March 6, 2023: Update on the 2023-24 Budget Shortfall

MESSAGE FROM THE INTERIM SUPERINTENDENT

On Monday, February 20, along with the Northshore Council PTSA I participated in Focus Day in Olympia. It was a valuable experience and an important advocacy opportunity. I want to thank the Northshore Council PTSA for inviting me to participate and representing the voices of our diverse community so well.

Since mid-January, I have been sharing information about our 2023-24 budget development process. Specifically, I have been sharing the gap between our 2023-24 projected revenue and what it currently costs to run our district and educate our students. Seventy-three percent of Northshore’s budget is paid for by the state based on student enrollment. Local taxes used for public education, referred to as levies, help make up the gap between what the state provides and what our students need. As we face a budget shortfall next school year, the outcome of this legislative session will be critically important. 

Part of the budget development process has been initiative mapping. Initiative mapping is the process of identifying all of the District’s expenditures beyond those associated with levies, bonds, or grants. The purpose of initiative mapping is to bring better coherence to our strategies, identify duplication in efforts, and help us make better-informed budget decisions. 

I want to thank the many people that have spent countless hours documenting our collective work. Through initiative mapping and the budgeting process, we identified additional expenditures that have grown our projected 2023-24 shortfall from an estimated $10-12 million to $21-22 million. One result of the mapping process is that district expenses were identified that are being paid for out of contingency funds in the 2022-23 budget and weren’t formally budgeted as ongoing expenses in the budget development process. These expenses include certificated staff, administrators, contractual commitments, and additional student services. 

The District has already taken steps to slow spending this year, requiring schools and central departments to limit spending to 75% of their budget through March 2023. Now, we are restricting additional activities including last week’s freeze on travel and catering. This will likely result in some additional dollars rolling forward into future budgets, but it is not a long-term solution. 

So, why does Northshore have a projected $21-22 million shortfall for next school year? 

• Declining student enrollment while we maintained or increased staffing levels over multiple years. Since 2019-20 and the start of the pandemic, Northshore has seen a decline of 600 student FTE and projects another 200+ student FTE decrease in the 2023-24 school year. Every 75 students is the equivalent of $1 million. While we have lost students, we have maintained and in some areas added staff to address student needs. As a side note, the school-age population in Washington is shrinking due to declining birth rates - the pandemic just accelerated anticipated enrollment loss;

• Increased student and staff needs as result of the COVID-19 pandemic. Unlike districts with higher populations of students qualifying for Free and Reduced Lunch status, Northshore received minimal ESSER funds (Elementary and Secondary School Emergency Relief Fund). In total we received $7.4 million. Emergency and recovery efforts were primarily paid for by our general fund and local levies;

• District decisions regarding programming and operations in support of our students; 

• The state’s continued underfunding of public education, specifically special education services. For example, in 2021-22, Northshore spent $23.6 million dollars of local levy funds to make up the gap between what the state provides for special education services and what our students need and deserve. If the state  was paying the full cost of legally required special education services, our budget forecast would be very different. This year’s legislative session ends on April 23; and

• State spending on public education hasn’t kept pace with inflation and the true costs associated with operating schools. 

The Seattle Times interview with state superintendent Chris Reykdal helps shed additional light on the financial “perfect storm” faced by Districts in Washington, including Northshore. 

What are our next steps? 

On March 13, 2023 staff will provide a budget update to the School Board at a special study session. You may watch the meeting live streamed. During this meeting we will review what makes up our budget shortfall and guiding principles for reductions. We are legally required to submit a balanced budget to the state - so, we must bring our expenditures into alignment with our projected revenue. 

I am personally committed to making sure the District is transparent about the budget challenges, solutions, and timeline. Cabinet has been asked to attend school staff meetings to present this information in person and answer questions. Your school leader is working with my office to schedule those conversations. I will be meeting with our Transportation Department this week as well as providing an in-person update to Support Services and the Administrative Center staff. 

Finally, the Budget and Finance Office will be hosting community meetings in March and April. 

• Wednesday, March 15, 11 a.m. - 12 p.m. (Zoom)

• Wednesday, March 22, 7- 8:00 p.m. (Board Room, Admin Center)

• Monday, March 27, 5:30 - 6:30 p.m. (Zoom)

• Wednesday, April 5, 12:30-1:30 p.m. (Zoom)

As a lifelong educator and someone who cares deeply about our students and staff, I recognize how challenging this is. None of the solutions will be easy, and it will likely require reductions in multiple areas across the system. I am committed to continuing to center our students, racial and educational justice, and commitments outlined in our strategic plan as we work to balance our budget. Thank you in advance for partnering in the hard work that lies ahead. 

In partnership,

Michael Tolley

Interim Superintendent