State schools Superintendent Chris Reykdal is sounding the alarm that a declining birthrate and "perfect storm" of financial pressures could roil school district finances in years to come.
The first signs of financial woes came a few weeks ago, when the Bellevue School District picked three schools for possible closure. Seattle Public Schools is also starting to talk about consolidating some schools to save money.
In a Feb. 16 meeting with the State Board of Education, Reykdal sketched out the money pressures facing public schools. He expanded on the topic in an interview last week and explained why he thinks the state isn't doing enough to fund education.
"I got elected to look out for schools, and I'm worried about school finance right now," Reykdal said.
This interview has been edited for length and clarity.
You told the State Board of Education that the school-age population in Washington is shrinking, causing serious financial ramifications for some school districts. Describe what could happen.
We know there's a demographic change coming to our state, and to our whole country, with a declining birthrate. With the COVID pandemic and the subsequent loss of enrollment, imagine the clock just sped up a decade. We're down to [enrollment] levels we thought we'd see in about 10 years, which is 1.06 million students. If you're a district that's experiencing this disproportionately, it almost puts a freeze on your budget. ... It is a perfect storm, and we are preparing ourselves for a number of districts who are going to find themselves in more financial distress. It doesn't mean they're going to close districts, or close even buildings in most places. It means now they need to start cutting, and managing that. [Reykdal also said complexities in the way the McCleary school funding case was settled will hit some districts harder than others.]
Where are those districts? Do you have a list?
We hope to have this done in the next two weeks, and then we can make some better assessments. We do know disproportionately the enrollment impacts are coming out of Puget Sound, where a lot of families had the opportunity to work from home, so they immediately started their 5-, 6-, 7-year-olds in a home-school concept, and that's part of [the enrollment drop].
What happens when a district is in financial distress? Does the state step in to prop up it up?
It hasn't happened since I've been here, but apparently there's a manual. We're a long way away from OSPI [Office of the Superintendent of Public Instruction] being involved, because their first step is to take local action. [The school districts] work with their Educational Service Districts, and the ESD has some role in helping them guide their finances ... helping them navigate how to concentrate the resources they have on the basic [education] work and not do any reductions to core basic services. We're already preparing ourselves for the next year or two. ... I don't think there's ever a state takeover scenario; it's: "How directive does the state have to be on the resources they do have?"
What should a parent take away from this?
Part of the reason [large districts] are first impacted is they have scale. So when [a large district] has a 5 or 10% decline [in enrollment] across schools, that's the kind of district that can get back by potentially closing a school and merging. Rural districts haven't seen the declines, and they don't have the option [to close schools]. I don't think it's an immediate worry for parents. Mostly, [my advice is]: Tune in to your district. Understand their particular budget conditions and follow along.
What are the inflationary pressures on schools right now?
What they find themselves at risk for is labor cost inflation. We have this responsibility by state law, in collective bargaining rights, to make sure that people have fair compensation. So the state Legislature consistently [accounts] for inflation for all the positions that the state provides for. ...But the state does not provide the money for levy-funded positions or federally funded positions, and about a quarter of the people in our school system are hired by those dollars.
In 2018, the state poured millions of dollars into education funding to settle the state Supreme Court's 2012 school-funding order known as the McCleary decision. Why wasn't that enough?
Imagine you want a full cup of coffee, and you only have half a cup, and the Legislature pours a bunch into your cup, and everyone's happy, but you still don't have a full cup of coffee. That was the case with capital budgets, that was the case with special ed — it was never amply funded, even after the court relinquished the case. I would definitely say, once inflation hit hard, having a quarter of your staff not covered by inflation factors ... those were all significant.
I look at it as how much are we spending [on K-12] as a share of the economy, and we put in 3.1% [of state gross domestic product] back into our public schools, and the national average is 3.6%. The cool part is we made progress. The tough part is we're not even at the national average.
Tell me more about the 3.1%. How do you arrive at that figure?
This comes out of Rutgers University. They have had an education finance think tank there for a very long time. [The report is called Making the Grade: How fair is school funding in your state?] They plug in all of these numbers. They look at GDP. It's called an effort index: How much effort is the state putting in.
So, if we're spending less than other states per GDP, you think it suggests we're underfunding education?
Yes, and even that is not an absolute. They'll say, "Gosh, we spend more per kid than other states." [According to the report, Washington spent $16,216 per pupil in 2020, $770 more than the national average.] But then you have to look at cost of living. So the only way I've found to norm that is, 'How big is your economy, and how much of that economy turns into tax revenue for your schools?' And we're behind.
At one point K-12 accounted for 51% of the general fund, but you say this year it will likely make up less — about 42-44% of the budget. That's still a lot of money.
It's all relative, isn't it? What is the legal obligation in your given state? And in our state, education is the paramount duty. ... The state has built an entire legal structure around their obligation. And I'd say they're doing a better job today than they were 10 years ago. But it's tough to hear that our state continues to grow so much in terms of revenue — at least in the short term — and then have a declining share of that going into public schools.
The state uses a cap — 13.5% of a district's student population — to determine how many special-needs kids the state will pay for. You have told the State Board of Education that it's "a borderline violation of civil rights, and perhaps an explicit one," to have a cap on these services. What's wrong with the way we fund special education?
[Districts are] supposed to manage to the need, by civil right — they're supposed to develop an IEP [Individualized Education Plan] by partnership with the family and the team, to address the accommodation necessary to give that student the opportunity for basic education. So I know that is the intent, and everyone works hard to do that. It is awfully hard to not think about limited resources when the state says you're capped at 13.5% of your students, so if you go over that, you still have to provide the accommodation.
Is there a fix?
We've said, eliminate the cap, try to go to a higher factor [by increasing the tiered multiplier, another source of special education funding]. The combination, we think, buys back all that levy obligation [locally funded levies] that districts have been utilizing [to meet the need]. There is a solution here. What the Legislature grapples with: "How do we know they [educators] won't keep going higher and higher in cost?" I totally understand why the Legislature needs financial controls, but this is one of these rare moments where the federal and state civil right needs to be the leading message and not the secondary message to a budget control conversation.
Reporting by The Seattle Times and ProPublica showed that the state has failed to monitor the private schools that serve some of the state's most vulnerable special education kids. What needs to change?
We definitely need to be in a different position on the front end of this. School districts are the drivers of those contracts. They're the institution of record. We do have a role ... we have the responsibility to make sure they are of the highest quality. We're going to step up our reviews, we're going to start getting more data collection. We're working a parallel process, if the Legislature will make clear to the NPAs [nonpublic agencies] that they do owe the state all this information. It is part of basic education services. It's mostly data collection and monitoring. ... And if there's something serious going on, the parent has other options. Especially if they think there's something illegal going on, they need to call law enforcement, they need to use all their tools to protect their child.
