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Issaquah district projects $9 million fund‑balance decline; enrollment expected to fall 355 students for 2025‑26
Summary
District finance staff told the board the general fund balance is projected to decline by $9 million this year amid slowed levy growth, rising costs and a year‑to‑date enrollment shortfall; the district projects an additional 355‑student decline for 2025‑26 and is watching federal funding and special education proposals in the legislature.
Issaquah School District finance staff presented a midyear financial update showing growing pressure on the general fund and a multi‑year enrollment decline the district expects to manage through budget planning.
Martin Turney, director of financial operations, and Mariah Banaszek, executive director of finance and budget, told the board the district's fund balance peaked at about $52 million last year but is projected to fall to about $43 million for the current school year, reducing the fund balance from roughly 17% of expenditures to an estimated 11%.
Staff said a revised projection shows a $9 million decline this year, larger than an earlier estimate of $6.7 million. Contributing factors listed in the presentation included $6.2 million in planned curriculum costs, roughly $1.3 million in lost revenue tied to enrollment coming in 0.5% below projection, $500,000 in critical facilities repairs (a middle school elevator), and about $1 million of inflationary operational cost increases.
Enrollment trends were a central focus. The district reported it is down 329 full‑time‑equivalent students compared with last year and projects an additional decline of about 355 students (roughly 1.9% of current enrollment) for 2025‑26, to a projected 18,435 students. Running Start participation remains high (above 700), and kindergarten enrollment is expected to hold steady, staff said.
Turney and Banaszek explained the district uses state budgeted enrollment through December and then adjusts in January to actual counts, causing revenue adjustments and staffing implications. The presentation also highlighted a shortfall at Echo Glen (96 students counted versus the state projection of 145) related to delayed cottage openings and a state overestimate; staff said they paused additional hires until the situation clarified.
Board members were briefed on reserves and board designations: the board previously set aside a $20 million commitment for future school facilities and increased the board-designated emergency reserve from $1 million to $1.5 million. Staff warned that with those commitments the district's unreserved, undesignated balance could dip below the 3% threshold the board uses as a guideline unless budget adjustments are made.
The presentation noted $9.4 million in annual federal grant funding (Title I and IDEA among the largest grants) and said uncertainty about the federal outlook would be monitored; staff described those federal funds as a potential multi‑year risk if reductions occur. The board was also briefed on legislative activity affecting K‑12 funding: a special‑education funding bill (SB 5263) and an MSOC (materials, supplies and operating costs) proposal (SB 5192) were moving through the legislature at the time of the meeting and could affect long‑term revenue.
No budget ordinance or appropriation vote took place at the meeting. Staff said they would continue analysis, hold bargaining negotiations (five agreements expected that spring) and aim to publish a preliminary 2025‑26 budget guidance in July, with proposed adoption scheduled for August.
