As SPS faces a massive budget deficit, here’s what to expect

The Seattle school district faces a projected budget deficit of $104 million-$111 million for the 2024-25 academic year. While the final budget vote is some months away — on July 2 — the district is considering a series of one-time, short-term approaches as well as some operational changes to close this year’s gap.

Bigger changes could be in store for the 2025-26 school year, when school consolidations, closures, grade reconfigurations and changes in school start times are expected to be on the table.

Here’s an overview of the budget issues that will be under discussion in the coming months. 

How did we get here?

Seattle is not the only district that will have to make tough budget decisions this year.

School systems across the country are coming to terms with the end of billions of federal COVID-19 relief dollars, which many used to expand programs and add staff. Some are also grappling with drops in student enrollment, which is a big factor in determining how much money local school districts get from their respective state governments.

For years, Seattle Public Schools’ expenses have been higher than its revenues. It’s been able to mask that structural deficit — or at least close it year to year — in part with one-time funds, state assistance and federal COVID-19 dollars.

With those federal dollars drying up, the district is back to a position where the education funding it receives from the state to cover the cost of basic education, special education, salaries and transportation is not enough, district officials said. Multilingual services, special education, transportation and substitute staffing services are also chronically underfunded, officials added.

How does the district plan to close the deficit?

The school district plans to use up to $36.9 million from an interfund loan — essentially, it would borrow money from its capital fund and pay it back, along with the interest it would have accrued, by June 2026. It also intends to use about $32 million of its reserves.

But it also plans to make cuts, which could mean layoffs and changes in services at schools.

It will cut $8.2 million in expenses at the central office. The budget plan under discussion also contains $5.7 million in cuts to schools and a reduction in the discretionary money principals receive. Student-to-teacher ratios could also increase in secondary schools, from 30:1 to 31:1. The district expects to save about $1.1 million from nonunion staff as well.

The district is also proposing to charge fees to participate in high school sports. The proposed fee of $200 per sport per student would be capped at $400 a year per student for those who play more than two sports.

The district says the fee is not mandatory and that families of students who do not qualify for free and reduced-price meals can choose to pay. The assumption is that if 50% of those families pay, the district would generate about $770,000 in 2024-25. If three-quarters of families pay, the district could earn about $1.1 million.

School Board Vice President Michelle Sarju, who represents District 5, said last month she was worried that students who were unable to pay the fees would not be able to participate in sports.

Beverly Redmond, the district’s chief of staff and spokesperson, said because the fee was not mandatory, the district was confident no one would be excluded. 

How are these financial challenges connected to enrollment?

This is where things get a little tricky. Declining enrollment is one of the reasons why the district is in this financial pickle. Because the district has less money to send to principals, principals are likely to get smaller sums of money in their buildings.

But, even if the district were on sound financial footing and enrollment dropped, individual schools with enrollment declines would have seen some changes in their local funding.

The district has said that, as much as possible, it would try to constrain cuts at the school level. But that was always an impossible thing to guarantee since there are a limited number of places to reduce costs.

Things got even more confusing when schools got their enrollment projections and principals started making staffing decisions while the larger budget discussion was playing out.

The district initially proposed $7 million in cuts at the school level, but board member Gina Topp, who represents District 6, and Sarju asked for that number to be reduced. At this week’s presentation, the school-level cuts were down to $5.7 million.

What about school closures, consolidations and grade configurations?

The big date is May 8. That’s when the district will present a proposed budget for the 2024-25 school year and the following year. The 2025-26 budget will address closures, consolidations, grade reconfigurations and program adjustments.

School start times are another big change on the horizon for 2025-26. The district now operates on a two-bell schedule, a model that requires 343 buses a day, officials said. The district is proposing to return to a three-bell schedule, which would reduce the number of buses by 80 or so daily and save about $9 million a year.

The move will require parents to adjust their daily routines. The district is putting forward the idea now so that parents can get ready.

What’s next in the budget process?

The public hearing on the 2024-25 budget recommendations is scheduled for June 10, with a vote expected July 2. If the interfund loan is part of the final budget proposal, the board must approve using the money by the end of June.

The School Board also plans to vote on the district’s four-year financial forecast July 2.