Seattle School Board approves plan to reduce $105 million deficit

In a first attempt to close a $105 million deficit looming over the district for the 2024-25 school year, Seattle Public Schools board members approved a fiscal stabilization plan Wednesday.

Superintendent Brent Jones announced the plan, which did not involve closing schools for the 2024-25 school year, last month. But school closures, grade level reorganizations, program adjustments and restructuring could be on the table the following year.

The plan recommends the district research and consider a “toolbox” of options including reducing central office staffing and expenses, making changes to transportation, cutting school staff, charging fees, leasing or selling nonschool properties, adjusting and restructuring programs, delaying the repayment of the “rainy day fund” and exploring legislative solutions, among other options. 

During a discussion before the vote, board members voiced concern that the list was too narrow. Jones clarified that “nothing is off the table.”

“This is really just giving us our guardrails for what we will pursue,” he said.

The board will vote on the final 2024-25 budget in July 2024, but will also hold conversations about shaping the budget every month until then. 

Seattle is not alone in dealing with a financial crisis. Districts all across the country are facing a fiscal cliff as federal money given out during the pandemic comes to a halt in September 2024. At the same time, enrollment is declining here and across the country, in part because of a dip in the birthrate. That means the state gives less money to the district because there are fewer students. 

Since the 2019-20 school year, the district’s enrollment has dropped by almost 5,000 students, which has resulted in an $81 million decrease in state money. 

The deficit is only expected to grow larger — it’s projected at $129 million for the 2025-26 school year, and $153 million for the 2026-27 school year. School officials say they are not receiving enough funding from the state.

Many districts are facing similar decisions about cutting staff and programming. Seattle has some other options, such as asking the Legislature if money from capital funds can be used to pay operating costs. That’s known as an “interfund transfer.”

The district asked the Legislature last year for permission to transfer money from the capital levies to pay for operations, School Board member Liza Rankin said, but then decided not to do it. The district would need to go to the state again to ask for permission.

“It isn’t a deficit-closing solution, it is a stopgap measure,” Rankin said in an interview before Wednesday’s meeting.

After some board members voiced hesitation about the interfund loan, Jones said it should be used as a last resort.

Other legislative solutions could include asking the state to fully fund special education, transportation and school construction. The district could also ask lawmakers to change the prototypical model — a set of staff-to-student ratios that determines how many teachers, principals and staff a school needs per student — to be more reflective of the amount of staff needed, a district spokesperson wrote in an email.

Even with recent funding increases by the Legislature, the district’s costs for special education services far exceed the amount the state provides.

School Board member Vivian Song requested a more detailed analysis from the district on what items cost the district the most money, suggesting special education was one of those areas.

The district could also ask the state for more equity-based supports, more money for a culturally responsible curriculum and courses, and investments in school safety, mental health, social emotional learning, equitable compensation to retain and recruit diverse staff, and money to create high quality learning environments, according to the same email. 

The district also owns 11 properties scattered across the city that aren’t used for school-related activities. The plan suggests the district could lease or sell one of them. These properties aren’t sitting empty, said a district spokesperson; they are used by community-based and private entities. 

One example: Oak Tree Plaza, a strip shopping mall on Aurora Avenue North and North 100th Street, is owned by SPS and brings in revenue, said School Board member Lisa Rivera.  

“I do not want to sell a property,” Rivera said in an interview before the meeting. “We are lucky to have the properties we have in Seattle and land is expensive here.” 

Fees could include a number of things, such as charging for athletics or credit card processing, a district spokesperson said. But Rankin is concerned that fees would disproportionately impact low-income families, and “I’m skeptical that it would be a big source of revenue,” she said.

Credit card changes come into play when parents pay for field trips. Those expenses go through a private company that charges a service fee. The district covers that fee. 

Another option: to delay repayment of the district’s economic stabilization fund, otherwise known as the rainy day fund, that helps protect the district against unforeseen circumstances. The district could pass a resolution to pay it back over time. 

If the fund falls below the recommended minimum of 3% of the total general fund expenditures, board policy requires that a plan be created to replenish the fund, and that the repayment plan be reviewed annually until funds are fully restored.

The district tapped into the fund last year to dig itself out of a $131 million deficit. 

Yet another is to use “carryforward” funds. Typically, the district lets an individual school keep money that it hasn’t spent at the end of the year. The plan suggests the district could collect unspent funds and put it back into the district’s general fund, Rankin said. 

The plan also includes a second phase of community engagement to define well-resourced schools. During phase one, the district heard from nearly 3,800 community members. A second phase would target students and underrepresented communities. 

During public comments, Alex Wakeman Rouse, one of the founders of a parent group called All Together for Seattle Schools, urged the board to go a step farther and “co-create” budget proposals with the community. 

Also in School Board business Wednesday, members voted unanimously to make Rankin the board president, Michelle Sarju the vice president and Evan Briggs the member at large. 

Sarju previously served as the member at large, Rankin previously served as vice president and Briggs was newly elected to the board in November 2023.

Clarification: This story has been changed to reflect that school board member Lisa Rivera is no longer using the name Lisa Rivera Smith.