Budget Recovery
At a Glance
Low point (Oct 2024)
−$35,400 projected fund balance
Reductions certified (May 2025)
$6.8 million
Binding conditions
Avoided
Interfund loan
Repaid in full, Aug 2025
Supplemental levy (Nov 2025)
Approved by about 70% of voters
Ending fund balance 2025-26
$X.X million [VERIFY]
From the Brink to Solvency
Two years ago, Bainbridge Island School District was close to state financial oversight. Today our general fund is positive, our interfund loan is repaid, and we are rebuilding our reserves.
This page tells that story: how we got here, what it took to recover, what it cost, and what we are doing to make sure it does not happen again.
We kept local control. By making $6.8 million in reductions ourselves in spring 2025, BISD avoided binding conditions and kept these decisions here, with our community and our labor partners.
Good to Know
What Are Binding Conditions?
Washington districts must end each year with a positive general fund balance. A district that ends negative, or cannot adopt a balanced budget, is placed under binding conditions by OSPI, and Puget Sound ESD appoints a financial administrator to oversee its budget decisions.
Why It Mattered
Decisions Made Here
Under binding conditions, the district must meet set financial targets, and a district that cannot meet them within three years can be found financially insolvent. Avoiding that path kept reduction decisions in local hands.
How We Got Here
Three forces came together:
State underfunding. Since 2020, state funding fell about $20.25 million short of what it actually costs us to provide special education, transportation, and materials, supplies and operating costs. Special education alone accounted for $11.25 million of that gap. We covered the difference with levy dollars and reserves until the reserves ran out.
Declining enrollment. State funding follows students. Slow but steady enrollment decline meant less revenue each year, while fixed costs like utilities and insurance kept rising.
Gaps in our own financial oversight. We own this one. In earlier years, some federal grant revenue was counted twice and some expenditures were not fully tracked, so our projections looked healthier than reality. When those errors were found, the picture changed quickly.
Timeline
| Oct 2023 | The district warns families that it can no longer use reserves to avoid cuts and will need to reduce spending by up to $4.5 million for 2024-25. |
| Mar 2024 | Kim Knight is appointed to lead district finance and begins a line-by-line review of the budget. |
| Oct 2024 | The low point. The review shows 2024-25 is on track to end at negative $35,400. The district freezes hiring, spending and travel, and borrows from its own Capital Projects Fund to make payroll. |
| Jan 2025 | Working with DBAC and Puget Sound ESD, the district sets a deliberately conservative enrollment projection (85 fewer students) and announces a roughly $6.6 million reduction for 2025-26. |
| Spring 2025 | BISD advocates in Olympia for school funding. The Legislature raises the levy lid, allowing districts to collect more under existing levies. |
| May 8, 2025 | The turning point. The Board certifies $6.8 million in program and staffing reductions, avoiding binding conditions and a second interfund loan. |
| Aug 2025 | 2024-25 closes with a positive fund balance of just under $1 million. On August 29 the Capital Projects Fund loan is repaid in full, with $54,000 in interest returned to the general fund. |
| Nov 2025 | Island voters approve a three-year supplemental Enrichment & Operations levy, with about 70% voting yes. |
| Aug 2026 | 2025-26 closes with a fund balance of $X.X million (X.X%) [VERIFY]. The Board adopts a 2026-27 budget built around the new Strategic Plan, staff compensation and continued restoration of the fund balance. |
Our Fund Balance, Year by Year
The fund balance works like the district’s savings account. Board policy sets a minimum of 5% of expenditures, roughly three weeks of operating cash.
| 2023-24 Actual |
|
$4.15M |
| 2024-25 Projected, Oct 2024 |
below zero
|
−$0.04M |
| 2024-25 Actual |
|
~$1.0M |
| 2025-26 Actual |
|
$X.XM [VERIFY] |
Bars are scaled to $5 million. [VERIFY: set the 2025-26 bar width to (balance ÷ 5,000,000) × 100%.] Source: BISD annual financial statements and Board budget presentations.
What It Cost
Because about 85% of our budget is people, there was no way to close a $6.8 million gap without affecting staff. We tried to spread the impact so that as few people as possible lost their jobs outright. Many reductions came as shorter days, fewer contract days, school-year-only contracts, part-time positions or furlough days. Some colleagues took on added responsibilities when positions went unfilled.
Sections were closed where enrollment no longer supported them, and some programs were reduced or moved to community funding. Sixth-grade band, for example, continued with support from band boosters and the Bainbridge Schools Foundation. These were real losses for real people, and we are grateful to everyone who carried this with us.
Making Sure It Doesn’t Happen Again
In Place Now
Safeguards
- ✓Regular public reporting on revenue, spending and fund balance at Board meetings
- ✓Monthly community review by the District Budget Advisory Committee
- ✓Conservative enrollment projections, so surprises add to reserves instead of creating a hole
Looking Ahead
Rebuilding Reserves
Restoring the fund balance to at least the Board’s 5% policy is a guiding principle of every budget we adopt.
With the supplemental levy, projections show a fund balance of about 9%, roughly 35 days of cash, by the end of 2028-29.
“Like districts across Washington, we are closely tracking regional birth rates and housing costs, but thanks to significant collaborative concessions from our teachers and labor partners, we’ve stabilized our finances. We’re in a fortunate position with a balanced budget that absorbs enrollment fluctuations without sacrificing authentic learning experiences where every student is seen, challenged and supported.”
— Bridget Lockett, BISD Communications Specialist
Thank you, Bainbridge. We came through this with local control intact because staff absorbed hard changes, families stayed with us, and island voters chose to invest in their schools. We will keep showing our work.