Tacoma School District staff outline draft five-year budget showing $30 million shortfall; levy, nutrition and transportation risks highlighted

Rosalind Medina, district finance staff, told the Tacoma School District Board of Directors at a study session that the district’s draft five‑year budget shows an approximate $30,000,000 shortfall and several revenue and expenditure risks that will affect the 2025–26 budget and beyond.

Medina said the district prepared the figures as draft legislative estimates and cautioned that many state and federal budget items remain in flux; she asked the board and public to treat the numbers as provisional. She said the district will present updated figures at future board meetings and hold a public hearing before final adoption.

Why it matters: The board must adopt a balanced budget each year. Medina’s presentation identified specific shortfalls and potential policy dependencies that could force deeper reductions, additional levy reliance or changes to programs such as Community Eligibility (CEP) meal service.

Medina summarized revenue and expenditure drivers the district is monitoring. On the revenue side she highlighted an enrollment increase that will add roughly $5.4 million compared with the prior budget and noted the district’s voter‑approved levy capacity of $82,000,000 (the voter‑approved cap) for the upcoming levy cycle. She said a correction is needed for a fiscal error: last year’s budget included an unrealized revenue assumption of about $5,000,000 that must be removed. Medina said transportation revenue shifts and other factors together account for roughly half of the current revenue gap.

On expenditures, Medina listed bargaining impacts from 11 negotiated groups, salary step and benefit increases, utility cost pressure, and insurance premium increases. She estimated a possible insurance premium uplift of about $1,000,000 and said the district will include higher utility and benefit costs in next year’s budget. Medina said legal settlements matter because the district is partially self‑insured and must hold local resources to meet initial claim obligations.

Nutrition and federal funding risk: Medina flagged the district’s Community Eligibility Program (CEP) and broader nutrition operations as major exposure points. She said the CEP program is an approximately $18,000,000 effort and that the district would not be able to make up a federal funding loss locally without state intervention. Medina reported a working estimate of a $3,000,000 increase in nutrition expenditures and said some of that could be covered by levy funds in practice. She also noted state legislation under consideration that could alter federal CEP eligibility thresholds (she said the current law requires CEP at a 40% free‑and‑reduced threshold and that draft legislation may change that to 25%), and cautioned the state or federal changes could increase the district’s costs or obligations.

Special education and other legislative items: Medina said legislators have recently moved bills that could increase special education revenues, which—if firmed up—might allow the district to reduce local support allocated to special education (the district currently uses local support funds in that category). She also listed a recently revised MSOC (material, supplies and operating costs) bill that produced a positive $2,000,000 change in the district’s favor in the house budget scenario she reviewed.

Levy and levy uses: Medina reiterated that levy funds are voter‑approved for enrichment and that, in practice, the district is using levy proceeds to cover gaps in nutrition, transportation and special education that the state is not fully funding. She said the district’s current levy cap is $82,000,000 and that the district will seek voter approval for the next levy cycle in 2026.

Reductions, staffing and reserves: Medina said the district is planning position eliminations and administrative staffing adjustments; those processes were near completion but specific impacts were still being finalized. She said the district plans to restore fund balance and proposed a conservative fund‑balance target (a 2% increase in fund balance for 2025–26) as a short‑term goal while working toward a larger reserve over time. She warned the board that operating with an insufficient fund balance would create “binding conditions” requiring significant operational changes.

Process and next steps: Medina said she will return to the board with updated numbers and that the superintendent’s office expects to present the proposed budget for adoption in July after a required public hearing. Board members asked for regular updates; Medina said staff will continue frequent cabinet level reviews and will provide monitoring at subsequent board meetings.

Ending: Board members thanked Medina and her team for the draft presentation and for continuing to update the public as legislative and federal funding decisions evolve. Medina reiterated the draft nature of the numbers and invited feedback and questions ahead of the next presentation.