Northshore board reviews restoration options as district faces shortfall, low reserves

The Northshore School District Board of Directors met in study session on Jan. 13 to continue development of the 2025-26 budget and to review staff'modeled restoration options that depend on potential state funding.

Deputy Superintendent Joanne Berge presented the district's updated projections and four restoration scenarios tied to varying levels of legislative funding. Berge said the district currently has a balanced 2024-25 budget but projects a widening gap for 2025-26 if no new revenue arrives. "There is never a guarantee," Berge said of legislative funding, but she added that some early bill drafts make modest funding appear "doable." She told the board the district has cut about $46,000,000 over the last two years and would exceed $50,000,000 with the next round of reductions.

Why it matters: Northshore's unassigned, or rainy-day, fund balance is well below the board's 3% policy. Berge said the district ended the year with about $8.1 million in total fund balance and that the portion categorized as unassigned is now projected at about $2.957 million. Without new revenue, staff projected a roughly $4.5 million operating deficit for 2025-26 under a no-action scenario, with existing proposed reductions and fund balance drawdowns leaving the district under the 3% minimum.

What staff presented: Berge and business staff described a central set of proposed reductions and a menu of restoration options contingent on state aid:

- Baseline reductions: staff modeled about $5.1 million in specific personnel and program adjustments (including administrative reductions at central office and a proposed change to secondary staffing allocations tied to special education general-education seat needs). The larger package previously considered reached roughly $8.2 million in reductions, meaning an additional $3.1 million of cuts would be needed to meet that higher target.

- Restoration Option 1 (illustrative): restore 6 of 11 high-school dean positions, restore 4 assistant principal (AP) positions, and lower class sizes for grades 4'8 toward pre-cut levels. Berge said a $5 million legislative allocation modeled in this scenario would leave only a small improvement to the district's unassigned fund balance (about $200,000) and would still leave the district under 1% for that reserve.

- Restoration Option 2: prioritize restoring 6 deans, add 2 APs (rather than 4), target lowering class sizes beginning with grade 5, and place $3 million into the board's fund balance reserve. Staff presented sub-models showing that a $1 million legislative allocation, for example, could translate into restoring about 3 dean positions and 1 AP and a partial class-size change for grade 5.

- Alternative "fund-balance-first" scenarios: staff modeled outcomes if legislative aid were used primarily to rebuild reserves rather than restore personnel. Berge said a $5 million allotment solely applied to fund balance in the model would raise the unassigned reserve to about 1.9% and could eliminate the need to borrow from the Capital Projects Fund for cash flow in the near term. Staff also modeled $8 million and $10 million scenarios showing larger but still incomplete progress toward the 3% target.

- Instructional materials/curriculum: the board asked for cost context for curriculum materials (noting many now use subscription/licensing models). Staff included a $1,000,000 instructional materials line in some models and discussed the potential to use a technology levy for recurring software-license costs.

Other budget pressures noted: Berge flagged a recent increase in rates for the state's Paid Family and Medical Leave program, saying employers'and districts'rate obligations rose by about 24 percent in the new announcement. She also cited an early special-education bill draft by state senators identified in the presentation that estimates roughly $14 million in additional revenue specific to Northshore; Berge emphasized the draft's amount is not guaranteed.

Board discussion and direction: Board members framed the decision as a trade-off between near-term student-facing restorations (APs, deans, class-size reductions, curriculum) and rebuilding a minimum reserve to avoid borrowing. Several directors urged prioritizing retention of staff who serve students furthest from educational justice; one director said, "let's prioritize keeping our people that are serving the students farthest away from educational justice and then work to adding people back into the system" (Director Hayes). Board members noted class-size reductions are "aspirational" because specific classroom sizes depend on local enrollment distributions.

Consensus path: Board members discussed a refined option staff labeled informally during the meeting as "2a": prioritize retaining staff (restore four AP positions), aim to raise unassigned fund balance to about 1%, and include up to $1,000,000 for instructional materials (with the understanding that exact buys and staffing lists will depend on the final legislative amount). Superintendent Michael Tully and Berge said they would use that direction to prepare staffing and adoption materials if and when legislative funds are available.

What the board did not do: This was a study session; there were no formal motions or votes to adopt specific restorations, and no positions were finalized. Staff noted any restoration plan will require specific staffing postings and detailed allocations once actual state apportionment and legislative action are known.

Next steps and timing: Staff will continue to track legislative developments through the end of the session and prepare a budget update for the board. The district's budget adoption remains scheduled for July 14. Board members and staff said they expect to revisit these items immediately after the Legislature concludes its session and as staff receive apportionment figures and final contract/levy projections.