Past Budget Work Review

Beginning in July 2022, on the brink of the 2022-23 school year, it became clear that Shoreline School District’s financial stability was in jeopardy, facing a multi-million dollar shortfall for the 2023-24 school year budget if major adjustments, including significant reductions in spending, were not made. An alert of this situation was originally shared at the July 19, 2023 School Board meeting, and more detail was communicated in the 2022-23 budget hearing and adoption presentation at the August 23, 2022, School Board meeting

What were the factors that led to this financial situation?

• Enrollment in the District has declined since the 2019-2020 school year by over 400 students

  • For each 100 students, we receive approximately $1,000,000 from the state

  • Declining enrollment is generally anticipated in our near future, due to declining birth rates in King County and limited housing affordability. School districts both nearby and across the country have seen similar enrollment declines.

• Our regionalization dollars – money we receive for being in a high cost of living area – declined by 2% a year from 24% to our current 18% enhancement to the state funding formula

  • The loss of regionalization funds over time equals a total of about $7M.

• As our revenue declined, costs increased for supplies, materials, insurance, gas, and other purchased goods and services

• During the pandemic, we received federal relief funds and enrollment stabilization dollars from the State

  • This revenue largely offset the declines from enrollment dollars and regionalization dollars

  • Expenditures were mostly to retain our staff and get through the pandemic

 

Spring of 2022 Background:

• Revenue projections assumptions were high, by approximately $5.3M

• Expenditure plan projections assumptions were low, by approximately $3.2M

• The assumptions projected a $7M ending fund balance, however the budget achieved only a $1,040,000 fund balance projection following additional reductions and updates to revenue in the summer

  • This is less than 1% of our budgeted expenditures and well below the 4-5% board policy unreserved ending fund balance requirement

  • This is a very narrow and low ending fund balance. On a personal budget, if you earn $75,000 a year, this is like putting only $450 in your savings account.

 

Throughout the 2022-23 school year, the Board and Superintendent engaged in a budget development process that included a number of staff, student, and community meetings and forums with the goal of engaging, seeking feedback and input. These opportunities for community education and engagement included (but were not limited to):

• 15+ School Board meetings

• 30+ school visits and meetings with staff

• 6 Budget Advisory Team meetings

• 9 community meetings

• Administered community survey (executive summary, report, video recording)

• Meetings with student groups at both high schools

• Study session on demographic analysis on enrollment by expert demographer

• Budget information reviewed by an independent third party, the Puget Sound Educational Service District, and Washington Education Association fiscal staff

Throughout the 2022-23 year, district staff, community members, family members, and labor partners engaged in proactive budget planning work to achieve a positive projected ending unreserved fund balance for the 2023-24 school year. Limits were imposed on discretionary spending, travel, overtime, and hiring; many purchases and renewals were canceled or delayed if possible; and many budget carryovers were not allowed.

At the April 18, 2023, School Board meeting a Reduced Educational Program was presented that offered approximately $9.1 million of the $13.9 million targeted savings needed to achieve a 2% minimum overall ending fund balance. Presentation | Video Recording

At the July 18, 2023, School Board meeting, a preliminary 2023-24 school year budget was presented that achieved a projected $4.1 million total unreserved fund balance. Presentation | Video Recording

At this meeting, it was also shared that absent additional revenue for 2024-25, additional reductions will be needed in order to balance future budgets and the district would continue community, staff, and student engagement into the 2023-24 school year and beyond