Superintendent’s Blog: Addressing Financial Challenges

Dear Bellevue School District Community,

At this week’s board meeting, I shared with the board and community some sobering financial challenges that our district is currently facing that are going to impact our system this year and for the next couple of years. Please read this letter to learn more about our current fiscal challenges, how we are addressing these challenges in the short and long term, and how the state’s insufficient funding of public education must be addressed to resolve the structural issues facing districts across our state.

Summary of Our Current Challenges

As our fiscal team has just closed out our books for the previous school year (2023-24), they have determined that our ending fund balance (reserve/rainy day fund) for the 2023-24 fiscal year has decreased to $8.4 million. This is significantly below the $17.7 million that it was projected to be. According to board policy, our ending fund balance is supposed to be between 5-6% of our total budget. Five percent of a $400 million budget is approximately $20 million.

The key issue is simply that our expenses far exceeded what we budgeted we would spend last school year. As we’ve traced back these higher expenses, we identified root causes that we now understand and can manage more appropriately in the future. I want to reassure the community that all the expenditures were for approved activities or services that support our students or that compensate staff for negotiated benefits. However, these expenses were higher than expected, were not adequately planned for in our budget, and lacked sufficient budget controls during the 2023-24 school year.

Because our ending fund balance is drawn down so low, these higher expenses mean we need to institute cuts in the current 2024-25 budget. Those cuts will be painful and will require sacrifice across the system, but they are designed to minimize impacts on students and staff in the long run.

We have new budget leaders, led by Jason Golec, Executive Director of Finance, who are leading the budget and finance work moving forward. Jason Golec and our new finance leadership team are hard at work tightening up processes and increasing transparency and communication. We have instituted a variety of internal improvements and controls that we shared with the School Board, but it’s going to take time for us to be on solid financial ground.

Growing the Fund Balance This Year Will Require $10M in Spending Cuts

We can’t maintain a balanced budget with the fund balance as low as it is. Over the next four years, we must raise our fund balance back to the 5-6% as dictated by policy. Ultimately, we should strive to rebuild our fund balance to be closer to $30 million within the next 5-7 years. For this current school year’s budget, this is going to require that we reduce our budget by approximately $12 million. We are starting by planning for an additional $2 million in revenue due to factors related to increased enrollment. That leaves us with about $10 million that we have to cut from our current school year budget.

To get to that amount, it is going to require collective action. Across all schools and departments, we must cut our spending—spending only what is absolutely essential and not what we’d like to have and making sacrifices on things that we hoped to get done that we can postpone to future years.

Because most of our spending is on salaries, these cuts will necessarily impact staff. In addition to instituting an immediate hiring freeze for non-essential staff, district leaders will feel the largest impact with the superintendent’s cabinet taking five furlough (unpaid) days and certificated administrators (principals, assistant principals, and directors) taking three furlough days. District departments and schools will be asked to significantly reduce discretionary spending by 30%.

More information on specific cuts will be communicated in the upcoming weeks. I know this is hard, but if we can work together to reduce our spending and spread sacrifices across the system, we will have the best chance of not having to pursue layoffs or other more disruptive solutions.

Improving Our Financial Processes & Increasing Accountability and Transparency

We are partnering closely with the School Board to fully understand and respond to our financial challenges. Executive Director Golec and I are committed to transparency and clear communication as we address these pressing financial issues, starting by scheduling monthly study sessions with the School Board. This will provide them with improved financial monitoring and transparency into our expenditures which will assist them in their oversight of our budget and finances. We are also instituting fixes to our financial processes and improved guardrails to prevent this from happening in the future. We have made key staffing changes in the budget and finance department this past school year which has already improved our systems and processes, and we are making additional personnel changes moving forward to ensure we have the right team to stabilize our budget now and into the future.

Local Challenges are Compounded by Insufficient State Funding

Our challenges in Bellevue are compounded by the fact that school districts across the state are facing a perfect (fiscal) storm. Student academic, social, emotional, and mental health needs are heightened coming out of the pandemic. There is enrollment instability and general enrollment decline across our region which adds complexity to the budgeting and staffing process. Inflation rates far outpace state funding. And all of this is on the foundation of insufficient public education funding that we receive from the state.

