A lean budget to 'rightsize' school finances

La Conner School Board Directors bit the bullet Monday in approving a barebones, $12.9 million annual budget whose target is to realize a positive fund balance by next summer.

This budget is about $1 million leaner than that adopted a year ago and reflects painful staffing and program cutbacks tied to declining student enrollment and loss of federal COVID-19 emergency funds.

The 2023-2024 budget was developed by Director of Finance and Operations David Cram, who was given the mission of restoring the school system’s fiscal health when he returned in March.

It hasn’t been easy, he told board members.

“I’ve been doing school finance for 27 years,” Cram said, “and this is the most challenging four-month period I’ve had.”

Last year’s budget, when Cram was working at the Marysville School District, painted a more robust financial picture. But Cram’s review of it found apparent inaccuracies.

“I don’t know if the ’22-23 numbers are accurate,” he said. “I don’t feel confident with those budget numbers.”

Nor was unused state “mascot money” adequately accounted for. Some $500,000 must be returned to Olympia after replacement of non-compliant Braves logos mandated by legislators and Swinomish Indian Tribal Community officials.

The excess mascot funds made revenues appear larger.

Cram projects that the new budget will land the district in the black – though barely – at the end of the next fiscal year.

“We will have about $100,000 left,” Cram said, “which gives us zero flexibility.”

He expressed confidence in rebounding financially with prudent budgeting. The board’s policy of maintaining a fund balance equal to 10% of the budget, despite anticipated declines in student enrollment, can be met, he said.

In the fall, 490 full-time K-12 students will enroll, down from 600 prior to the pandemic, he estimates. He projects a student population of 448 in 2026-2027.

“We’re going to gradually get ourselves back in a strong position,” Cram insisted. “We’re on the right track. We’re getting ourselves back on a strong foothold.”

Board President Susie Deyo said the budget, while painful at the outset, is a first step toward “right-sizing our district.”

Deyo has worked tirelessly to market the district to families with students attending nearby parochial and non-aligned campuses. She lamented that rising housing costs contribute to a declining student population. And student enrollment, she and Cram pointed out, is the main driver of state funding support.

“We used to have a busload of kids out of Shelter Bay,” Deyo said. “We don’t now. We encourage Shelter Bay and Swinomish to come to an agreement (on a new master lease). It’s impacting our enrollment. People can’t get a 30-year note in Shelter Bay. And housing in the Town of La Conner is very expensive. We’d hoped that the new housing would bring in more families. But buying an $800,000 home is hard for young families.”

Deyo said she has repeatedly received positive input from people regarding academic and extracurricular programs.

“But,” she said, “they say they can’t afford to live in the district.”

“It’s difficult,” board member John Agen said, “for 30-year-olds with kids to afford housing here. It requires a significant income. The whole La Conner area has exploded in terms of housing costs. That has impacted our enrollment and COVID impacted everyone’s enrollment.”

One potential cost-saving measure this fall – a kindergarten/first grade split classroom – will be reconsidered.

Elementary teacher Judy Zimmerman told board members that while split classrooms aren’t unusual, a kindergarten/first grade split wouldn’t be ideal.

“A split classroom shouldn’t be the first experience for our students,” Zimmerman said. “Kindergarteners need time coming in to learn the lay of the land. They’re not first graders. Creating a second grade/third grade split would be better.

“I understand that hard decisions have to be made,” said Zimmerman. “I know we’re trying to dig ourselves out of a financial hole.”

She fears that families with kindergarten students might enroll their children in other districts if La Conner runs a split kindergarten/first grade class.

“We have to be selective where a split goes,” La Conner Schools Superintendent Will Nelson acknowledged, noting that there is already a fourth grade/fifth grade classroom at the elementary school.

“I hear what Judy is saying,” Nelson said. “She’s absolutely right. I hear what she’s saying. We’ll look with (elementary principal) Heather (Fakkema-Hovde) to see if we have any other options.”

Cram offered a positive closing note reporting a $1.5 million grant to upgrade the high school heating, ventilation and air conditioning system.

“That’s the best news of the day,” he said.

Cram, in turn, received kudos, with Zimmerman asking Cram to forestall any thoughts he might have of retiring soon.

Board member J.J. Wilbur said, “He’s a savior. This is the best we’ve understood the budget in years.”