Kent School District projects multi‑year budget shortfall after enrollment and federal funding drops

Kent School District budget staff told the school board at a retreat that the district faces a multi‑year structural deficit driven by lower enrollment, rising special‑education costs and proposed federal funding cuts.

Director of Budget Ms. Tyler presented the district’s adopted 2025‑26 budget and an updated forecast. The budget the board adopted in June showed about $555.6 million in revenue against $570.0 million in appropriations, a $14.9 million budget gap at adoption. After designations, the unassigned ending fund balance at adoption was about $39.5 million, or 7.3 percent of the general fund — above the board’s 5 percent reserve policy.

Ms. Tyler said the district’s October student count was 792 students below the numbers used to adopt the budget, and special‑education enrollment was down about 413 FTE versus the adopted estimate. She told the board those changes prompted a revenue recalculation that, together with a proposed federal reduction in Title I, II and III funding, produce roughly $20.4 million of near‑term pressure: an $8.2 million loss tied to K‑12 enrollment, about $6.2 million tied to inclusive (special) education enrollment, and about $6 million in proposed cuts to federal programs.

The budget presentation laid out staff projections for balancing the shortfall. To hold the district’s unassigned ending fund balance at the board’s 5 percent minimum the staff said the district would need roughly $8 million in budget‑balancing solutions for 2025‑26 (offset in part by using about $12.4 million of beginning fund balance), approximately $30 million of ongoing reductions for 2026‑27, and a smaller adjustment in 2028‑29. The presenter said the $8 million first‑year solution would be ongoing and therefore affect later years as well.

Ms. Tyler summarized staffing and program changes since adoption: a net staffing increase of about 30.6 FTE overall, driven by a roughly 39.9 FTE increase in classified staff and an approximate 9.23 FTE reduction in certificated positions. Special education staffing rose by a net of about 46 FTE, while general‑instruction FTE declined.

On program budgets, Ms. Tyler told the board that several program lines run persistent deficits because state funding does not cover the district’s costs. She showed a multi‑year special‑education deficit that grows from roughly $17 million to above $31 million in the 2025‑26 adopted budget projection, citing both higher expenditures and a revenue drop. She also reported an MSOC (materials, supplies, other costs) forecast gap and a transportation shortfall that contribute to the structural pressure.

Asked by board members, staff said the district currently projects it will close the 2024‑25 fiscal year with about $60.0 million in ending fund balance; final book‑closing and the audit are expected in November. Staff said they will recalibrate enrollment projections for the 2026‑27 budget cycle and present updated numbers to the board in December.

Ms. Tyler flagged EP&O (educational programs and operations) levy timing as a significant driver of long‑term outlook. The current EP&O levy is scheduled to expire on Dec. 31, 2027; staff’s forecast assumed continuation of voter support but noted the levy only covers a portion of the district’s unfunded obligations. The presentation said the total unfunded staffing and program cost in the district is roughly $123 million and that the EP&O levy (about $81.1 million) covers approximately two‑thirds of that shortfall.

Board members pressed staff on program‑by‑program impacts, the composition of the projected staffing changes, assumptions about state funding rates per FTE and the mechanics of MSOC contingency budgeting. Several board members asked whether neighboring districts were reporting similar enrollment declines; staff said multiple nearby districts, including Lake Washington, Seattle and Auburn, were experiencing similar trends.

On next steps, staff told the board they will: - Present a list of proposed budget‑balancing solutions for $8 million in 2025‑26 and outline options for the larger 2026‑27 reductions; - Accelerate the district’s budget development calendar so proposals can be included in the June adoption timeline; - Recalibrate and present updated enrollment projections in December after further analysis; and - Complete year‑end closing and the independent audit in November (S&P credit rating was cited as a reason to preserve audit cleanliness).

Ms. Tyler emphasized the composition of the budget: “Eighty percent of our budget … are made up of labor or payroll and salaries and benefits,” framing why staff said most balancing options will touch personnel costs and why the district must weigh permanency when implementing reductions.

The board and staff agreed to develop guiding principles to steer staff proposals and to bring draft options back for board review. Staff also said they are monitoring the federal government shutdown and the state budget process for any additional impacts on district revenue.

The district did not take a formal vote on budget reductions at the retreat; the session was a staff update and board discussion.

Ending — The district plans to return with specific options, including expenditure and program scenarios, as staff finalizes enrollment recalculations and the year‑end audit. The board asked staff to prioritize clarity on which proposed changes would be short‑term, one‑time savings and which would be ongoing reductions with multi‑year effects.