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Finance report shows improving balances but board warned special‑education funding change will shift costs
Summary
District finance staff reported a stronger fund balance than the prior year, but said state changes to special‑education claiming rules mean the district can no longer backfill special‑education costs with EP&O levy dollars. The board was told the change will shift remaining costs onto basic education funding and local budgeting decisions.
Karen (finance staff) presented the district’s June financial report to the Port Angeles School District Board of Directors on June 12, saying the general fund balance is declining from the recent peak but remains better than the same time last year.
“General fund ending fund balance is coming down a little bit,” Karen said, but “we’re higher than we were last year at the same very time.” She flagged capital‑project revenues as healthy and said expenditures will rise as Stevens construction advances.
The presentation moved to a policy and funding shift with practical implications: the state removed a cap on special‑education claiming, enabling districts to claim more state and federal special‑education funds, but OSPI guidance and recent legislation forbid using EP&O levy proceeds to backfill special‑education costs going forward.
Karen summarized the consequence: the district will claim state and federal special‑education apportionment for eligible students but those allocations “are still gonna fall short of the actual cost of providing education and services for each student.” She said that previously the district had used EP&O funds to make up the gap. Under the new rules, the remaining gap would be funded from basic education apportionment (BEA) or other local choices.
Board members who had heard public reports that the legislature “fully funded special education” said they did not understand the limitation until the meeting. One director said she had “many people who are so excited that we're going to have full funding with special ed” and asked where the prohibition was documented; staff said the restriction is in the enacted legislation and in OSPI guidance.
Other financial items presented: an MSOC (materials, supplies and operating costs) increase of $81.26 per FTE that the finance staff said yields roughly $262,000 in new funding; potential federal grant reductions if Title II/IV become block grants; and a medium‑confidence risk that USDA changes could reduce nutrition reimbursements, which would affect the district’s current Community Eligibility Provision (CEP) food service model.
Karen also reported enrollment and staffing metrics: the district’s annual average FTE was reported at 3,283.65 and headcount at 3,382; Seaview Academy, CTE and running start figures were included in the packet. She said final, precise federal‑fund share of the budget will be provided in follow‑up materials.
What the board directed: no immediate policy changes were made, but members asked for clearer public messaging about what the legislature did and did not fund, and asked staff to provide written citations (OSPI guidance and relevant enacted legislation) for the claimed prohibition on using EP&O funds for special‑education backfill.
Ending: staff will return with follow‑up documents and more detailed budget figures; board members signaled concern about potential service impacts if the district must shift costs into BEA or local budgets.
