Peninsula School District likely facing $12 million budget gap in ’23-24
Peninsula School District is bracing for an estimated $12 million in budget cuts next year, stemming from reduced enrollment and the end of a pandemic school finance rule.
The district announced the impending cuts Tuesday. The news came just two weeks after district officials and school supporters on Feb. 14 cheered the passage of a three-year operations levy renewal and a six-year security and technology levy.
Pandemic funding boost ends
About 500 fewer students are enrolled in the district than the 2019 pre-pandemic level. That’s a 5 percent decrease.
Schools around the region and the country face a similar trend. When public schools re-opened, some families remained in home-schooling and some moved to private schools. Other students simply left school or are unaccounted for.
State funding formulas are primarily tied to enrollment, and leeway granted during the pandemic is coming to an end. Peninsula is not alone in its budget crunch.
“The state allowed us to maintain our funding based on pre-pandemic enrollment, but that ends this year,” said Chief Financial Officer Ashley Murphy. “Because we have fewer students than in 2019, our district will receive less in federal, state and local funding. School districts all across Washington state are facing similar enrollment declines and budget shortfalls.”
Other recent state legislative changes also impact Peninsula’s budget.
The state will not renew additional funding granted to school districts based on the experience level of their education staff. Peninsula, which enjoys a high level of senior and experienced staff members, received money beyond the basic state allotment through this rule, which was part of the 2018 McCleary education funding overhaul.
Staffing cuts anticipated
Although the 2023-24 budget won’t be finalized until August, the district has already begun a review in anticipation of cuts “and ‘right-sizing’ our staffing to reflect actual enrollment,” Murphy said.
“Our goal is to make any necessary reductions as far from classrooms as possible,” she said. “With this budget review, we are prioritizing levy-promised staffing and programs in our district. We will also continue to streamline and improve our efficiencies and focus our district priorities based on strategic plan initiatives.”
The district’s strategic plan, approved in June, prioritizes fiscal responsibility along with academic excellence, innovation, learning environment and community engagement.
Because the budget review is in its early stages, the district does not yet have a draft list of proposed cuts or an estimate of how many positions will need to be eliminated, said spokeswoman Danielle Chastaine.
“District and union representatives are working collaboratively together at this time,” Chastaine said in an email to Gig Harbor Now.
Like most districts, Peninsula will factor employee retirements and resignations into the staff reductions. “We anticipate staff retirements will help offset necessary reductions,” Chastaine said.
Levies help soften the blow
The district’s ability to collect the full levy amounts approved by voters is tied to and capped by enrollment. But the district structured ballot measures to try and avoid that scenario.
“When PSD determined the levy amounts, we used conservative enrollment projections,” Chastaine said. “As long as the district’s actual enrollment reaches projected enrollment, the district will be able to collect the full levy amounts approved by voters.”
The recently approved operations levy replaces the current levy, which expires at the end of 2023. It funds staff and programs not fully covered by the state. The measure, as approved by voters, will generate $27 million in 2024, $28 million in 2025 and $29 million in 2026.
The six-year security and technology levy will generate annual amounts increasing from $6 million in 2024 to just under $7 million in 2029.
“We are grateful to our community and voters for once again supporting our local levies,” Chastaine said. “The Educational Programs and Operations Levy accounts for 18 percent of our budget, so if it had not passed the estimated deficit would be far more significant. The Safety, Security and Technology Levy is a capital levy, so funding will be used for specific projects.”
Current numbers, next steps
The Office of the Superintendent of Public Instruction reports 9,080 students enrolled in the current school year at Peninsula School District.
The district’s general fund budget for the current school year is $153 million.
More information about the 2023-24 budget is expected to be shared with the school board in March.