Forecast shows Yelm School District finishing year with shortfall of $4.76 million in general fund

After a 40-minute presentation from Yelm Community Schools Chief of Finance Jennifer Carrougher on Thursday, Aug. 28, the YCS Board of Directors unanimously approved the 2025-26 budget, which includes a projected shortfall of $4,764,547 in the district’s general fund.

School board member Bill Hauss was absent and excused from the meeting, and board members Denise Hendrickson, Frank King, Casey Shaw and Debbie Edwards each voted in favor of the upcoming budget.

Additionally, the associated student body fund will conclude the school year with $412,016, while the debt service fund will finish with a balance of $4,331,025. The capital funds project budget will finish the upcoming school year with a balance of $11,783,096. The fifth and final fund included in the budget is for transportation and vehicles, and it will finish the school year with a balance of $1,095,551. 

Carrougher began the YCS board meeting with a public hearing about the upcoming budget, which has been reviewed and approved by the state Office of the Superintendent of Public Instruction (OSPI). She noted the district projects $90.3 million in revenue and $99.6 million in expenditures this upcoming school year.

“We have a transfer out to pay for debt, nonvoter debt, that we have that goes to the debt service fund. That leaves us with a negative $4.7 million budget. We will not be submitting a balanced budget this year, similar to last year, but it’s a little more significant as you can see,” Carrougher said. “When we’re talking about our ending fund balance, it’s not funds that we have access to. Some of that includes inventories. It includes pre-paid items we’re paying for the following year in the current year. It includes things that are restricted. We have, for example, some carryover dollars. We have carryover in typically our CTE program. It’s restricted for that program next year. We have carryover in some of our federal programs.”

She added that debt service is also restricted. Additionally, Carrougher noted that while looking at the ending fund balance, they really need to focus on the “unassigned fund balance.”

“That’s really our deficit. That’s almost $6.1 million,” Carrougher said.

She also highlighted the unassigned minimum fund balance policy, which requires YCS to set aside 5% of expenditures from that year. Carrougher said this is approximately $5 million.

“So if we were to restore that fund balance, we have the resolution to temporarily reduce that amount because we’re in a financial situation,” Carrougher said. “We will need to restore it, and if we restored it, that would leave us with approximately an $11.1 million deficit.”

The chief of finance also highlighted some of the budget’s assumptions and unknowns. One of the biggest variables is the upcoming Tuesday, Nov. 4, general election, when YCS will run a fourth levy attempt. This time, the rate is set at $1.30 per $1,000 of assessed value. She noted the $4.76 million deficit in the budget assumes the levy attempt is not passed in two months. She also highlighted enrollment fluctuations, which serve as another large revenue impact for the school district.

“We can’t budget funds that we are not sure we’re going to get. Those are not included,” Carrougher said. “Enrollment fluctuations — these first two items are the largest revenue impacts — we just don’t know what’s going to happen. We projected a flat enrollment based on roll up, and we removed transfer students. As you’ve heard, we’re not accepting transfers right now until we know how many students we’re going to have at the beginning of school.

“The budget has assumed no new revenue streams. Sometimes we can apply for grants that were unknown at the time of the budget, but right now we don’t know of any,” she added. “Legislative session impacts — as you know we received very little help for 2025-26, and we don’t expect that we’re going to get any significant help anytime soon. Food service participation and transportation ridership — the budget assumes those are staying the same as the current year and we don’t have a reduction or increase in those numbers. Inflation is obviously an unknown.”

Carrougher also highlighted the enrollment budget, and noted the district is doing roll up and looking at no transfers. Last year, in the 2024-25 school year, YCS budgeted 5,600 students and the actual amount was 5,507 students. The 93-student difference reduced funding for the district last year.

“We get about $10,000 per student for basic education. We’re doing a flat enrollment based on current enrollment, not what was budgeted,” she said.

Carrougher noted YCS will be closely watching enrollment numbers across the district throughout the first four days of school. She said a student will be considered enrolled if they attend one of the first four school days.

“We will be really closely monitoring that, and looking at whether there needs to be any staffing movements or additional reductions on positions that we haven’t filled yet,” Carrougher said.

Carrougher also highlighted the general fund revenues and wanted to provide a visual of where most of the funding comes from. She noted that 92% of YCS’s funding for the upcoming school year is provided by the state of Washington. In years the district receives levy dollars, the state provides around 80% of funding with levy dollars add an additional 12%.

“In addition to the basic proportion of what we get based on enrollment, we also get money for special education, pupil transportation, child nutrition, English learners, advanced academics in those programs that we operate outside of the basic classroom construction,” Carrougher said.

She added that the general fund pays for basic education, and is the majority of what the YCS revenues pay for.

“That’s all of our general classrooms, teachers, counselors, instructional para support, and that is only for the general classroom,” Carrougher said. “It doesn’t include our other programs like special education or CTE. You’ll see those listed separately. It does include our alternative learning and our open doors program.”

She noted that it pays for classified salaries and benefits, which equates to 85% of the total budget. In addition, certificated instructional staff receive an average salary of $109,000, though the state only allocates $85,000 per staff member.

“That’s 85% of our total budget. 85% comes out of staff,” Carrougher said. “The other 15% is for what we call material supplies and operating costs (MSOC). That includes purchase services, which we contract a lot of staff in our special education program because there is shortage of staff in many of those areas. That’s included in MSOC.”

Additionally, it pays for insurance, utilities and Running Start payments. Carrougher also noted that athletics cost $1.5 million, and previously was $1.8 million with transportation included.

Athletics are also funded through levy money, according to Carrougher.

“That is not funded by the state at all. That is 100% levy funded,” Carrougher said. “Salaries and benefits — we pay over $10 million more in salary and benefits that the state allocates us for those salaries.

“What are our options to cover our excess costs? The state gives us money, and we spend more than what they give us. We have a couple of options. We hire a reduced number of staff below what the state allocates us. They allocate us a certain number of staff and we don’t have the money to pay all of those staff. The other option is to use levy dollars, or a combination of both. We typically use our levy dollars for a majority of that,” Carrougher continued. “If we don’t have levy funds, I think it’s pretty clear that we only have one option left and that’s to reduce more staff.”

Shaw asked Carrougher about the 5% per year expenditure increase and how that’s projected. She told the school board member that it’s based on a 10-year trend of expenditure increases in YCS.

Superintendent Chris Woods added that he believes Shaw is asking if the increase comes from MSOCs, and the cost of students.

“Those are the two expenses that rise every year,” Woods said. “As we’ve seen, the state has not kept up with inflation. Not even close.”

Carrougher added, “We have already identified over a million dollars in staffing and open positions that are being held, depending on what happens in November. Even if we pass our levy, we know we still have to make reductions.”