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    Budget Shortfall for 2021-22 and Beyond
    Posted on 02/04/2021

    Budget Shortfall for 2021-22 and Beyond

    Next school year, Seattle Public Schools will have a $69.8 million budget shortfall. While next year's budget reductions will be challenging, more significant shortfalls are projected beginning in 2022-23. Without an increase of revenue, public education services and supports will be reduced.

    SPS has been preparing for this coming year's shortfall and has a plan to resolve the deficit. This plan was presented at the January 20 Board Budget Work Session pdf icon. The School Board will vote on the final budget for 2021-22 on July 7.

    Why does SPS have a budget shortfall? In 2018, the state legislature changed the K-12 public education funding formula to create more equity across districts. Investments from the state included funding to reduce K-3 class size, teacher salaries, and provide additional counselors. These funding formula changes disproportionately impacted districts and, at the same time, limited the amount of local levy funding each district can collect.

    Historically, our district's levy collection amount increased as property values increased. This is no longer the case. SPS went from collecting an average of $4,000 per student to a fixed $3,000 per student.

    Our past levy authority helped us fill the gap between state funding and what it costs to run an urban district.

    The state's education funding formula continues to be decades behind in key areas. The formula doesn't provide funding for the full cost of many staff including school leaders, nurses, social workers, and central office. For example, we continue to be funded for 9 nurses for our 53,000 students; we pay for an additional 51 using levy funds and other grants.

    Special Education also continues to be underfunded statewide. The state allocation for Special Education, including Special Education transportation, falls short of what our students need and what our families expect. We supplemented the state's special education allocation by $71 million last school year using levy funds.

    The district receives minimal support for other basic district functions such as curriculum, professional development, safety and security, facilities and maintenance, IT, and student technology. These foundational school supports must be paid for by our local levies.

    As the cost of these supports go up and levy collection remains fixed at $3,000 per student, our budget gap will grow.

    For the past couple years, the district has had budget reserves to make up the gap. This reserve is close to expiring. Without new revenue from the state or an increase to our levy collection authority, we need to reduce our expenses. Eighty-five percent of district expenses are staff.

    Our 2020-21 budget also reflects the additional challenges of the pandemic. Seattle Public Schools receives transportation funding based on the previous year's ridership. This school year, because of remote learning, we have very few students riding buses – but we are still accruing significant costs. It costs the same to transport one student on a yellow bus as it does 30.

    Our transportation expenses far exceed the revenue we are generating from the state. This issue needs to be prioritized and resolved by the legislature as soon as possible.

    The pandemic also resulted in lower enrollment than expected, a loss of about 1,650 students – many of them in kindergarten. Since our district levy collection is based on the total number of enrolled students, we are asking the legislature to "hold us harmless" (similar to a waiver) and allow us to collect funds for our projected enrollment, and not our actual, for 2020-21. These funds have already been approved by our local voters.

    2020-21 Budget Reduction Proposal

    The shortfall for 2021-22 is $69.8 million (difference between revenue and expenses). To resolve the deficit, the board has currently directed staff to move forward with the following:

    • Use $19.4 million, half of Economic Stabilization Fund (rainy day fund)
    • Use $21.8 million, all of the Unrestricted Fund Balance (prior year savings)
    • Transfer $10 million of general budget expenses to Capital
    • Make $12.3 million in district-level cuts
    • Make $6.2 million in school-based reductions

    Detail of District Level Reductions:

    • Option School Transportation, $740,000
    • Fall Enrollment Reserve, $2,800,000
    • School Mitigation Reserve, $1,400,000
    • Infrastructure Improvement Resources, $2,000,000
    • Curriculum Funds 6-8 ELA, $2,300,000
    • Curriculum Funds not yet committed, $954,212
    • Central Office Reductions, $2,128,293

    Total: $12,322,505

    Detail of School Level Reductions:

    • Increase class sizes by 1 student for grades 4-12

    Total: $6.2 million

    Decision-Making Timeline:

    • January 20: School Board Budget Work Session
    • January 21-February 3: Central budgeting
    • February 23: Budget allocations to schools
    • May 3: All budgets finalized
    • July 7: Board approves 2020-21 budget

    Frequently Asked Questions

    What does the projected budget deficit mean for future educator and staff raises?

