in that school need to be reassigned to other schools within our system by adjusting district boundaries for each school. This is a very extensive process and would need about 18 months to do properly.  

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.

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.

Our community graciously approved our local enhancement levy to support our schools in the spring of 2022. We are not authorized by the State to ask for more money – the levy amount is capped, and levy lid lifts are not available to schools.

The District will examine ways to potentially increase enrollment as we work through this process. An online school is not a likely target, however, as there would not be adequate time to home-grow a program like that, and districts who partner with an online school provider retain little of the revenue associated with those students.

RIF is the acronym for “reduction in force” – which means the reduction of staffing through attrition or separation from employment. In the event of a potential reduction, RIF notices are required for staff holding a teaching certificate on or before May 15th of each year. The District has similar dates/deadlines for other labor partners as well, but the deadline for notice to certificated staff is set by State law.

A lot can happen between the decision to proceed with a RIF (currently anticipated for late April) and the adoption of the budget in August. The legislature will conclude their work by the end of April if they finish on time, and other staff may resign or retire later this Spring and into the summer, thereby creating vacancies that may be able to be reduced in lieu of a RIF or bring someone back from being part of a RIF. The legislative action may provide for funding we are not aware of at this time. We also could see indicators of improved enrollment through the registration process, although we never know for sure about our student enrollment until we see our students in the fall.

The District must only have a positive ending fund balance (i.e. $1.00) to comply with state requirements. However, that is a financially precarious position for the District.

 

We do not receive our revenue in a steady, equal stream. Our revenue from the state fluctuates by month between 5% and 12.5% of our apportionment dollars. Our local levy tax proceeds arrive mostly in two large payments in April and November, aligned with property tax collection. Fund balance helps to offset those months when revenue is lower, and helps us with cash flow during those times. 

If the District has little ending fund balance and needs to expend more in a month than we have, we would need to take a loan out from our Capital Fund and repay that loan with interest.

If the District projects our budget with a certain amount of student enrollment and those students do not arrive in our schools in September, ending fund balance helps to buffer those losses. In a situation when a District has a very low fund balance, any additional financial issues result in mid-year reductions, which would be very disruptive and difficult.

The budget for 2022-2023 was adopted at the August 23 regular meeting of the board. It was item #10 on the agenda. The background materials are available on our website, and the recording of the meeting is linked there, and it can be viewed directly hereto learn about.

Districts are required to have a draft budget completed by July 10 (adjusted for weekends) submitted to our Educational Service District and available for the public to review. We are also required to adopt the final budget prior to August 31st.

The School Board meetings throughout July and August included various presentations and information about how the final budget was coming together. At that time, a waiver to the board’s policy on ending fund balance was noted as necessary for the current year. The School Board waived their minimum ending fund balance target for the current year during the adoption of the budget on August 23. Presentation | Video Recording

Ending fund balance calculations are not completed until November, after we close the books and complete all the necessary accounting for the previous fiscal year.