Shelton budget update shows smaller-than-expected shortfall; district outlines three levy scenarios

The Shelton School District’s finance director said the district closed its most recent fiscal books in a better position than feared and outlined options for a February replacement levy that would restore local and state matching dollars.

“we ended up with any fund balance of negative $1,800,000,” Finance Director Clint Sherman said, adding the figure was better than a previously projected negative $2.2 million and that, under current assumptions, the district could finish the year with about $2 million rather than $1.6 million.

Sherman told the board the district’s October enrollment was 4,232 students, below the 4,375 budgeted, but that the improved fund balance created a larger near-term cushion. He framed the levy discussion with a brief history of local levies, the impact of the McCleary court decisions on state funding and the mechanics of local effort assistance (LEA), which can return state funds to districts that pass replacement levies.

Why it matters: The levy debate determines whether the district can maintain programs that are not fully funded by the state — including athletics, counselors, nurses, custodial services, curriculum and many staff positions. Sherman said those programs are largely levy-funded and that failing a levy would force reductions to people and services rather than utilities or insurance costs, which cannot be cut.

Sherman presented three scenarios for a replacement levy: (1) keep the dollar amount the same as the current levy; (2) keep the current tax rate ($2.25 per $1,000 of assessed value) for predictability; and (3) increase to the current statutory maximum ($2.50) to accelerate recovery of the district’s unrestricted fund balance. Using an average home value near $400,000, Sherman projected monthly impacts of roughly $72 (scenario 1, similar to current payments), $75 (scenario 2) and $83 (scenario 3), and estimated that maximizing the levy would cost about $17 more per month than the current-year payment after accounting for declining bond rates.

Sherman noted that passing a replacement levy would trigger LEA payments that help the district “reclaim some of the taxes we pay to Olympia and bring those back into our local community.” He also cautioned about external risks: the federal/state nutrition programs (SNAP/meal funding), special education, and Title programs make up large funding streams; the district has been told to proceed as if those funds will continue but to prepare for contingencies.

Board members asked whether the three scenarios would accelerate the district’s exit from restrictive financial oversight. Sherman said scenario 3 would move the district quicker toward a recommended unrestricted fund balance (he cited an unofficial target of roughly $6 million to $7 million), scenario 2 was the typical “best practice” for predictability, and scenario 1 would lengthen the recovery timeline.

Sherman said the ESD and the Office of Superintendent of Public Instruction have been engaged and that the district will continue conservatively projecting revenues going forward.

What the district said it would do next: Sherman invited community members to contact him for details and said the district will post presentation materials online. He emphasized the levy is a replacement of an existing local levy, not a new tax.

Board members and staff added that, should federal nutrition funding lapse, meal participation at school would likely increase and food banks would feel added pressure — a factor that could indirectly affect attendance and student needs.

Ending: The board did not take a levy vote at the meeting; Sherman’s presentation set out options and math the board will consider as it develops a levy proposal.