    As part of the 2018 state funding formula, teachers received increased salaries. In 2018-19 SPS negotiated a new collective bargaining agreement (CBA) that provides our educators a Seattle competitive wage. For teachers, this new salary schedule resulted in a 10.5% increase, but SPS is still not the highest paying district in the state. Currently, we rank number #4 for teacher salaries and our school leaders rank #4.

    From this point forward, SPS will only be funded to provide cost of living salary increases (1-2%). Salary increases beyond the state's cost of living allocation will require making budget reductions in other parts of the organization. This is despite Seattle voters approving an allocation of $4,000 per student by a vote of 72%. We have the authority from our voters to collect more levy funds but can't because of state law.

    What about Coronavirus Response and Relief Supplemental Appropriations (CRSSA) Act 2021: Elementary and Secondary School Emergency Relief (ESSER) Fund II? Will SPS be getting any funding and can it help address next year's budget shortfall?

    On December 27, 2020, the United States Congress passed additional stimulus funding to the K-12 public education system. The state of Washington will be receiving $824 million for K-12 educational purposes. Ten percent of ESSER II can be reserved for state-level targeted purposes, while 90% will be provided to districts through the Title I methodology with funds needing to be spent by September 30, 2023.

    • In Round I of ESSER, SPS received $10.7 million in relief funding to support the purchase of student and staff technology for the online learning model in place since March 2020.
      • In Round II of ESSER, SPS is slated to receive $41 million
    • The funds can be used for the original 19 ESSER allowable activities (ESSER Funds Allowable Usespdf icon), as well as the following 3 new purposes: addressing learning loss, preparing schools for reopening, testing, repairing, and upgrading projects to improve air quality.

    OSPI and state budget writers have put forward a proposal that districts use their federal stimulus dollars to backfill funding shortfalls in enrollment and transportation due to the pandemic. To address learning loss and ensure we don't exacerbate our budget shortfall, we need both ESSER II funds and for the state to provide funding for enrollment and transportation. We are asking the state to hold us harmless on impacts to our local levy collection as a result of lower enrollment. If approved, the OSPI proposal for supplanting federal stimulus dollars will have a significant impact on our budget and students.

    Is SPS required to provide transportation to students?

    Seattle Public Schools must legally provide transportation for students with disabilities when it is identified as a required service in a student's IEP, and for students in transition (McKinney-Vento) or foster care.

    How many students ride yellow buses?

    Around 9,000 students. Sixty-three percent are basic riders and don't fall into the legally guaranteed category. Thirty percent of these basic riders attend option schools. Another 1,500 students attend opt-in Highly Capable programs and receive bus service. Another 15,000 students receive an ORCA card and use public transit.

    Why is SPS exploring the reduction of transportation?

    For school year 2020-21, before we knew about the pandemic in late February 2020, we were already projecting a transportation budget shortfall of $17.7 million. We anticipate these shortfalls to increase each year if the state's transportation funding model isn't adjusted. This is separate from the impacts of the pandemic, which have also impacted funding. As we plan to return students to in-person learning, we must prioritize students with guaranteed transportation and examine all options for balancing our budget.

    Open Enrollment and the School Choice Process began on February 1. How can families make informed decisions if they don't know if transportation will be provided to option schools?

    Open Enrollment has been extended until Friday, February 26. Please visit the enrollment page for more information.

    The Board and staff held a Transportation Work Session on February 23 from 4:30 – 6 p.m. Meeting agendas are posted at least 24 hours in advance of the meeting.

    The meeting will be  and broadcast on television on Comcast 26 (standard-def) and 319 (hi-def), Wave 26 (standard-def) and 695 (hi-def), and Century Link 8008 (standard-def) and 8508 (hi-def).

    To listen by phone, dial 206-800-4125 and use Conference ID 931 417 102#. This phone number and Conference ID.