Finances
This section of the Annual Report for the 2022-2023 school year provides a snapshot of the district's finances and factors that affect our budget. For a complete report including a line-by-line operations budget, please visit the Finance webpage.
In This Section
The Budget Process
Each year the budget process begins shortly after winter break and the School Board then establishes broad parameters for budget development guidelines in early spring (adopted 4/7/2022). Budget development for 2022-23 was the second year of making budget reductions with much uncertainty for the future of our financial outlook. The administration follows the board’s parameters and reinforces these parameters during actual budget development. These guidelines were observed and incorporated into the 2022-23 budget.
State revenue as a percentage of total revenue peaked in 2018-19 (71.4%) and now comprises 65.85% of the district’s operating revenue, a decrease of 1.25% over the prior fiscal year (67.1%). The state is now 5.55% below the recent historical peak in state funding as a percentage of total operating revenue.
The state legislature has continued to increase education funding pursuant to the McCleary decision, however a large portion of this “new” revenue comes in the form of salary and benefit allocations, making the funds less flexible than local levy dollars.
The legislature implemented significant structural changes to the education funding for 2019-20 and beyond, which included a decrease in local levy authority (capped at $2,500 per student or $2.50/1,000, whichever is less and adjusted by the consumer price index (CPI) annually). This drop in local levy funding is coupled with new restrictions on what and how local levy funds can be used to support and supplement basic education.
The district is very close to its statutory 2023 levy authority of $61,000,000. This was possible given the passage of HB 1590, which allowed the district to base its levy authority on 2019-20 enrollment or 2021-22, whichever was greater. The 2022-23 Budget had a 2023 calendar year levy of $2,878.66 per student.
Due to continued enrollment decline, the district had to reduce programs significantly, with a reduction in force of both certificated and classified staff that was authorized by the board on April 28, 2022. The program reduction action rationale summary is provided as follows:
Rationale for total reductions of $11.38 million for fiscal year 2022-23:
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We will likely continue to face student enrollment declines and/or stagnant student enrollment. (An estimated 1,899 fewer students over a three-year period).
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A decline in enrollment directly affects revenue that is generated on a per student basis from local, state and federal funding formulas.
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Our tuition-based programs such as Food Service, Before and After School Care (BASC) and facility rentals declined significantly during the previous two years and did not drive the historical program revenue contributing to the deficit.
The financial decline has been steady, even with the infusion of $24 million in one-time state funding and the $7.1 million provided in Federal Elementary and Secondary School Emergency Relief (ESSER) monies. In 2019-2020, the district had a $42.3 million beginning fund balance and at year end (2020-21) $38.4 million.
To keep staff and community informed and seek input, we offer several communication avenues. We created a budget website with a timeline and ongoing updates; the School Board scheduled time at each business meeting for legislative and budget updates (livestream for the public), administrators met with key groups such as the PTSA to provide updates; the district asked for comments and suggestions via a budget e-mail account, and the district shared information via the 411 Weekly Bulletin.
Where the Money Comes From
The district receives funding from three primary sources. The State of Washington provides approximately 65.85% of the funding for general operating costs, the federal government provides 3.97%, and 29.94% is generated through local fees and the Educational Programs and Operations Levy (EP&O).
In the State of Washington, 295 school districts and 19 other Local Education Agencies receive funding. Our district is ranked 203rd out of 314 in terms of total revenue received per student. The average district in 2020-21 received $15,944 in revenue for each student, while Issaquah School District received $15,622 per student during the same fiscal period. This puts our district at a revenue disadvantage of $6.2 million per year when compared to the state average per student in 2020-21. When compared to King County districts, we are ranked 14th of 18 in terms of per pupil revenue.
Where the Money Goes
The Issaquah School District is the second largest employer in Issaquah with more than 2,900 full-time and part-time staff members (this excludes several hundred substitute employees). These employees include 1,250 teachers, 350 paraprofessionals, 135 bus drivers, 70 Food Service workers, 185 office/support staff, 140 custodial/maintenance personnel, and other administrative and support staff.
Our district’s budget is represented by seven distinct cost centers. These cost centers encompass all the above staff and help to present a visual picture of the district and its many programs and services. These cost centers are defined as follows:
- (1) Basic Education (Classroom Services)
- (2) Basic Education (Support Services)
- (3) Special Education
- (4) Echo Glen
- (5) Food Services
- (6) Transportation
- (7) Other Programs
(1) Basic Education (Classroom Services)
Educational services for the district’s more than 19,000 students are provided in 16 elementary schools, six middle schools, three comprehensive high schools and a choice high school. The basic education classroom staffing allocation goal for each grade level has been established as follows:
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Kindergarten through third grade: 20.0 students to 1 teacher (Range of 18 to 24).
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Fourth and fifth grade: 25.0 students to 1 teacher (Range of 22 to 28).
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Sixth through eighth grade: 25.5 students to 1 teacher (Range of 26 to 32 when adjusted for prep period).
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Ninth through 12th grade: 25.75 students to 1 teacher (Range of 28 to 34 when adjusted for prep period).
Our district offers a full program of basic education services to students. Each school is equipped with a library, counseling services, nursing services, and extracurricular programs. The Teaching and Learning Services department works to align the classroom curriculum with local, state and national learning goals.
We offer technology to support student learning and teachers are provided opportunities to learn how to use technology in the classroom to best enhance the learning environment. Equipment and software tools are upgraded on a continuous basis.
