Budget update

Hello Stanwood-Camano families! For the next month or so, we plan to provide weekly updates on the District’s financial situation, including plans to reduce the budget and the reasons why. This week, we want to focus on explaining the history behind the current school financial landscape.

For years, school funding and managing school budgets year-to-year was fairly predictable. Yes, there would be some ups and downs — largely due to legislative, enrollment, and economic changes — but for the most part there were limited uncertainties. One reason for this predictability was because some state-funded salaries were based on staff experience and education level in a particular district. We call this “staff mix” using a state salary allocation model (SAM).

That changed in 2018 when the dust settled from the McCleary legal decision, and the state Legislature removed staff mix as a way to fund some salaries. What followed proved to be a hard reset to schools’ long-standing financial patterns. Nonetheless, educational leaders across the state began crafting budgetary roadmaps for each district’s future.

As part of the McCleary decision, most school districts saw their annual revenues from the state jump significantly during the first year. Districts in areas with a higher cost-of-living than most — like here in Stanwood-Camano — even received a bit more money using a funding model called salary “regionalization.”

However, the Legislature mandated that a portion of those extra regionalization dollars decrease over a period of three years. This happened at the same time district expenditures continued increasing to keep pace with cost of living and mutually agreed-upon contracts between the district and its labor partners.

The result is a growing budget gap.

Additionally, the state now provides cost of living adjustments for public school staff based on Implicit Price Deflator (IPD) — a formula used to help calculate cost-of-living changes — but the state doesn’t increase funding allocations in line with the actual dollar amount districts pay for a cost-of-living adjustment.

To complicate matters further, the IPD needed to plan for the 2023-24 budget is not known until the state Legislature finishes the state budget, which is usually near the end of the legislative session, scheduled for April 24 this year. IPD was originally anticipated to be 2%, but is now estimated to be in the 4.5%-6% range due to inflation.

For Stanwood-Camano School District, the drop in state funding from the regionalization “step down” and annual salary increases mean the district’s gap between state-funded salary revenues and expenditures grew the past three years. The district has been able to mitigate that difference to some extent by reducing other costs and by relying on temporary funding received during the COVID-19 pandemic.

In next week’s budget report, we will explore the district’s financial impact from the COVID-19 pandemic.

See the district budget webpage to learn more.