Lopez Island School DistrictA Learning Community that Welcomes, Excites, and Challenges

Raising that $300,000 would mean that LISD has a positive fund balance at the end of this school year which means we would avoid state oversight known as binding conditions. However, that $300k maintains the programming we have now. It does not restore Woodshop or Spanish Class or Middle School Sports or Culinary Program or provide for a Head Maintenance position or other cuts that we have made in the past two years.

With SNAP benefits set to pause on November 1st, LISD continues to offer free meals to all students because it is the right thing to do and also because it is revenue neutral. As I have explained previously, the cost of staffing the lunch line is equal to the cost of providing meals to all students, so we shifted our staffing and put that money into school food. The U.S. Department of Agriculture (USDA) has provided an additional 30 days of reimbursement funding, through December 31. At this time, OSPI does not anticipate disruptions to meal reimbursements through the end of the calendar year. OSPI continues to receive USDA foods for school meal programs, and order fulfillment and delivery is proceeding as usual.

The budget item titled "Capacity" is a budget mechanism to allow for funds (donations and grants) to be received during the school year without requiring a Board Budget Amendment. "Capacity" for 2025-26 was increased to $500k to allow for the $300k in donations from LIEF. "Capacity" for the same amount appears on both the revenue and expenditure side effectively zeroing it out. It is not money in the school budget - it is a mechanism to create room in the approved budget for incoming funds without requiring Board action with every donation or grant received. For example, in 2024-25 LISD received two grants totalling $200k to make our playground ADA accessible. Capacity allowed us to accept those grants without having to wait for a Board meeting to approve a budget amendment.

Linked here is an analysis completed by the Educational Service District (each school district received one) indicating budget gaps in funding categories since the 2019-20 school year. In addition to the levy lid which resulted in LISD collecting approximately $400k less each year than Lopez voters approved ($2.8M over 7 years), we have seen an estimated $1.96M funding gap in Special Education and an estimated $2.33M funding gap in Materials, Supplies and Operating Costs (MSOCs). A further analysis reveals that over 80% of MSOC costs are out of the district's control - costs for tangible goods like paper, custodial supplies, etc have all risen significantly and we have no way to negotiate lower costs. The budget line entitled "Purchased Services" includes essentials like insurance, utilities, contractor repairs and professional services like payroll as well as contracted mandated special education services. When those costs go up, and they have significantly, we must pay the higher costs. This explains some of the increase in the "Purchased Services" line from last year to this year, but the biggest reason "Purchased Services" increased is because that is where we place the placeholder expenditure that zeroes out the Capacity revenue. We increased Capacity revenue this year in anticipation of $300k in donations so therefore we increased "Purchased Services" expenditure by the same amount. This is how Capacity is a net zero on the budget, and why it appears that LISD has significantly increased "Purchased Services" this year.

LISD currently has no reserves. Reserves would be in the form of a positive fund balance at the end of the school year. Current LISD Board Policy expects LISD to maintain 5% of the overall budget in reserves. Reserves prevent cash flow issues month to month as revenues come from the state and other sources at various times throughout the year and we need to make payroll each month. Without reserves, we have had to carefully manage cash flow these past two years and so far have been successful. Reserves also impact the district's credit rating so we were downgraded recently by Moody's due to lack of reserves.

We also, like all school districts, have multiple levies. Our EP&O levy (the one that is capped by the McCleary decision) is a six-year levy that is up for renewal next year. We will seek the full amount of that levy next year even though the lid will not currently allow us to collect it so that we will have capacity in that levy for any levy lid lift legislation that might occur. Our Tech and Safety levy is a four-year levy that was renewed last year. And we run a Capital Levy for Capital improvements which we did last summer to raise the necessary funds to complete the water utility project. Tech levy funds can only be used for tech and safety and Capital levy funds can only be used for capital improvements - neither of those levies can be used for general operating expenses.

As an aside, the fence along the easement between the school and the pool (aka the 'School to Pool trail') was required by WSRMP (risk management - our insurer) to allow a teacher to safely escort a class of students to the pool for PE classes and was included in the water utility plan and paid for with Capital Funds. There is livestock on the parcel to the east of the easement and the current fence was the least expensive option that met WSRMP expectations. We are in conversation with FLIP about ways to improve the look of the trail. The funds used to build the trail and the water utility project could not be used to address the school general operating shortfall. And an MOU with the pool includes swim classes as part of PE class at no cost to the school.

Staffing costs, as with most organizations, are the biggest component of the budget. Last year, the classified union PSE agreed to no salary increases for two years beyond the cost of living increase provided by the state known as IPD. This year, the teacher's union LEA also agreed to IPD only, effectively freezing salaries for all staff at the school. It is a tribute to our two unions that they recognized our budget challenge and accepted salary freezes in order to be part of the solution to our budget challenge. In 20 years in school leadership, I have never seen unions engage in such an act of cooperative sacrifice.

As Superintendent, it is my responsibility to balance the budget each year and seek to restore reserves. In my two-year tenure so far, the School Board has approved a balanced budget and we have managed to avoid binding conditions. We continue to advocate with elected officials for legislative improvements to the state funding formulas. We continue to pursue "out of the box" financial remedies like partnering with Chicaoji to produce our famous local hot sauce as a fundraiser and seeking grants to install a large rooftop solar array that could reduce our utility costs by $25k annually. The school budget stands to benefit from Lopez Parks and Rec which is on the November ballot. And we continue to seek donations and volunteers.

I hope this answers many of the questions that have been posed on various forums, and I hope to see the wonderful level of support for the school that has been expressed by so many continue as we strive to provide the highest quality education to the students of Lopez Island.

Brady