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Tacoma Public Schools projects budget shortfall, warns of "binding conditions" without cuts or new revenue
Summary
District finance staff told the school board that current projections show revenues falling short of expenditures and could trigger state oversight unless the district reduces spending or secures new funding.
Tacoma Public Schools finance staff told the board on March 27 that current year revenue projections are lower than budgeted while expenditures are tracking higher, producing a potential year-end deficit that could trigger a state-imposed financial oversight process.
Finance presenter Ross said the district budgeted $577.8 million in revenue but now projects about $562.2 million, while expenditures are projected to be higher than budgeted. "If things were to continue on the trend that we have at this moment in time, that's where we would end," Ross said, describing an extrapolated negative fund balance and saying the district is pursuing mitigating strategies to avoid that outcome.
The nut of the district's concern is a projected shortfall that, if realized, would place the district in what Ross described as "binding conditions," a status in which the Office of Superintendent of Public Instruction (OSPI) or the educational service district can appoint a financial oversight committee to recommend corrective plans. Ross said examples of possible corrective actions include renegotiating collective bargaining agreements, eliminating positions or contracts, and selling surplus properties to improve cash flow.
Ross walked the board through causes the finance office identified: fewer-than-expected grants and other revenues this year, lower-than-expected transportation revenue after a February true-up, rising costs for utilities and insurance, and declining federal reimbursement rates for school meals. "We are not fully funded for the wages and... inflationary components," Ross said. He added that some revenues the district had anticipated did not materialize and that encumbrances (committed spending) are being reviewed more closely.
Board members and staff described steps already underway: pausing noncritical hiring, reducing discretionary spending, pulling back uncommitted encumbrances, examining contracts for reductions or eliminations, and identifying surplus properties. The district also has 15 task forces reviewing possible savings and efficiencies.
Ross said six Washington districts are already in binding conditions and an additional number are reportedly on watch lists. He stressed the district's goal remains to avoid state oversight and that the administration is pursuing a set of guiding principles while preparing a new forecast scheduled for around March 20 (board materials indicated a March update cadence).
The district sought public and legislative attention: staff urged board members and the community to contact legislators about the state funding outlook because a flat state budget would make avoiding cuts more difficult. The presentation noted uncertainty around timing of some state and federal funds, including the state-funded transitional kindergarten program, where funding timing may be irregular.
The board did not take a vote on any of the finance actions during the presentation. Ross said the administration will return with updated forecasts and proposed mitigation steps for the board to consider.
Ending: The district's next budget forecast and staff recommendations will be presented to the board in follow-up meetings; in the meantime administrators are pursuing immediate cost controls and asking community members to communicate with state legislators about funding.
