Bellevue School Board approves $7.3 million general fund extension and petitions OSPI for binding conditions oversight

The Bellevue School District Board of Directors voted June 26 to file a general fund budget extension of $7,294,612 with the Office of Superintendent of Public Instruction, increasing the district’s 2024–25 general fund appropriation from $425,397,592 to $432,692,204.

Board action followed presentations by district finance staff showing the district will close 2024–25 with a negative ending fund balance. Executive Director of Business Services Jason Pollock told the board the district projects revenues of about $418 million and expenditures of about $432 million for the fiscal year, leaving a projected negative ending fund balance of roughly $5.9 million. Pollock said the shortfall results from both lower-than-expected revenues and higher expenditures.

Superintendent Kelly Aramaki explained what the next step means: “Binding conditions is basically state oversight status triggered when a school district ends the fiscal year with a negative fund balance,” she said, adding that OSPI requires a detailed financial recovery plan, enhanced budget monitoring and approval, and monthly meetings among the district, the Puget Sound Educational Service District and OSPI.

The board also passed a second resolution asking OSPI to include $68,982,152 in taxes receivable for calendar-year levies into the 2024–25 extension and to expedite placing the district into binding conditions. That petition was approved by the board by voice vote; directors recorded ‘‘aye’’ and no opposition was noted.

Megan Hayden, the district’s director of budgeting, described accounting and timing factors that affect the extension. She said some accounting entries required by the Governmental Accounting Standards Board (GASB) — for example multi-year software or lease contracts — appear as expenditures in the year of signing but are offset as revenue for reporting purposes, producing a revenue-neutral but expenditure-visible line on financial statements. She also said the district had budgeted an optimistic $10 million of additional revenue tied to projected enrollment growth that did not materialize.

Board discussion focused on the drivers of the deficit and on oversight steps. Directors repeatedly cited special education costs and past budget assumptions as recurring risk areas. Director Martha Trias noted the district’s chronic absenteeism and equity concerns during the meeting’s earlier agenda items as context for student-centered priorities the board must protect while reconciling finances. Several directors emphasized the need for clear, frequent reporting and stronger internal controls going forward.

Board President Carolyn Watson and others highlighted a one-time legislative option now available to districts. Aramaki described Senate Bill 5412 (as discussed in the meeting) as enabling a one-time sale of certain district property to help restore fund balance; she said the district has identified a parcel “on the backside of Somerset” that is not usable for a school and has been listed for sale. The superintendent and directors stressed that the property-sale authority is a one-time measure and not a recurring revenue solution.

Pollock and Hayden outlined next steps: the district will file the paperwork with OSPI and, once OSPI acts, the district will enter regular monthly oversight meetings with OSPI and Puget Sound ESD. Staff said the process of agreeing on binding-condition metrics typically spans two to three years but could vary; if established metrics are met sooner, the district may progress out of oversight sooner. Staff also warned that failure to meet agreed metrics could escalate to enhanced oversight, in which OSPI assigns closer financial management support.

The board approved the budget-extension resolution and the binding-conditions petition in separate voice votes. The district’s budget team will bring a preliminary 2025–26 budget to the board in July and a finalized budget proposal for action in August, and staff asked the board to continue monthly study sessions to monitor cash flow and staffing so the board and OSPI have clear, timely information.

The resolutions and staff presentation make the district’s fiscal condition public and start the formal state review process. The board and staff repeatedly said they will continue a public-facing recovery effort focused on transparency, student-centered planning and community input as the district implements a recovery plan in partnership with OSPI.