Jacob Dimond / jake@yelmonline.com
Yelm Community Schools Superintendent Chris Woods and Chief of Finance Jennifer Carrougher were very direct about the ramifications of a fourth consecutive levy failure in the upcoming November general election during a school board meeting on Thursday, Aug. 28.
Carrougher first highlighted several budget datapoints, including a four-year history of ending fund balances from the last four school years, and a projection of the upcoming school year. During the 2021-22 school year, YCS finished with an ending fund of $8,611,802.
The following school year, in 2022-23, the district finished with an ending fund of $6,586,473. In the 2023-24 school year, the ending fund took a small dip and finished at $4,979,114. Carrougher noted the two reductions in the 2022-23 and 2023-24 school year were primarily due to an Elementary and Secondary School Emergency Relief Fund cliff due to a federal influx of COVID-19 relief disappearing. Additionally, the school no longer received “stabilization funds” in those two years.
At the end of the 2024-25 school year, the fund slightly decreased to $4,897,756. Those funds, according to Carrougher, included $6 million of levy and Local Effort Assistance (LEA) dollars that YCS collected in the first half of 2024.
The budget is not projected to finish in the green at the end of the 2025-26 school year, with estimates showing a shortfall of $4.76 million.
“I want to talk about some other things that contributed to the declining fund balance. Levy failures, underfunding of basic education. As we’ve heard a lot, the state is not fully funding basic education. That includes salaries. The salaries that we pay to stay competitive and recruit and retain qualified staff is above and beyond what the state provides to us. We also subsidize our special education program above what the state allocates,” Carrougher said. “We have had large reductions over the last three or four years in our Local Effort Assistance funding. That is what we receive when we have a levy. Cost and services keep going up, inflation. We have had flat enrollment the last couple of years, but we’ve had reduced enrollment since pre-COVID. Every year we have reduced enrollment and reduced our fund balance that much more.”
She also projected a four-year forecast for the YCS ending fund balances, assuming the levy passes at the $1.30 per $1,000 assessed value rate, there’s flat enrollment, no additional cuts and including the 5% increase per year based on trends in expenditure increases.
With those variables, the 2025-26 ending balance would be $1,155,179, and the 2026-27 ending fund balance would be $1,216,492. In the 2027-28 school year, the fund would end at $231,509, and dip below zero in the 2028-29 school year at negative $2,481,919.
“What you can see in the last two years is that amount goes down quite a bit. By the fourth year, we’re at negative $2.4 million,” Carrougher said. “What this is showing us is that the $1.30 per $1,000 of assessed value is not sustainable. We’d need to start looking at more significant cuts moving forward if we retain that rate.”
Additionally, Carrougher provided data from a four-year forecast if the upcoming November levy were to fail, but all other variables from the first example remained the same. Without levy funds, YCS will conclude the 2025-26 school year with an ending fund of negative $4,764,574.
In the 2026-27 school year, YCS would finish with an ending fund of negative $16,319,185, and negative $29,504,503 in the 2027-28 school year. Finally, in the 2028-29 school year, it was projected that YCS would finish with an ending balance of negative $44,587,156 without levy assistance.
“If you look at the end of the four years, we’d have a negative $44,587,156 fund balance. That obviously shows it’s not sustainable to operate without a levy,” Carrougher said. “It’s very important to know we’re constantly, continuously monitoring our fund balance. Additionally cuts will need to be made. Even at the $1.30, we know that’s not sustainable. We are going to have to make additional cuts.”
School board member Casey Shaw asked Carrougher what actually happens to YCS if they don’t pass a levy over a four-year range.
“In actuality, what would actually be happening? It would be worse, right? We can make a whole bunch of cuts and we’re still not anywhere close to balancing the budget,” Shaw said. “What is the actual situation that could happen? We would never go $44 million in the hole and still be in existence, right?”
Woods told Shaw that without levy dollars, the bottom line is YCS will not be able to operate.
“We cannot afford to operate unless we have levy dollars. There are districts that are making significant cuts like we are, with levy dollars,” Woods said. “That levy, at $1.30, is not getting us back to making up the deficit and replenishing the 5% as policy states ending fund balance and reserves. That’s just getting us to a place we’d still have to make some cuts to get to a balanced budget. That’s not even the fund balance or the reserves. That’s not putting anything back in there. What we’re doing is we’re going to our voters to ask for something, quite honestly, very minimal.”
Woods also highlighted the district’s regularly scheduled meeting with OSPI and the Educational Service District around binding conditions. He noted YCS meets with them quarterly, and at the end of the year.
“We talk about what we’re doing, what measures we are taking in order to try to balance the budget,” Woods said. “We share everything we’re sharing here, in addition to all the other cuts and positions we are holding currently, and not filling as a result of that.”
If YCS gets to a point where they cannot balance the budget, OSPI becomes involved with “financial oversight” and puts together a committee with representatives from OSPI and other “financial experts.”
“They come in and continue to meet with us, but look even closer at the budget. They’ve been looking at it with us all along. For example, we have to submit our budget to ESD and they have to OK it before it goes on to OSPI. They have to OK it before we even bring it to you guys to approve,” Woods said. “From financial oversight, from there, they create the committee and we work closely with them. They make recommendations around spending, cuts. If we still can’t get to a balanced budget, at that point they take over oversight. They make decisions around spending. They make decisions around allocations for hiring. They are essentially the fiscal agent for Yelm Community Schools.
“If we are still not able to balance the budget, with again, without levy dollars it will not happen, what happens at that point is dissolution and that’s where you talk about Yelm Community Schools becoming part of another district,” Woods said. “Whether that’s Bethel School District or North Thurston (School District), Yelm Community Schools becomes part of them. And then you inherit whatever tax payment they have. It’s no longer our decision here in Yelm until the next election. At that point, you would be subject to whatever tax payment that school district has. Very directly, the bottom line is without levy dollars you do not operate with a deficit of $44 million. You can’t. We would be in a situation where decisions would be made for us. We’re not talking a few hundred thousand dollars. We’re talking millions of dollars. This is potentially our first year without levy dollars.”
He said what YCS has discovered, along with many other school districts across the state of Washington, is that the funding system for public schools is broken. He believes that’s become clear across the state, and said Bellevue School District being in binding conditions is a prime example of the statewide issue.
“The funding system is broken, and there’s no way you can operate without levy dollars without the funding model at the state being revamped,” Woods said. “That’s just where we are. There are going to be more districts in the same situation we are.”
Additionally, Woods highlighted what might be looming immediately after the November election if the levy fails. He noted that winter and spring sports within YCS could be part of cuts with a fourth consecutive failure. Sports within YCS costs roughly $1.5 million, or $1.8 million with transportation included.
“If it does not pass in November, these things would be set in motion immediately. We would be looking at making immediate cuts for the remainder of the school year. Obviously we have collective bargaining agreements we have to honor, but anywhere we have to make cuts — for example, it would be potentially that we cut sports for the rest of the school year, as far as winter and spring season,” Woods said. “We would cut any other extracurricular activities, and even some staffing cuts where we are able and where the collective bargaining agreement allows. At the end of the day, we have to pass the levy.”
The next YCS board meeting is set for 6 p.m. on Thursday, Sept. 11, at Lackamas Elementary School, 16240 Bald Hill Road Southeast.