Special education funding from the state nowhere near covers the needs students with disabilities have. And in Bellevue, we value providing for the needs of all of our students, which means we have historically spent more and more of our local levy dollars to supplement services for students. State funding for materials, supplies, and operating costs (MSOCs) has fallen far behind the rise in costs for fuel, food, and insurance due to inflation. Far too many state mandates are simply not funded including transportation for students experiencing homelessness, substitute costs for paraprofessionals, mental health supports for students, and the actual costs of health insurance for part-time employees. As a result, districts across the state and most in our region are grappling with complete financial distress. The bottom line is that the state does not fully fund basic education and overly restricts funds that districts can raise from local sources, hampering our ability to meet student needs and legislative mandates. Our incoming governor has expressed a commitment to returning public education funding to be 50% of our state’s operating budget, which we should all support.

To address these broader funding issues, I am working with the Bellevue School Board, the Bellevue Council PTSA, the Bellevue Education Association, and the Bellevue Schools Foundation to advocate for adequate funding from the state legislature at this upcoming legislative session. I am also working with the University of Washington College of Education to build coalitions with superintendents from across the state to advocate for increased funding for school districts from all corners of the state.

We Can Overcome These Challenges Together as a Family

We have some challenging times ahead as we bring our spending in line with our revenues. Similar to a family sitting together at the dinner table to talk about how to make ends meet each month, we must do the same as a district-wide family. As we make sacrifices now, I want to assure you that we are taking steps to ensure the long-term financial stability of our district.

Regarding the Building of Programs During This Season of Budget Reductions

Although we are cutting budgets, there are a few initiatives that we will continue to work on particularly because they are attracting more students and families to Bellevue. We are building a Welcome Center (using capital dollars), similar to what colleges have, to improve families’ experiences with the enrollment process. We are continuing to build innovative programs such as our language programs, which have been key drivers for our increased enrollment this year. This fall, for example, we are planning to launch an elementary Japanese language program. We are also planning to restart a Parent Partnership Program in collaboration with Bellevue Digital Discovery, where we support Bellevue families who are homeschooling their children. We are also continuing to build out our CTE offerings at high school which have been incredibly popular among our kids.

To the BSD Staff & Families

To BSD Staff – the excellence of the Bellevue School District is synonymous with the excellence of our staff. In the short term, our salaries or supports might be impacted a bit and we may not be able to fund as many positions as we have in the past. This will be challenging for us, but we will approach it in as compassionate and collaborative way as possible. Making sacrifices now will help us stabilize and invest in staff and supports in the future.

To BSD Families – we are going to do what we can to minimize the impact on student learning opportunities, but I need families to know that we are not able to provide our kids with unlimited resources and opportunities. We have to live within our means as an organization. That said, these sacrifices will not impact our ability to continue to provide a world-class education here in Bellevue. I know many families will want to look for ways to support us during this time—this is one of the many things I love about this community. I encourage families to work with the Bellevue Council PTSA to advocate for adequate state funding of public education. I also encourage families to consider contributing to the Bellevue Schools Foundation (BSF). BSF helps us to fund unfunded priorities such as mental health counselors and STEM education.

Looking Forward with Hope and Optimism

And finally, through the challenges, I would be remiss if I didn’t end with a note of hope and optimism. In my hardest moments, the challenges can feel overwhelming. But then, without fail, parents, staff, our school board, and especially our amazing students come alongside me and remind me of ALL of the inspiring things that are happening in our classrooms, on our fields, and on our stages throughout the district. We have so much to be proud of and so much to be grateful for. So, keep coming alongside and let’s build a stronger system for our students, staff, and families together.

Sincerely,

Dr. Kelly Aramaki
Superintendent
Bellevue School District

Learn More About Our State’s Funding Crisis

• The Issues at the Core of Washington State’s Funding Dilemma
• Six Things to Know About BSD Funding and More about Property Taxes