Pasco School Board directs staff to seek budget extension, reduce mandated reserve to 2.5% to close $6.9M shortfall

The Pasco School Board on Tuesday gave district staff informal direction to begin paperwork to reduce the board-mandated fund balance requirement from 5% to 2.5% and to pursue a budget extension to close an estimated $6,900,000 shortfall for the 2024–25 fiscal year.

District staff presented the proposal during the board’s budget closeout update. Dr. Castilleja, the district staff member leading the budget presentation, said the district projects a $6.9 million deficit and that the board’s $24.2 million budgeted fund balance currently includes a $16.5 million board-mandated 5% reserve and $7.8 million in designated assignments. “The staff is requesting [the] board mandated fund balance requirement from 5% to 2.5%, and get us working on initiating the budget extension process,” Dr. Castilleja said.

The nut graph: The reduction is temporary, district staff said, and would be coupled with a multi-year plan that relies chiefly on natural attrition to lower staffing costs by about $4–5 million per year. The district must secure approval from the regional Educational Service District (ESD) and the state Office of Superintendent of Public Instruction (OSPI), and hold a public hearing before the board can adopt a formal resolution to extend the budget.

District staff described the mechanics and timeline. Staff said the district will begin required paperwork immediately, submit the extension documentation to the ESD for review and then to OSPI for approval, and hold the required public hearing at the June 24 board meeting. If approved, staff would implement the reduced reserve for closeout of 2024–25 and embed the approach into the planning for 2025–26.

Board members voiced support but characterized the direction as informal. Vice President Steve Simmons moved to “provide an extension to reduce the board mandated fund balance requirement from 5% to 2.5% and initiate the budget extension process”; Board President Amanda Brown said a formal motion was not necessary and treated members’ statements of support as the board’s direction. Several directors said they favored the approach because it preserves jobs relative to alternative uses of the designated funds. Director John Kennedy said he hoped the district could restore the 5% reserve as soon as feasible.

District staff outlined the illustrative multi-year strategy: keep the $7.8 million in designated assignments intact, lower the mandated reserve to 2.5% for up to three budget cycles while pursuing $4–5 million per year in staffing reductions through attrition, reassess annually, and return to a 5% reserve when conditions allow. The district estimated cumulative reductions of roughly $10–15 million over multiple years under the model, but emphasized those figures were illustrative and dependent on revenues, grants, and expenditure changes.

Board members emphasized communication and noted that staff already had started outreach. Superintendent Whitney later confirmed staff had shared an internal message and a family/community communication about the district’s budget outlook and that additional public meetings are planned.

No formal vote was taken Tuesday; instead the board provided staff direction to prepare the budget-extension materials, advertise and hold a public hearing on June 24, and bring a resolution for board consideration. Dr. Castilleja told the board, “We will get started tomorrow.”

Looking ahead, staff said the 2025–26 budget will use a conservative enrollment estimate and that the board will see the proposed 2025–26 budget and the required adoption materials in July, with OSPI submission following board adoption.