The Chehalis School District Board of Directors is looking at ways to restore the district’s general fund balance to its required minimum.
The Chehalis School District Board of Directors held a special meeting on Tuesday, June 17, ahead of its regularly scheduled board meeting to discuss the district's financial woes. According to the district's Chief Financial Officer Heather Pinkerton, the general fund is estimated to fall roughly $1 million below its required minimum amount by May 2026. During the presentation, Pinkerton presented some possible solutions, such as staffing adjustments, reducing staff travel and other penny-pinching maneuvers.
“We are reducing expenditures, and we are seeking grants and being successful with our competitive grant applications, but we still have work to do,” Pinkerton said. “We need to still stay the course … We are still very short of where we need to be financially.”
While the district is not out of money, its general fund is expected to drop below its self-imposed minimum fund requirement. A Chehalis School District policy meant to enforce financial responsibility and help the district weather financial hardship requires the district to have a minimum amount in the general fund equivalent to 5% of the district’s budget. Currently, that sets the required minimum fund balance at $2,946,605. The district's predicted general fund balance for the end of the 2025-26 academic year, however, is $1,927,578, which is actually $360,024 higher than expected.
During the presentation, Pinkerton identified the main challenges facing the general fund as well as possible solutions and places the district can save money. The biggest challenges were an upcoming collective bargaining with labor unions as well as minimal changes to funding amounts coming from the state and uncertainty around federal funding. The Trump administration has previously threatened to cut federal funding to states not complying with certain executive orders. Washington is among those states.
Pinkerton identified staffing reductions as the best way to reduce costs and improve the district's financial standing, noting that a vast majority of the district budget — 83.4% — is spent on staffing. The main ways the district plans to reduce staffing is by allowing attrition to thin the ranks, meaning the district would not hire replacements for employees retiring or leaving their jobs for other reasons. The district will also plan to not renew certain contracts and will reduce the number of substitute teachers the district hires.
“We have been working since the last board meeting on continued staffing reductions through both through attrition, non-renewal of provisionals, reductions in hours and days, reduction of substitutes and realignment of duties. We will continue to do that moving forward,” Pinkerton said. “A lot of our budget is staffing. So we need to really focus in on our staffing.”
During the presentation, School Board President J. Vander Stoep added some context to the discussion and said that the general fund balance was not low by accident, but because it had served its purpose.
He noted the district has been able to avoid major staff layoffs. He said the district decided to spend more on repairs and improvements to facilities and infrastructure with the expectation that it would save the district money in the long run.
“So we had a 5% balance, and a great number of the school districts in the state had to have significant layoffs, and Chehalis didn't have to have significant layoffs … in part because we had that minimum balance,” Vander Stoep said. “That balance has been a protection for employees, for education resources in this school district, and that's why it's been used, unfortunately. Always better to not tap into it, but that's why it's there.”
Vander Stoep added that the next step is to hopefully build the minimum balance back up to where they need it.
During discussion, Board Member Kelsi Hamilton asked if the district should change its self-imposed policy of a fund minimum to make it less restrictive. Hamilton cited being told that being below the fund minimum could impact the district's credit rating.
“Obviously, we've got great intention behind it, but I don't want to have a policy that is so rigid that it's hurting us,” Hamilton said. “Maybe if we just make a tweak to it, it maintains the integrity of our intention, but it wouldn't make it so that it's something where we're having a finding.”
Pinkerton responded, clarifying that while the district had received notice of its fund being low, they had not received a finding from the auditor’s office. She said that any negative impacts would be minimal and ultimately worth keeping the policy in place.
“There have been a lot of things over the last decade, 15 years, that lead me to recommend that you stay with a 5% funding,” Pinkerton said.
