Mark Davalos discusses the new K-6 configuration in June 2018.
The Centralia School District may in be financial trouble come next year, according to the superintendent and current projections for next year’s finances.
“We are now in a position that I can say it looks like our revenue is not matching our expense,” said Centralia School District Superintendent Mark Davalos at Wednesday’s Centralia School Board meeting.
Davalos brought a resolution before the Centralia School Board — “Expenditures in Excess of Budget” — that asked the school board to acknowledge current projections for the 2019-20 budget, which show there will be insufficient funding. The board passed the resolution, but removed a paragraph.
“... at the present time the level of funding the District will receive from certain federal, state, and local funding sources is uncertain, but appears insufficient to allow the District to maintain its current educational program and services,” reads the resolution in part.
According to the resolution, the projected beginning fund balance for the 2019-20 budget is $4,372,556, while the projected ending fund balance is $1,352,900.
“We have, for the first three years now of my four years in the district, we have held an ending fund balance of over $6 million,” Davalos said. “One year it even got close to $7 (million). After this year, and we did set some of that money aside for the capital projects, but we still began the year with a hefty beginning fund balance of $6 million plus. Well, we now know that the expenditures and the loss of levy funds is going to affect us such that we are predicting that the ending fund balance is going to be at about $4 million plus.”
Board members hesitated to pass the resolution, stating that it may be premature. Davalos said the resolution was not an action on the board’s part, but an acknowledgement that he has made them aware there may be an issue with the upcoming budget.
“This is just permission by resolution to examine the budget and to determine soon — I would hope by late April — that if we do have a negative budget issue that we are going to need to do possible reductions,” Davalos said. “Reductions in our business, since we are 86 percent personnel, will include some folks. So we have to look at what we will cost, what we will cut, where we will cut and how much we will cut.”
If the district does lay off staff, Davalos said, some of those contracts will require notice before the budget is complete by the end of August. Davalos and CEA co-chair Lauri Johnson did not respond to request for comment Friday.
“If we were going to lay off any staff next year, some of our contracts require notification prior to that budget adoption of potential layoffs,” Davalos said. “Not that that will have to happen, but if it did and we don’t do it early enough, we can’t do it after we have adopted the budget by law.”
The Centralia School Board eliminated the third paragraph from the resolution, which references board policy 6040. Centralia School Board vice president Jami Lund argued during the meeting that the policy addresses emergencies for the current budget, not planning for upcoming budgets.
The Centralia School District begins working on the budget for the following year in late spring each year. The district must submit its budget to the Washington State Office of Superintendent of Public Instruction by the end of August.
What complicates the financial planning process is that the legislature will remain in session until April 28, and it is unclear how, or if, funding will change for school districts.
As a result of the McCleary case — in which the Supreme Court ruled the legislature was not adequately funding K-12 basic education — school districts received an increase of funding from the state last year. The court ruled in the McCleary case that the state was underfunding public education, causing districts to use local levy dollars to supplement teacher salaries and basic education, which gave districts in more affluent areas an unfair advantage.
The legislature came into full compliance last year when it passed a bill to overhaul school funding and provide more state money for teacher salaries.
At the same time, the state capped how much the school districts can collect from local levy dollars and added restrictions for how districts can use that money. As a result of these changes, the majority of school districts in Washington are limited to collecting $1.50 per $1,000 of assessed property value.
“I would also hope, deep down inside, as I think a lot of districts across the state are hoping, that somehow, somewhere people come up with additional money,” Davalos said. “It’s not looking good, but if that did happen and we ended up with additional resources from the state that would mitigate this and we could roll that back, put those reductions back in place and do recalls or reverse our decisions in time to start the summer without as many cuts as we may have to look at.”
