Finances

Each year the budget process begins shortly after winter break and the School Board then establishes broad parameters for budget development guidelines in early spring (adopted 4/7/2022). Budget development for 2022-23 was the second year of making budget reductions with much uncertainty for the future of our financial outlook. The administration follows the board’s parameters and reinforces these parameters during actual budget development. These guidelines were observed and incorporated into the 2022-23 budget.  

State revenue as a percentage of total revenue peaked in 2018-19 (71.4%) and now comprises 65.85% of the district’s operating revenue, a decrease of 1.25% over the prior fiscal year (67.1%). The state is now 5.55% below the recent historical peak in state funding as a percentage of total operating revenue. 

The state legislature has continued to increase education funding pursuant to the McCleary decision, however a large portion of this “new” revenue comes in the form of salary and benefit allocations, making the funds less flexible than local levy dollars.   

The legislature implemented significant structural changes to the education funding for 2019-20 and beyond, which included a decrease in local levy authority (capped at $2,500 per student or $2.50/1,000, whichever is less and adjusted by the consumer price index (CPI) annually). This drop in local levy funding is coupled with new restrictions on what and how local levy funds can be used to support and supplement basic education.  

The district is very close to its statutory 2023 levy authority of $61,000,000. This was possible given the passage of HB 1590, which allowed the district to base its levy authority on 2019-20 enrollment or 2021-22, whichever was greater. The 2022-23 Budget had a 2023 calendar year levy of $2,878.66 per student.  

Due to continued enrollment decline, the district had to reduce programs significantly, with a reduction in force of both certificated and classified staff that was authorized by the board on April 28, 2022. The program reduction action rationale summary is provided as follows: 

Rationale for total reductions of $11.38 million for fiscal year 2022-23: 

• We will likely continue to face student enrollment declines and/or stagnant student enrollment. (An estimated 1,899 fewer students over a three-year period).  

• A decline in enrollment directly affects revenue that is generated on a per student basis from local, state and federal funding formulas.  

• Our tuition-based programs such as Food Service, Before and After School Care (BASC) and facility rentals declined significantly during the previous two years and did not drive the historical program revenue contributing to the deficit.  

The financial decline has been steady, even with the infusion of $24 million in one-time state funding and the $7.1 million provided in Federal Elementary and Secondary School Emergency Relief (ESSER) monies. In 2019-2020, the district had a $42.3 million beginning fund balance and at year end (2020-21) $38.4 million.  

To keep staff and community informed and seek input, we offer several communication avenues. We created a budget website with a timeline and ongoing updates; the School Board scheduled time at each business meeting for legislative and budget updates (livestream for the public), administrators met with key groups such as the PTSA to provide updates; the district asked for comments and suggestions via a budget e-mail account, and the district shared information via the 411 Weekly Bulletin. 

The district receives funding from three primary sources. The State of Washington provides approximately 65.85% of the funding for general operating costs, the federal government provides 3.97%, and 29.94% is generated through local fees and the Educational Programs and Operations Levy (EP&O).  

In the State of Washington, 295 school districts and 19 other Local Education Agencies receive funding. Our district is ranked 203rd out of 314 in terms of total revenue received per student. The average district in 2020-21 received $15,944 in revenue for each student, while Issaquah School District received $15,622 per student during the same fiscal period. This puts our district at a revenue disadvantage of $6.2 million per year when compared to the state average per student in 2020-21. When compared to King County districts, we are ranked 14th of 18 in terms of per pupil revenue. 

The Board of Directors and superintendent have established the primary goal of funding a comprehensive educational program that reflects overall community values and directs resources in support of the district’s Mission and Ends learning goals for students.  This endeavor is to be accomplished within the parameters of: 

• The district Mission, Executive Limitations and Ends learning goals for students. 

• A comprehensive educational program that reflects overall community values and interests and provides an equitable and balanced educational experience for all students. 

• Overall growth in student learning toward state and federal learning targets, as well as growth for each of the disaggregated groups.  This includes students working above standard. 

 

A program that allows students to: 

• Meet the requirements for a Washington state high school diploma; 

• Meet the standards set forth by the Student Achievement Council for baccalaureate institutions or community and technical colleges to meet each student’s High School and Beyond Plan; 

• Have access to student-driven opportunities to explore noncore options especially in the areas of CTE, STEM and the arts, providing career-connected learning; 

• Consider student opinion in academic remediation and acceleration opportunities; 

• Provide targeted resources to combat the COVID-19 pandemic as it relates to student/staff safety and learning loss. 

  

• Maintaining an unassigned fund balance of 3-7% of the general fund budget; 

• Maintaining sufficient reserves for start-up operating costs associated with new schools; 

• Establishing staff compensation and benefit levels that do not deviate materially from the local professional market, insofar as district resources allow; 

• Maintaining administrative costs at a level no higher than the King County average (currently: 12.31%) for school districts. Our administrative expenses were set for 9.12% in the 2022-23 budget. 

• Maintaining and managing the district’s resources to protect district assets and guarantee the board’s financial goals, including an annual review of program that is sufficient to determine how much local Educational Programs and Operations (EP&O) Levy must be collected/rolled back. 

• State revenue increase of approximately $12 million. 

• Salary and benefit allocations comprised of a 5.5% IPD (inflationary adjustment) $9.8 million. 

• Adjustment to the prototypical funding/allocation model of $2.2 million. 

• Program reductions of $11.38 million. 

• Local cost of IPD salary increase of $6.25 million. 

• Projected enrollment decline of 301 students of $3.4 million.  

• Estimated negotiated increases above IPD of $5.6 million.  

• Increase in local levy authority of $5 million. 

• Increase in non-employee related costs (insurance, fuel, commodities, general inflation) of $3 million. 

• Loss of Transportation funding of $1.76 million.  

• Draw down of reserve balances estimated at $10 million. 

Our district thanks the state for increased funding in the form of enrollment hold harmless and revisions to the prototypical funding model. We also extend our gratitude to the community for supporting the EP&O Levy, Capital Levy, and Transportation Levy in April of 2022.