Shelton School District outlines $2.3M shortfall, $5M in staffing cuts and multi-year recovery plan

Superintendent Wyeth and Executive Director of Finance Clinton Sherman told the Shelton School District School Board that accounting corrections and falling federal grant dollars left the district with a significant deficit and required personnel reductions.

Clinton Sherman said the district faces structural pressures: "we do have a problem with non restricted dollars covering basic expenses." He told the board the district identified long-standing accounting deficiencies, recognized outstanding invoices as current-year liabilities and discovered a $2.3 million shortfall after those adjustments.

The board heard that the district reduced staffing costs by approximately $5,000,000 this year, cutting building staff by about 7% and central office staff by about 32%. Sherman said some reductions were made midyear and that an earlier apportionment advance was used to cover cashflow: the district has worked with the Educational Service District (ESD) and OSPI toward remedies and has arranged payment plans with vendors.

Superintendent Wyeth told the board that personnel cuts were painful but necessary: "It does pain me to have to do a reduction in force." She said declines in federal program funding and the district's reliance on restricted dollars worsened the position and that the administration is prioritizing building a general fund balance and paying vendors.

Sherman described federal and state funding risks: the district is budgeting conservatively for a roughly $1,000,000 decrease in federal dollars in 2025—6, and noted a proposed 70% cut to some federal Title and at-risk school grants in later years if enacted. He presented current-year revenue of about $84.5 million and estimated next-year expenses of roughly $80.5 million under the recovery plan. The local levy is roughly 10% of district revenue (about $8 million) and generates additional levy-equalization dollars from the state when passed.

Board members asked for detail on vendor payments and accounting practices; Sherman said the district has contacted hundreds of vendors, established payment plans and is training a new finance team. Sherman and the superintendent said they are withholding 2% of next year's basic education revenue as a further conservative step and are exploring sale of surplus property and other assets.

Public commenters raised staff turnover and morale while the board discussed finance actions. Community member Marilyn Aaron said the district had already lost many staff this year: "That's 136 staff members gone. Let's let that sink in for a moment." The board reiterated that the district will prioritize minimizing student impacts while correcting its finances.

Sherman summarized the plan's trajectory: the district expects to end the current year with a negative balance after recognizing liabilities, and to conservatively finish next year with an estimated $1.5 million in fund balance if revenue and expense assumptions hold. He repeatedly described the projection as conservative and contingent on state and federal funding decisions.

Discussion-only items included the mechanics of prior accounting practice, considerations about whether to pursue forensic accounting (Sherman said the district lacks the cashflow for an expensive forensic audit and had found no evidence of loss, only deficient practice) and the limits of district authority over state and federal grant reductions.

Next steps discussed included continued vendor prioritization and payment plans, monitoring of federal grant allocations, continued hiring scrutiny and bringing refined figures to upcoming budget workshops for board review.