Eatonville district projects tight 2025–26 budget as enrollment shifts and state aid lag

The Eatonville School District projected a slim ending general-fund balance for 2025–26 on Tuesday, driven by declining enrollment, a shift of students to higher-cost alternative-learning programs and what staff described as inadequate increases in state material, supplies and operating cost (MSOC) funding.

Krista Hearsink, who led the budget presentation, told the school board the district currently shows an overspending variance of $351,000 for July but has encumbrances that staff expect to liquidate. She said the district may need an “apportionment advancement” — an early draw on state apportionment — in months when expenditures exceed revenues, particularly in late spring.

The risk, Hearsink said, is amplified by a structural shift in enrollment. The district ended 2023–24 with movement from basic education into alternative learning (ALE), which “is a much more costly program to run,” she said. That shift reduced staffing allocations and raised per‑student operating costs even when state per‑student apportionments stayed the same. Hearsink reported a targeted fund‑balance goal of 2.9 days of cash on hand but said the budget as presented assumes a more conservative 2.7 percent fund balance.

Board members and staff discussed the state funding picture at length. A Washington Association of School Administrators calculation cited in the presentation estimated an MSOC funding need of roughly $400 per student; by contrast, the district’s MSOC allocation for the current year was described in the presentation as about $35 per student and earlier one‑time supplements at roughly $21 per student. Hearsink and other staff said those amounts fall well short of rising costs for insurance, utilities, transportation and special education.

The district’s four‑year outlook presented to the state, staff said, assumes no staffing reductions; under that “no‑change” scenario the general fund balance continues downward and triggers closer scrutiny by the Washington State Auditor’s Office. Hearsink noted Eatonville — along with many other districts — appears in the auditor’s FIT tool watch lists and that the auditor will consider a district’s financial trajectory and corrective steps in assessing oversight needs.

Staff outlined several revenue and expense pressures: sharply rising benefit costs as more employees become benefit‑eligible (driven in part by a low full‑time threshold), higher liability and property insurance, continued transportation fuel and parts cost increases, and the end of pandemic supplemental funding. Hearsink flagged roughly $1.3 million of underfunding concentrated in insurance, utilities, building maintenance, running‑start tuition and dropout‑reengagement services, excluding transportation and special education, which also carry large unfunded costs.

The presentation noted the district may pursue external revenue options such as grants or a local levy; board members and staff observed that levy capacity varies widely by community tax base and that small, property‑sparse districts face much steeper voter burdens. Staff said four other districts recently pursued levies and at least one had a successful election.

On procedural items tied to the budget, the board approved Resolution 7‑53 to adopt the 2025–26 budget as presented (motion and vote recorded; “aye” recorded, motion carries). Trustees also approved an interlocal agreement with Educational Service District 113 for network support and awarded contracts for special‑services providers (a 0.8 school psychologist and as‑needed physical therapy). Hearsink told the board the limited general‑obligation bond tied to a current capital project is scheduled to close imminently and that a non‑voted principal payment of $300,000 is budgeted next year to begin principal payments on non‑COVID debt of about $4.53 million.

Board members asked staff to return with more detailed departmental breakdowns and multi‑year comparisons. Hearsink said staff would provide additional budget detail by department, longer historical trend lines and a MSOC disclosure required by state reporting.

Discussion (options and direction): board members and staff discussed options to manage the trajectory — including targeted staff reductions, seeking additional local levies, maximizing grant applications and tighter MTSS/intervention practices to limit special‑education growth.

Formal actions (decisions): the board approved Resolution 7‑53 (2025–26 budget adoption) and approved the ESD 113 interlocal agreement and the special‑services contracts; the meeting record shows all motions carried with recorded “aye” votes.

What the district will do next: staff will prepare more granular reports (departmental budgets, historical comparisons), monitor enrollment and cash flow by month, and plan for potential apportionment advancement if cash shortfalls materialize.

Ending note: staff repeatedly cautioned that the budget outlook depends on enrollment patterns and the state’s decisions on ongoing MSOC funding; several presenters urged continued legislative advocacy and community outreach to address the funding shortfall.