Tri-City students still missing after COVID. Kennewick levy loss a budget double whammy
The Kennewick School District will operate with a budget deficit for several years because of the financial strain placed on the district from a year without local funding and slow enrollment recovery after COVID.
The district will be able to balance its budget with general fund reserves and COVID stimulus money, as well as meet state law requirements, but it’s facing a long-term financial hit.
A budget workshop held earlier this month included projections showing that Kennewick’s general operating fund will bleed about $5 million to $10 million annually over the next four years, shrinking the balance by about one-third over that time.
Vic Roberts, Kennewick School District’s executive director of business operations, said they’re looking better this next upcoming school year on paper than they did this last school year.
During the 2022-23 school year, they operated at a deficit of about $15 million due to the immediate shock of missed levy dollars.
The situation underscores larger budgetary stresses school districts around Washington state are experiencing with reduced enrollment, changing student demographics and expiring pandemic-era support funding.
But Kennewick’s problems are unique in that voters chose twice in 2022 to not renew local levy funding, which also included crucial state-matching funds. Altogether, the district had to shift funds around to cover a hole the size of $34 million this year.
“It is a concern,” Roberts said. “The (legislative) session did give a little bit of relief here and there, but not what’s needed. It’ll definitely be challenging over the next two, three years for all school districts.”
The district made cuts amounting to about $5 million in the current school year budget, which mostly affected programs and new curricula adoption. Despite those cuts, the budget still shows Kennewick in the red by about $15 million this year.
“It’s going to be a while before we can think about putting that back,” Roberts said. “If we do any curriculum, it will have to come out of ESSER (Elementary and Secondary School Emergency Relief).”
Kennewick will begin receiving a reduced amount of local funds in 2024 after voters agreed in February to approved the operating levy.
No staff cuts are expected next school year, Roberts said, but the district will continue to look at not filling some positions that will be vacated. Unfilled retirement positions would account for about $500,000 in savings next year.
Enrollment and special education
While Tri-City schools added hundreds of students throughout this school year, enrollment is still not back to where it was prior to the COVID pandemic for Kennewick and Pasco.
Kennewick is budgeting to serve about 18,445 students next school year. In 2019, the district was serving about 18,700.
Kevin Hebdon, Pasco School District’s executive director of fiscal services, said they lost about 325 students when COVID hit. Their school district receives about $9,390 from the state per pupil, amounting to a loss of $3 million for the district, and they’re still rebounding.
Pasco is early in its budgeting process and on-track to pass a balanced $328 million budget, Hebdon said.
Clinton Sherman, Richland’s executive director of financial services, said they lost about 400 students during COVID but have mostly rebounded to pre-pandemic numbers.
“We are right where we were, within about 40 students,” Sherman said at a meeting earlier this month.
Public schools largely pay for education through a funding formula based on student enrollment. Each student enrolled qualifies a school district for thousands of dollars in basic education funding, plus any additional funding from the state or federal level that a student may qualify for based on learning circumstances, such as special education or low-income status.
While public schools in the Tri-Cities lost hundreds of students due to the pandemic, short-term enrollment projections tied to annual budgeting surpassed expectations this year. Richland has 267 more students than expected and Kennewick there are an additional 114 students.
Tri-City school districts will receive an additional $10.8 million in special education funding starting next year because of increased enrollment and an increase up to 15% in the funding cap passed by the Washington state Legislature.
“Special education is probably the biggest gain for us,” Hebdon said. “The reports back from the hill was that there wasn’t much of an appetite from legislators to look at K-12 general education… I kind of got the sense that we were on the back burner.”
In all, Washington lawmakers approved $417 million in new support for special education during this biennium, and nearly a billion dollars over the next four years — although the immediate need is closer to $900 million.
ESSER funds
In the coming months officials will need to figure out how to spend the last of their ESSER dollars, which are special one-time federal funds that were dished out to school districts so that they could respond to the pandemic.
Richland, Kennewick and Pasco were awarded about $137 million total over three cycles. So far, about two-thirds of that has been spent or earmarked by the districts, the Edunomics Lab at Georgetown University reports.
They have until September to spend ESSER 2, and until September 2024 to spend the remaining ESSER 3.
Kennewick will use $15 million in ESSER this year and next year to cover lost revenue from its failed levies.
Pasco spent $21 million alone in the past eight months on HVAC improvements, staffing for virtual learning options, tutoring to address learning loss and buying a building along Court Street to accommodate mental health programs, health aids and tutoring.
Hebdon said Pasco will have about $2 million remaining to spend next year.
Sherman said Richland will have spent its remaining ESSER dollars with the conclusion of summer school.
Districts will likely look to cut some staff positions that were funded by ESSER if they cannot move them under the umbrellas of general education or levy funding.
