School District Faces $17M Special Education Funding Gap Amid Financial Volatility

The Evergreen School District's School Board meeting on August 12, 2025, addressed critical financial challenges facing the district, particularly concerning special education funding and overall fiscal health. The meeting highlighted a significant shortfall in state funding, with special education funding gaps projected to reach 22% for the upcoming year, despite recent increases. This shortfall translates to an anticipated $17 million deficit in special education funding, which is impacting the district's ability to allocate levy funds for enrichment programs.

The district's financial reserves are also a pressing concern, with projections indicating a decline to approximately 3.8% to 4% by October, falling below the board's minimum policy requirement of 5%. This decline raises alarms about the district's capacity to manage emergencies, cash flow, and planned expenditures. Currently, the district faces monthly payroll and accounts payable obligations of $36 to $38 million, while only maintaining $15 to $16 million in reserves, necessitating potential borrowing from capital project funds to meet payroll obligations.

The board discussed the implications of falling below the minimum fund balance, including the risk of entering "binding conditions," which would subject the district to increased oversight and financial reporting requirements from the Office of Superintendent of Public Instruction (OSPI). Currently, eight districts are in binding conditions, with many others on the verge of similar status. The board emphasized the importance of developing a financial action plan to restore the fund balance and maintain fiscal responsibility.

In conclusion, the meeting underscored the urgent need for strategic financial planning to address the growing funding gaps and ensure the district's long-term financial stability. The board plans to continue discussions on these issues in future meetings, with a focus on restoring the fund balance to meet policy requirements and avoid the pitfalls of financial distress.