Board hears 2025–26 budget update as legislative funding and cash timing remain uncertain

Executive Director Davis told the Olympia School District Board of Directors on April 24 that preparing a 2025–26 operating budget is difficult while the state Legislature is still finalizing proposals.

"It's hard to do a budget update when we don't know what's happening with the legislature," Davis said, as the board reviewed staffing meetings, transfer requests and a range of revenue scenarios.

Davis said October 2024 enrollment exceeded internal estimates (9,022 students vs. a projected 8,886) and the district is seeing net in‑district transfers and a rise in out‑of‑district transfer requests. In elementary classrooms the district counted 26 students in overload (across 18 classrooms) and 15 split classrooms; most overload seats were at Madison and Boston Harbor. Some schools requested small increments of additional FTEs to address capacity and course needs: LP Brown requested 0.1 FTE to add a kindergarten–three classroom; Washington Middle School requested 0.1 FTE to accommodate geometry; Garfield requested a 0.4 FTE; Boston Harbor and Madison proposed a combined reconfiguration that would move 0.5 FTE from each school.

Davis reviewed program‑level details including the Freedom Farm program, which the district expects to grow from about 45 students toward a planned 75 and for which the formula would generate about 3.5 staff FTE; the district has been temporarily supplementing the program with 0.6 FTE and school budgets as grants have expired.

On revenue, Davis described the main items the board has been watching: a likely 2.5% inflationary adjustment to compensation in both House and Senate proposals (which Davis tied to state law), changes to benefit (SEB) rates, possible changes in pension (retirement) costs, and an unresolved levy lid increase. Davis said a 2.5% inflationary adjustment appears in the budgets and would yield roughly $1.8 million in new state funding but, because the district employs more staff than in prior years, would raise payroll costs by more — Davis estimated added compensation cost near $2.9 million. SEB increases were less certain; Davis used an average of the House and Senate proposals to model increases between roughly $1.8 million and $2.0 million. Davis estimated step increases and experience factors would add more than $1 million.

On three major, high‑impact items: MSOC (materials, supplies and operating costs), special education funding, and the levy, Davis said the House and Senate differed. A larger MSOC allocation in the Senate budget would have helped; the House largely paid only inflation. Special education proposals had varied during session; the most recent version Davis discussed used a single multiplier of 1.16 and, in the district’s projection, would yield roughly $1.3 million in additional funding — far less than earlier, larger multiplier proposals that advocates had sought. A possible change to the levy lid — a proposal to raise the per‑pupil levy limit by $500 in year one and then by an additional 3.33% annually — would be immediately implementable for Olympia because the board previously approved a higher levy rate; Davis estimated a levy lid increase could add as much as $2.5 million the first year and $5.0 million thereafter depending on enactment and local decisions.

Davis and board members also discussed an apportionment shift lawmakers sometimes use to manage state cash flow. Davis described a proposal to reduce payments to districts in February, March and April by about 2.5% and shift those dollars into August, which helps the state but would reduce district cash in late winter. Davis said that 2.5% reduction across those months equates to roughly $3.125 million and would require the district to borrow (an interfund loan) from capital reserves for a short period; interest and repayment would be required if that mechanism were used. Board members noted many districts have used interfund loans and that interest and timing vary by county arrangements.

Davis said the current forecast shows the district ending the year with an approximate 3% fund balance under the assumptions used and that the district is tracking a projected overspend in the current year of about $2.6 million. Davis told the board the district keeps minimal contingency amounts in order to avoid naming individual positions for reduction while the Legislature remains in session.

Board members pressed for clarity on timelines and on how construction projects or new housing within school catchments might affect enrollment. Student representative Roberts asked whether transfer students bring additional money; Davis replied that apportionment for a transfer student is the same per pupil as for resident students, and that out‑of‑district transfers still represent revenue the district had not counted previously.

Public commenters who addressed the budget urged more transparency and more nuanced treatment of staffing allocations. Melissa Walker, a teacher librarian at McLean Elementary, described library and counselor cuts proposed for her school and asked the board to weigh supports other than FTE reductions. Dune Ives and Brian Brannes also urged careful consideration of staffing, revenue options and the effects of closures the district discussed last year.

The board did not take formal budget actions at the session; Davis and district staff said they would return with updated numbers after the Legislature completes its work.