Clark County school districts are in the red

It’s been nearly a year since the Washington Supreme Court accepted the state’s new school funding plan, which injected billions of dollars into public education.

It was a momentous occasion for Washington, bringing to an end the McCleary case, a decadelong court battle over how to fully fund schools.

Now districts across the state are seeing red.

Nearly every school district in Clark County is facing significant budget deficits in the 2019-2020 school year. And local schools are not alone. The Seattle Times reported that 253 of the state’s 295 school districts are projecting deficits next year. And a Washington Association of School Administrators analysis found that 115 districts, including Battle Ground, Hockinson and Green Mountain, will actually receive less money or see only negligible increases under the new funding model.

So what went wrong?

District officials describe a perfect storm of events leading to significant deficits, and for most of them, the story is the same. Capped local levy dollars mean fewer discretionary funds for programs. The multimillion-dollar contracts districts agreed to during last summer’s teachers strikes increased labor costs. Enrollment is declining as millennial families are delaying having children.

“Our students, teachers, families and communities urgently need you to work to improve the state’s new funding system for our public schools,” Vancouver Public Schools Superintendent Steve Webb wrote in a letter to legislators. Vancouver Public Schools is projecting a $14.3 million deficit, and has announced cuts to central administrative staff, the elimination of about 50 teacher and instructional positions, and spending down some of its reserve fund to balance its budget as required by state law.

“Without legislative action, valued K-12 programs and staff positions will be cut, class sizes will go up, and some districts may be insolvent in the next several years,” wrote Webb, who has dubbed the ongoing issue the “McCleary mess.”

But if this legislative session is any indication, school districts are more likely to see incremental changes rather than another massive overhaul of the state’s school funding model. Rep. Monica Stonier, D-Vancouver and an instructional coach at Evergreen Public Schools, is optimistic that districts will sort out their budgets over the next couple years. These “smoothing” cuts are only temporary and will give districts a chance to look at what programs are effective and deserve continued funding, she said.

“We’re in the middle of a challenging place right now,” she said. “But I think we’ll be better off.”

Teacher strikes

Eight of Clark County’s nine school districts project operational deficits in the upcoming school year. In the worst-case scenario, the combined shortfall could be more than $50 million. Clark County’s largest school district, Evergreen Public Schools, announced up to an $18 million budget deficit last month coinciding with the departure of Superintendent John Steach. Under Interim Superintendent Mike Merlino, the district has since hosted a series of public forums to discuss the proposed cuts, which include closing the printing center, ending the district’s in-house professional development conference and cutting 37 positions in the district office.

“We weren’t a district that was a winner in McCleary,” Merlino said.

This is the second crisis in a short period of time area districts have faced. The region was gripped by historic teacher strikes last summer, delaying the start of school for most students in the county by several days. At the time, and for months afterward, school districts pointed to multimillion-dollar contracts signed with their teachers’ unions as a significant factor in expected budget deficits.

But districts since have appeared to back away from that rhetoric, pointing instead to compounding issues causing the deficits. Merlino said the raises weren’t unrealistic given that teachers didn’t receive cost-of-living raises for several years during the Great Recession. Teachers had to catch up, he said.

“You don’t really begrudge a group if they felt like they’ve been kind of held back for an extended period of time,” he said.

Still, that attitude isn’t shared by all in Olympia. State Sen. John Braun, R-Centralia, told The Columbian Editorial Board last month that districts and unions have to shoulder the blame for budget deficits.

“Are there deficits?” he asked. “Yes, but I think that has more to do with the bargaining situation we went through last summer.”

Stonier called that characterization disingenuous.

“(Braun) knows that teachers were going to negotiate for fair salaries when money started to show up at the state,” she said.

Other factors

School district officials say lower local revenue and declining enrollment are also to blame for the shortfalls.

Battle Ground Public Schools is projecting an $8 million budget shortfall in the coming school year. The district hasn’t identified any specific cuts at this point, but Superintendent Mark Ross said it’s likely the district will stop funding some of the counselor, nurse and speech language pathologist positions that are currently funded by local levy dollars. Battle Ground has long funded these positions above what the state currently allocates under a formula called the state prototypical schools model.

Ross said it’s unlikely any staff will have to be cut, but positions could be eliminated through attrition.

“We’re just trying to move the pieces and we’ll fill where we can,” Ross said.

The district is also expecting enrollment declines at some of its campuses, after long talking about overcrowding due to a growing student body. Average enrollment in the district is about 12,974 this school year, according to OSPI. That’s down from the 13,564 the school district had projected for the school year. The district now projects enrollment will stay steady at that decreased number of students into 2019-2020.

“Our real story is the drop in enrollment,” said Meagan Hayden, director of school finance for the north Clark County district. “That’s what’s driving the reduction at the moment.”

Hayden speculated that increasing housing costs could be driving the decline. Maybe fewer young families are purchasing homes, she suggested. Her counterpart in Vancouver Public Schools, Brett Blechschmidt, said that district is projecting enrollment declines of about 458 students, particularly in its incoming kindergarten classes. Some data suggest young families are increasingly waiting to start families due to the cost of raising a child.

“They tend to wait later in their lives or careers to start their families,” the district’s chief financial officer said of Vancouver’s millennial crowd. “There’s a little bit of a lag.”

Then there’s the infamous levy swap, the backbone of new school funding legislation. That policy increased the state school levy to about $2.70 per $1,000 in assessed property value, while capping the levies local districts can collect at $1.50 per $1,000 in assessed value or a levy rate that would generate $2,500 per student, whichever results in a lower rate for local taxpayers. That change was rolled out over two years; next year represents the second phase of the swap.

The result is that most school districts lost a large chunk of their discretionary funding — dollars that can be spent on anything. Vancouver Public Schools, for example, estimates it will lose about $8 million in local tax revenue in the 2019-2020 school year — a drop of about 22 percent.

Overall, the district has about $48 million more in revenue than it did in 2016-2017, the last school year before the adoption of school funding legislation. But district officials say most of that money must be spent on specific projects or expenditures, like bus operations, employees’ medical insurance and supplemental programs.

“More money is being vested in K-12 across the state in total,” Blechschmidt said. “What’s been misunderstood is how much more money is being invested when you think about the levy swap and all the other moving parts that come together to the McCleary solution or McCleary mess, depending on where you’re at.”

Districts are optimistic for some legislative relief. In particular, they’re eyeing budget moves and legislation that could increase the amount of money school districts receive to serve special education students. Still, that’s not going to be enough to turn a negative into a positive for area school districts.

“We ultimately have to get to this number,” Merlino said. “I don’t really see it getting worse, but whatever the number is, we have to get to it.”