At the September 24th Snoqualmie Valley School Board meeting, Assistant Superintendent Ryan Stokes explained to board members that work will be needed to balance the district’s budget in future years.
As part of the McCleary settlement, the Office of the Superintendent of Public Instruction (OSPI) now requires districts across the state to create a 4-year budget projections, which SVSD did and approved in July 2018. That 4-year estimate – created before a settlement with the teachers union – showed the district operating slightly in the red three of the four years, but using reserves from the 2018-19 budget to help offset projected deficits.
It was revealed on Monday night, though, that the new SVEA teacher contract that included estimated 10 – 17% raises, will cost the district $2.3 million more annually than was forecasted in the July budget that had earmarked approximately $7.5 million to fund existing teacher raises, hire new teachers to lower K-3 class size and fund associated employee benefits.
Adding to the multi-year deficit projections are confusion around levy collections for 2019. Since districts certify levy collections in late fall – before assessed values are finalized by the county – OSPI is suggesting districts use a one-year ‘lag’ model where they collect the local levy based on the prior year’s assessed values. If SVSD does this – uses 2018 assessed values instead of 2019 – they would collect $1.2 million less than voter’s approved, which was based on an 9% assessed value growth in 2019.
Asst. Superintendent Stokes said due to potential uncertainty surrounding local levy collection in the post-McCleary era, the district did use a conservation 5% AV growth for their 2019-20 budget so there would actually only be a $200,000 local levy shortfall for that school year.
The bottom line is, the union settlement and the revised levy collection significantly altered the district’s 4-year budget estimates and the 2019-20 budget will require some work in the coming months.
Stokes said currently the district has about $8 million in reserves, which could be gone without looking for ways to create a more balanced budget. He stated that school districts are not allowed to operate at deficits that exhaust their reserves.
OSPI is also requesting school districts statewide submit updated 4-year projections that reflect bargained union contracts by November 1st. They will be used in an OSPI Financial Health Indicators model that will be released in the spring.
At Monday’s meeting Stokes told the board they will need to make a choice to submit that 4-year projections as is or chose to propose changes now that could alter the outlook. He did say that submitting the projection as is could be used by OSPI to show the legislature the impacts of the McCleary fix, which faced increasing criticism this year as some districts – in an effort to stay competitive with salaries of neighboring districts – offered compensation packages that left them facing deficits even larger than the Snoqualmie Valley.
The Edmonds School District – which gave some of the largest teacher raises in its union settlement this summer – is now anticipating being $39 million in the red by 2022.
When asked what amount the levy collection was playing in the SVSD’s projected deficit, Stokes said it was minimal, that most was attributed to the higher than projected union settlement.
At its next two October meetings the SVSD board will be diving deeper into the budget and deciding what projections to submit to the state – as well as having discussions about the 2019-20 budget that could include enrollment projections; K-3 class size compliance; staffing and expenditure reductions.
Board President Carolyn Simpson commented on the latest budget forecasts saying, “Like all districts in the state, we are in a new territory of changes to state funding and local levies, combined with a new teacher salary model that helps us attract and retain high quality teaching staff. We look forward to working with our district leadership team to take a hard look at our four year financial forecast, knowing that the forecast is using estimates and presumptions, some of which are still in question. We are committed and we will continue to deploy our funding in the best way possible to further our mission of educating all students to prepare them for college, career, and citizenship.”
You can see the full 4-year budget projections PPT presentation HERE.