Dear BISD Community,

I apologize in advance for the length of this letter. However, it is a very important update regarding the projected budget deficit amount BISD needs to close for 2025-26 in order to create a balanced budget. This message also provides answers to several important questions. 

For the 2025-26 school year, we anticipate needing to reduce our budget by $6.5-$7 million dollars. I want to acknowledge the enormity of this amount and that, yes, this will mean impactful reductions. This will be a very tough next several months, and please know that I am committed to making thoughtful decisions in the most transparent and compassionate manner possible. 

1. How did BISD get into this financial situation?

We are in the midst of a perfect storm — years of deficit spending, a few years of limited budget oversight, several fiscal errors and a slow and steady decline in enrollment — have led us to this point. However, the biggest culprit in our financial crisis is how public schools are funded in the state of Washington. The state and federal funding model is broken, causing BISD’s expenditures to outpace our revenues. (See more about this in question 13.) 

For 2025-26, based on current funding formulas and projected lower enrollment, we anticipate receiving $66.3 million in revenue, and our anticipated expenses (if we make no adjustments) equal $72.8 million. This difference between anticipated revenues and expenditures is $6.5 million.   

2. How do you project enrollment? Why do you anticipate it will be lower than this year? How does this impact BISD’s revenues? 

To project enrollment, BISD looks at the three-year average cohort survival rate (meaning, for example, how many 1st graders roll up to 2nd grade, etc.), plus factors in the birth rate (which is low for incoming kindergarten students) and the most recent demographer’s report. For 2025-26, the demographer estimates a decrease in BISD’s enrollment by 55-120 students. 

After consulting with the District Budget Advisory Committee (DBAC) and the Finance Department at Puget Sound Educational Service District (PSED), we set our enrollment projection to be down by 85 students for 2025-26. While this enrollment projection is very conservative, we have very little room for error. If we miss the mark and end up with fewer students than projected, we would end up in a negative budget position for the 2025-26 school year and be in binding conditions.

Based on the loss of 85 students, we need to plan for $986,000 less in revenue, as each student represents a per-pupil rate of $11,600. NOTE: This loss in revenue is already factored into our projected budget deficit for next year. 

3. What other pieces need to be factored into next year’s budget? 

We need to plan for an increase in inflation in two key areas — utilities and BISD’s property & liability insurance. Our insurance premium through the Washington State Risk Management Pool is estimated to increase by 25% next year.  Combined, we expect these increases to amount to approximately $368,000.  NOTE: This increased expense is already factored into our projected budget deficit for next year. 

In addition, because there are so many unknown factors that contribute to our overall budget, we need to allow for variability by providing a range, which is why we state the amount of $6.5 to $7 million instead of stating a firm figure. 

4. In order to close the budget gap, are you considering school closures? 

No, we will not be reconsidering school closures due to the following reasons:

• While the potential loss of enrollment is contributing to our budget deficit, it is certainly not the only, or even the main reason, that we are currently facing these challenges. If we did not predict a decrease in enrollment for next year, we would still need to reduce our budget by approximately $5.5-$6 million.

• While we anticipate a decrease of 85 students next year, this decrease is distributed across our K-12 schools, not just one school or grade band. We do not have a small enough student population to support a decrease in our overall number of school buildings. As we discovered last year, our students simply do not fit in a way that would allow for an equitable educational experience. 

• While we expect another lower-than-typical enrollment for 2025-26, forecasts project that we should see an upward trend in kindergarten enrollment beginning in the 2026-27 school year.

• Building closure does not save as much money as once was originally thought. It is important to remember that the number one way to reduce spending in a school closure scenario is by reducing the number of staff positions. Any potential school closures or reconsolidations considered need very close to the same amount of staffing as they currently have due to the overall number of students. 

5. Is it even possible to make reductions in that amount without drastically changing the school day for our students?

Yes, it is possible, but that is not to say that it won’t be incredibly difficult. One of the most important things that we can do is to take a step back and think about what we offer our students each day, and if there is a different framework or model that we may have not considered. We also need to look closely at ways in which we can make reductions across employee groups, school levels, programs and departments. Additionally, new sources of locally generated revenues are being evaluated to offset the reduction amount. For example, an increase in and/or the creation of a more robust student fee structure and an all-day preschool offering are being considered. 

6. What will the reduction process look like?

It will take a high level of coordination between our building and district administrators, labor partners and the DBAC. Meetings with these groups are articulated in a carefully developed schedule between now and April. Additionally, feedback from Focus Groups is being categorized and shared with each of these groups so that we can understand the values held by all stakeholder groups and learn about ideas not yet considered for reductions and/or revenues. Essentially, all possible ideas (as long as they adhere to our legal and compliance requirements) will be explored. We will look at what is operationally feasible and has the least impact on our students. 

