District finance chief: revenues 2% over budget, warns of federal cuts and rising insurance costs

Peninsula School District Chief of Finance and Operations Ashley Murphy told the board on Feb. 25 that the district’s revenues were tracking about 2% above budgeted projections for January 2025, driven largely by higher-than-expected enrollment. "Total revenues are coming in approximately 2% over budgeted," Murphy said.

Murphy cautioned that the district faces several fiscal pressures over the coming year, including uncertainty in federal categorical funding, a projected rise in liability insurance costs and the scheduled loss of the district’s remaining experience factor. "Our federal funding for this year is locked in," Murphy said, "but what we have been working on is what does that mean for next year?" She warned that cuts at the federal level that affect Educational Service Districts (ESDs) or OSPI could cascade to local districts through higher ESD fees.

Murphy cited several quantified concerns: federal sources were about 4% under current expectations for this fiscal year (with many federal reimbursements claimed later in the year), the district has "used almost 4,400,000.0 more than we've brought in" in drawing on balance to cover day‑to‑day expenses (a planned drawdown), and the district expects to lose an experience factor equal to about $1,300,000 next year. On insurance, she said the district received notice of a potential 15% increase on a roughly $3,000,000 liability premium — which the district estimates could translate to just under a half‑million dollars additional cost and follows a $600,000 increase last year.

Murphy said categorical programs most at risk under possible federal reductions are title categorical programs (including some Title allocations commonly used for special programs) and that the district currently receives about 4% of its revenues from federal sources compared with some higher‑poverty districts that receive substantially more. "Some of my peers stand to lose $20,300,000 if this goes through because they're higher poverty districts," Murphy said; "we stand to lose approximately $1,500,000" in a scenario she described.

On state legislation, Murphy reported the transportation bill appears to have stalled and is unlikely to provide additional transportation funding for the district. Two bills remained under consideration related to MSOCs (material, supplies and operating costs) and special education; Murphy described those as potentially helpful but unlikely to cover the district’s known insurance increases. The board discussed the levy‑lid lifting option under consideration at the legislature, and Murphy and several board members noted that revenues raised by a levy swap would not necessarily return to Peninsula but could be redistributed through local effort assistance to property‑poor districts.

Board members asked about regionalization (localization) changes and Murphy said no immediate changes were expected to shift the district into a higher regional factor. Murphy said the district will budget conservatively for next year — assuming possible revenue losses — and add back revenues if legislative developments produce new funds.

Murphy concluded that while the current position is manageable, the district is preparing conservative budgets and monitoring federal and state actions closely. "So we're going to be conservative. We're going to build budgets assuming loss of revenues on those side," she said.