Olympia School District board hears preliminary 2025-26 budget outlook and staffing implications

President Klifthorn and the Olympia School District board on Feb. 27 received an initial budget outlook for fiscal 2025–26 that projects enrollment-driven revenue losses, ongoing inflationary cost increases and legislative uncertainty that together leave the district with a narrow cushion for next year.

The report matters because the district’s operating budget funds salaries, special education and student services. Executive Director Kate Davis said the district expects its annual average full-time equivalent enrollment for 2024–25 to end near 8,970 students and that continuing declines would reduce state prototypical funding and translate into staffing reductions tied to those formulas.

Davis told the board, “we think that we'll end the year with an annual average of 8,970 students for this year,” and outlined how the state prototypical model would translate that projected decline into about 0.6 certificated administrator FTE, roughly 8.8 certificated instructional FTE (teachers, counselors, librarians, health services) and about 2.4 classified FTE reductions — producing a rough state funding change in the neighborhood of $1.48 million. She cautioned those model figures do not translate dollar-for-dollar into personnel cuts at each school because staffing is allocated across 19 schools and subject to rounding and the district’s fractionalized staffing approach.

Superintendent Patrick Murphy framed the presentation in the Legislature’s context and the McCleary court decision, saying the district is watching a range of bills that could affect the “big three” areas of special education, MSOCs (materials, supplies, operating costs) and transportation. “There’s a lot of unknowns,” Murphy said as he introduced the session.

Budget drivers Davis highlighted include salary inflation (maintenance-level estimate of 2.4 percent), rising insurance costs, projected increases in utilities, and a levy inflation factor that is pupil-driven. Under the governor’s maintenance-level assumptions used in the presentation, the district’s net preliminary position showed a modest structural shortfall (Davis cited an illustrative gap of about $1.0 million against the preliminary maintenance-level estimate) and an estimated ending fund balance that would be just below the board’s 3 percent minimum unless adjustments are made.

On special education the board heard district-level figures showing state and federal funding cover a majority of special-ed costs but leave a material levy-supported gap. Davis presented a table (district staff follow-up provided during the meeting) showing roughly $22 million of state special education revenue, about $2.1 million of federal special education funds and total special-education expenditures near $30.1 million — leaving several million covered from local levy dollars.

Board members pressed staff on enrollment assumptions and cohort movement. Director Flores and others asked about the jump from eighth to ninth grade (the district gains students at that transition, including students entering from private or alternative programs) and the drop from 10th to 11th grade (running start enrollment reduces on-site high school counts because students take college courses off-site). Executive Director Davis and the superintendent explained those are recurring drivers when projecting year-to-year FTE.

Board members also discussed pending legislation. Davis and Murphy described two MSOC bill proposals under consideration in Olympia: one proposed a modest per-pupil increase on the order of $5.55 in one draft and a larger-dollar alternative in other drafts; staff warned that bills that layer additional restrictions on MSOC use can increase administrative burden without producing large net revenue. Murphy said earlier proposals that would have moved the district substantially toward closing its multi-million-dollar funding gap have been “watered down” in committee.

No formal budget decisions or reductions were adopted; the presentation was explicitly preliminary. Davis said staff will continue to refine estimates and return with more detailed options in the coming months. The board’s next steps include deeper review of enrollment-driven allocations, continued monitoring of legislative changes and additional budget workshops prior to adoption.

Votes at a glance from the meeting (consent and routine actions): The board approved the meeting agenda; approved minutes from the Feb. 13 regular meeting and the Feb. 20 work session on school improvement plans; proclaimed Education Support Professionals Week for March 2025; and adopted the consent agenda. These routine items were moved and seconded and were approved by voice vote as recorded in the meeting minutes.

What’s next: Staff will refine 2025–26 estimates as the Legislature finalizes state allocations, update enrollment and staffing projections, and present detailed options for any required reductions or levy/levy-related planning before the board adopts a final budget later in spring or summer.