Ideally, we will have a solid idea of the necessary Reduction in Force (RIF) by the April 24th School Board meeting. This will allow us to have individual conversations with impacted staff members in early to mid-April, thus allowing each person as much notice as possible to find future employment. We will provide timely and transparent updates as often as possible, taking great care to respect the privacy and confidentiality of our employees in such a small and community-focused district.

7. Are you also planning to find ways to increase revenue to help offset the number of reductions?

Yes, a few of these were mentioned above, and we have also heard amazing ideas as a part of our Focus Groups and online survey! 

8. What happens if we have higher than anticipated enrollment?

That would be a great problem to have! In a K-12 system, students distributed across our grade levels may or may not lead to a need to increase staffing. If we need an increase in staffing, this would likely be accomplished through the recall process of staff members who received a RIF notice. 

This increase in enrollment would mean additional revenue from the state, which we typically receive in January. Due to our budget crisis, we most likely would be able to appeal to OSPI for an emergency apportionment payment in October, which we would then put towards building back up our ending fund balance. 

9. Conversely, what happens if we lose more than 85 students? 

As I mentioned in the answer to Question 2, If we miss the mark and end up with fewer students than projected, we would end up in a negative budget position for the 2025-26 school year and be in binding conditions.

10. What about our Cash Flow issues and the inter-fund loans that we will need to take against our Capital Fund?

We anticipate taking a minimum of two Capital Fund loans in the 2024-25 school year. Currently, we anticipate needing to borrow in February and May for a total of approximately $4 million due to the uneven apportionment distribution throughout the fiscal year. 

The good news (yes, there is a small sliver of good news!) is that our mid-year corrections are working and we currently spend an average of 3% less per month. We hope to pay the loan back (or a large percentage of it) by the end of this fiscal year. 

11. I read about the sale of BISD land in the Grand Forest. Why are you selling the land and where does the money from the sale go?

The land was purchased in the early 1990s in the event that we needed a second public high school on Bainbridge. Unfortunately, we all know now that this is not the case. The proceeds from the land sale must go into the Capital Fund, not the General Fund. This means that these funds will not directly “solve” or offset our budget deficit. They will, however, allow for our Capital Fund to have enough capacity (as we are borrowing approximately $4 million in inter-fund loans) for unexpected essential renovations. Additionally, we want to reaffirm our shared community value of keeping public land public. 

12. What will the 2025-26 school year budget forecast be after these reductions are made?

Making these reductions will allow us to have a balanced budget for the first time in many years. As mentioned above, our goal is to pay off as much of our Capital Fund loan as possible by the end of the 2024-25 fiscal year, or early in the 2025-26 fiscal year. In our reduction plan, we are not accounting for any NEW revenue from the state that may occur as a part of this legislative session. Any new revenue received will go toward paying off what remains of our inter-fund loan and building back up our fund balance to a healthy amount. Rebuilding our fund balance to this amount will take time, likely several years of careful planning, monitoring and systems work. 

13. You mentioned earlier that the funding model for K-12 schools is broken. Can you provide more information about this? 

If you look at gaps in state funding in our “Big Three” areas below — Special Education, Materials, Supplies & Operating Costs (MSOC) and Transportation — BISD has been underfunded in these three areas by $20.25 million since 2020. BISD is not the only district in the state that is underfunded —- all 295 districts in the state are focusing on these three areas in an effort to demonstrate the importance of fixing the school funding model during the legislative session. 

 

14. Is there anything I can do to help? 

We are so glad that you asked! 

• Advocate for Additional Funding from the State: This Week In Olympia (TWIO) is a weekly newsletter that communicates what is going on in the state capitol during the current legislative session and is a great resource. In addition, you can connect to local advocacy efforts by filling out this form. 

• Donate: Bainbridge Schools Foundation (BSF) exists to bridge the gap between what BISD receives from the state and the actual cost of educating our students. We are grateful for our partnership with BSF and the incredible work it does in supporting our district. 

I want to reiterate that I know this is a lot of information to absorb, and I want to honor the fact that the reduction amount is incredibly overwhelming. I don’t know exactly what reductions will be made or what revenue-generating ideas will stick. What I do know is that we will get through this together — just as we did during the pandemic and just as we did last year during our time of potential school closures. There is no doubt that this will be a very difficult few months, but our ability to come together will carry us through. Let this not be a time where we become divided or enshrined in mistruths. Let this instead be a time when we collaborate, support one another and work side-by-side on behalf of each of our students and our entire BISD community. 

In care & solidarity,

Amii Thompson
BISD Superintendent