Our district also provides many co-curricular and extracurricular opportunities for students. These activities are designed to promote physical, intellectual and leadership development. In addition, students are able to participate in a Running Start Program, which enables them to earn college credit for classes taken in high school while advancing their standing in higher education and in the pursuit of a future career.
(2) Basic Education (Support Services)
Support services for the district connect our many schools and programs through educational leadership and by providing the materials, equipment, facilities and other support needed for a quality educational environment. The departments in this cost center provide for the governance of the district, the hiring of hundreds of staff members each year, and maintaining the grounds and buildings to ensure a quality learning environment. Many of the items we all take for granted, such as heat, lights, water, telephones, insurance, warehousing services and data processing services are associated with support services.
(3) Special Education
We serve more than 1,700 special education students. Special education services are designed to provide an individualized educational program to meet the handicapping condition of each student. This is a quality program that results in many students meeting the same demanding curriculum standards as regular education students. The cost of the program was approximately $45.1 million in 2022-23.
Our district participated in an appeal to the State Supreme Court regarding the inadequate funding of special education programs. We lost our case against the state, but we still believe that the legislature should define special education as part of the basic education program and require it to be fully funded under the parameters established in the state constitution. The $12.9 million budgeted in the 2022-23 school year was necessary to backfill the special education shortfall in funding created by the state’s current funding formula through the use of local levy funds.
(4) Echo Glen
The State of Washington contracts with our district to provide educational programs to serve the Echo Glen Children’s Center for juvenile offenders. This school provides educational programs to approximately 239 students belonging to districts all around the state of Washington. This program is not a financial responsibility of our district and should be fully funded by the State of Washington.
(5) Food Services
The Food Service Program provides more than 8,500 lunches to students and staff members every day. That is the equivalent of 1.5 million meals each year. During the 2022-23 school year we also piloted and then launched a breakfast program. The state and federal government provide minimal funding to support this program. Approximately 95% of the cost of this program is paid for from the fees charged for each meal served. This program represents $7.9 million of the total district operating budget.
(6) Transportation
Approximately 50% of our students ride the bus on any given day. This means that nearly 10,000 students ride the bus from home to school, and back home on a daily basis. Our district has more than 155 school buses that are operated and maintained by district employees and travel more than 1.5 million miles each year. The cost of providing these services was approximately $13.5 million dollars during the 2022-23 school year.
Like special education, transportation is defined as part of the basic education program; thus, it is required to be fully funded by the state under the parameters established in the state constitution. The state currently funds approximately 54.5% of this obligation, leaving the other 45.5% to be funded from local levy and fees. According to the state, they have fully funded the to/from school transportation model.
(7) Other Programs
Our district provides other educational programs including remediation in reading, assistance for Multilingual English Learners and Reserve Officers' Training Corps (ROTC). We also provide a before and after school childcare program and night/summer school programs that are totally funded by tuition and fees charged for these services.
Budgetary Goals and Philosophy for 2022-23
The Board of Directors and superintendent have established the primary goal of funding a comprehensive educational program that reflects overall community values and directs resources in support of the district’s Mission and Ends learning goals for students. This endeavor is to be accomplished within the parameters of:
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The district Mission, Executive Limitations and Ends learning goals for students.
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A comprehensive educational program that reflects overall community values and interests and provides an equitable and balanced educational experience for all students.
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Overall growth in student learning toward state and federal learning targets, as well as growth for each of the disaggregated groups. This includes students working above standard.
A program that allows students to:
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Meet the requirements for a Washington state high school diploma;
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Meet the standards set forth by the Student Achievement Council for baccalaureate institutions or community and technical colleges to meet each student’s High School and Beyond Plan;
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Have access to student-driven opportunities to explore noncore options especially in the areas of CTE, STEM and the arts, providing career-connected learning;
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Consider student opinion in academic remediation and acceleration opportunities;
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Provide targeted resources to combat the COVID-19 pandemic as it relates to student/staff safety and learning loss.
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Maintaining an unassigned fund balance of 3-7% of the general fund budget;
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Maintaining sufficient reserves for start-up operating costs associated with new schools;
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Establishing staff compensation and benefit levels that do not deviate materially from the local professional market, insofar as district resources allow;
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Maintaining administrative costs at a level no higher than the King County average (currently: 12.31%) for school districts. Our administrative expenses were set for 9.12% in the 2022-23 budget.
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Maintaining and managing the district’s resources to protect district assets and guarantee the board’s financial goals, including an annual review of program that is sufficient to determine how much local Educational Programs and Operations (EP&O) Levy must be collected/rolled back.
Major Budget Drivers for 2022-23
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State revenue increase of approximately $12 million.
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Salary and benefit allocations comprised of a 5.5% IPD (inflationary adjustment) $9.8 million.
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Adjustment to the prototypical funding/allocation model of $2.2 million.
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Program reductions of $11.38 million.
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Local cost of IPD salary increase of $6.25 million.
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Projected enrollment decline of 301 students of $3.4 million.
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Estimated negotiated increases above IPD of $5.6 million.
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Increase in local levy authority of $5 million.
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Increase in non-employee related costs (insurance, fuel, commodities, general inflation) of $3 million.
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Loss of Transportation funding of $1.76 million.
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Draw down of reserve balances estimated at $10 million.