An expected, multi-million-dollar budget shortfall has Sequim School District leaders preparing for cuts to staff and making significant changes to its operations.

Sequim schools superintendent Regan Nickels said the district is looking at an approximate 7.7 percent budget cut — or about $3.6 million — as district staffers prepare the expenditure and revenue plan for the 2023-2024 academic year.

The district on March 7 sent surveys to school families, staffers and the community at large, seeking their views on what the district should retain, where cuts could be made and where there are “creative” opportunities for revenue. See the survey at surveymonkey.com/r/7ZZ8ZMN.

“We have quite a bit of latitude [about spending], so it’s about our priorities,” Nickels said.

In addition, she said district officials will be hosting two Budget Community Forum events about possible changes and budget reductions. The first was set for Monday, March 13, and a second is planned for 5 p.m. Monday, March 20 — just before the board of directors’ regularly scheduled meeting at 6 p.m., in the Sequim High School library, 601 N. Sequim Ave. (childcare will be available).

District officials, Nickels said, are already identifying “priority” areas that should be maintained — including special education, learning assistance and similar programs, extended day learning and increased achievement — while looking at eliminating “redundancies,” looking at department-by-department restructuring, and keeping staffing cuts as far away from student instruction as possible.

“I think the way we’re going to do it is thoughtful,” she said Monday.

“I appreciate every idea … because we’re going to need them all,” board director Michael Rocha noted.

Shortfalls

The budget shortfall isn’t only a Sequim problem, Nickels noted at the Sequim School Board meeting on March 6. In the fallout of the COVID-19 pandemic, school districts received (ESSER) funds, short-term funding distributed to support districts through the pandemic.

But the funds were one-time revenue streams that will soon run out.

“This shortfall is common across our state and nation,” Nickels said.

Sequim will have spent more than $7million ESSER funds by the end of the school year.

These funds, Nickels noted in an email to district families on March 4, have helped in a variety of ways in the past two years, enhancing staffing levels and increasing health and mental health services (such as more nurses, health room assistants and social emotional/behavioral health specialists, etc.).

The district will have about $1.34 million remaining, though these funds have “strings attached,” she said at the March 6 meeting.

“We’re going to maximize the latitude of how these funds are spent,” she said, though she warned board directors that any ESSER funds spent to keep staff are not sustainable because they are one-time revenues.

“ESSER [funding] allowed a lot of districts to continue business as usual,” Nickels said. “Now it’s just the collision.”

The district has used its ESSER funds wisely, board director Larry Jeffryes said, “but we’re going to have ongoing budget issues.

“We need to get an idea of what is this going to do in 2024-25, [20]25-26.”

At the same time, the district’s student population has not rebounded to pre-pandemic levels. Some of the district’s funding comes from apportionment based on student full-time equivalent (about $9,000 per student).

The district had about 2,566 students as of October 2022 — down from about 2,685 in October 2019. Since this past October, Nickels noted, the district lost another 24 students.

“We thought we had plateaued pretty well … [but] $9,000 per student adds up,” she said.

Compounding the problem, Nickels said, are risings costs and an experienced teacher population that earn more than the state will reimburse.

That problem is also a blessing for Sequim schools, she said.

“There are experienced teachers [here]; we should be a school district that wants to keep their staff.”

While the district should see some budgetary relief as staffers retire, resign or leave for other districts, “attrition will not be the solution,” Nickel said. As of March 6, seven staffers have indicated their intent to retire or leave, and the district has had conversations with others, she said, but at best the district would be looking at $1.4 million in spending reductions with those changes.

Further, she said, very few Sequim district retirements or resignations have come in after April in recent years.

“We’re looking at every personnel cost,” said Darlene Apeland, the school district’s Director of Business Operations.

Funding

State legislators are currently in session and have yet to propose a full budget from the House or Senate, leaving Sequim and other school districts in a waiting game to see if any budgetary changes will affect their budgets.

“We’re definitely in projection status,” Nickels said.

Sequim’s annual budget is about $46.675 million. Nickels said the district would like to keep a minimum fund balance of about 4-6 percent — auditors suggest something closer to 9-11 percent — and Sequim’s currently hovers at about $1.7 million, or a little less than 4 percent.

“We have the lowest fund balance among the Olympic Peninsula schools,” Nickels said.

A low minimum fund balance can hurt the district in lowering its rating if the schools seeks a bond in the future, she said.

“We’re not in a dire situation but I wouldn’t call it strong,” Nickels said.

Elementary shift?

Nickels also said the district is looking at changing its elementary school model that sees schools — Greywolf and Helen Haller — serve kindergarten through fifth grade, to a model with one school serving K-2 students, the other serving students in grades 3-5.

“We don’t see that there’s an issue with that type of a model,” Nickels said.

The switch, she said, could help reduce some “redundancies” and improve opportunities around the district’s Learning Assistance Program.

“There also are issues around change,” Nickels said.

The elementary school shift was proposed under then interim superintendent Jane Pryne during her tenure but was shelved.

David Updike, a school psychologist with the district, said the elementary model shift wouldn’t be a positive for Sequim students.

The research, he said, shows that students,particularly those in the younger grade levels, need more routine and that they struggle on both social/emotional and academic areas when they make a transition from one school to another.

Larger grade bands — such as Greywolf and Haller’s K-5 model, compared to two schools of K-2 and 3-5 — are better suited to offer that routine.

“They need stable caring environments [and] stable routines, especially the younger they are,” Updike said.

“This [model change] specifically ignores that.”

He said the elementary model shift seems more like a “pet project” coming from administration than a money-saving effort.

“I’m quite skeptical we’re going to save any money from it,” Updike said.

He said the district can make cost-saving changes at the elementary and secondary levels without moving to a K-2/3-5 elementary model, such as having support specialists work at multiple schools or teachers taking on multi-grade classrooms (such as a third/fourth grade split class).

“I don’t think it’s ideal but better than a giant change like that,” Updike said.