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Draft Budget Designed to Help Align Spending, Priorities

Draft Budget Designed to Help Align Spending, Priorities

At the Aug. 11 School Board meeting, administrators presented the board with a draft budget that is the next step in the Issaquah School District’s efforts to align its spending with district priorities. And, while the School Board must approve a budget for the 2022-23 school year by the end of August, the work to align budget with district priorities will continue this year as part of Superintendent Heather Tow-Yick's First 100 Days Plan

The district’s expenditures exceeded revenues due to a number of factors, including: declining enrollment, COVID costs paired with a relatively low amount of federal COVID relief dollars, increasing inflation, cost of living increases approved by the Legislature, unfunded mandates and more. It’s important to note that while the Legislature funds the increases for positions included in their model, the district covers the costs for staffing positions that are beyond the state funding model out of local dollars. 

This year’s draft budget includes an estimated $354,044,893 in revenue, 16.25% of which comes from local levy dollars; and $371,610,355 in expenditures, 61.4% of which is spent directly on classroom costs such as teachers, counselors, librarians, principals, educational assistants, teaching supplies, materials, textbooks, extracurricular programs, staff development, curriculum development and technology support. 

While the district faces a budgetary challenge, the situation can also be an opportunity, Tow-Yick said. “How do we get our budget in line with our revenue, while considering what we need to grow our investments further, to increase and accelerate impact and opportunity for all?” she asked. 

The district’s budget process begins each spring, when the School Board establishes broad parameters for budget development. This year, the board adopted those parameters in April. Next, the finance team and other administrators use the board’s parameters to help develop the budget over the following months. Each summer, the superintendent and team present a draft version of the budget to the board, and conduct a public hearing to accept any comments about the budget from members of the public. 

The board also held a public hearing about the budget as part of its Aug. 11 meeting. The budget will come before the board again for proposed approval at its Aug. 25 meeting.

How did we get here? 

A big piece of our overall funding picture is painted by the state Legislature. While the Legislature has increased education funding overall since the McCleary decision, a large portion of the revenue that the district receives from the state is in the form of salary and benefit dollars, which are less flexible than local levy dollars. The Legislature also adjusted the structure of education funding for the 2019-2020 school year and beyond, including decreasing district’s local levy collection authority by capping it at $2,500 per student of $2.50 per $1,000 assessed property value – whichever is less and adjusted by CPI annually. Additionally, the Legislature added restrictions on how local levy funds can be used to support and supplement basic education. 

Enrollment decline is a second piece of our overall funding challenge. The district has lost about 1,900 students over the past three years; a majority of that decrease has occurred in elementary grades. Enrollment directly affects revenue, which is generated on a per student basis through local, state and federal funding formulas. As part of a multi-year strategy to bring our expenditures in line with our revenue, the School Board authorized reductions of $11.83 million for the 2022-23 fiscal year. The current deficit is about $17.5 million.  

“Concerns when you get down that low in fund balance include cash flow timing to cover recurring expenditures and having adequate resources to protect against unforeseen expenditures or loss of revenue related to emergencies,”  said Martin Turney, the district’s Chief of Finance and Operations. Twice each year, the district receives tax dollar collections, which help bolster the general fund.  

The ending fund balance for the 2022-23 school year is projected at $24 million. As a percentage, the fund balance has been on a downward trend since the 2018-2019 school year

Where our Revenue comes from 

The district receives funds from three primary sources: the state of Washington, at about 65.85% of the general operating costs; the federal government, which provides 3.97%; and local fees and dollars including the Educational Programs and Operations Levy, which offers 29.94% of our funding. When comparing Issaquah with the 313 other school districts and education agencies that receive funding from the state, the ISD ranks 203 out of 314 for revenue per student. In 2020-2021, the average district received $15,944 per student, while the ISD received $15,622 per student. If looking at King County school districts, the ISD ranks 14 out of 18 in terms of per pupil revenue. 

What are the district’s major expenditures? 

The school district is the second-largest employer in the city of Issaquah, with more than 2,900 full- and part-time employees. Our district expenditures are represented by seven major services and programs:  

  • Basic Education (61.4% of budgeted expenditures)

  • Classroom Support Services (12.23% of budgeted expenditures)

  • Special Education (12.15% of budgeted expenditures)

  • Echo Glen (0.85% of budgeted expenditures)

  • Food Services (2.12% of budgeted expenditures)

  • Transportation (3.64% of budgeted expenditures)  

  • Other programs such as help for struggling readers, English language learners, ROTC and traffic safety (7.62% of budgeted expenditures). 

 

To learn more about the 2022-23 budget process: