Spokane Public Schools rejected asking for a supplemental levy last week. Here’s what that means.

Time will tell whether Spokane Public Schools made the correct decision last week by forgoing a supplemental levy election in April.

The fiscal future is so hazy and the variables so numerous, it may be another year before the impact of last week’s 3-2 decision is felt.

By then, the district will be seeking a three-year replacement levy – a major reason the supplemental levy proposal was rejected and the board decided instead to draw on its reserves next year.

In trading away the chance for a one-time infusion of $22.5 million, the district gained some important intangibles.

The biggest is trust, as board member Kevin Morrison reiterated during Wednesday’s discussion. Based on a track record of 70%-plus approval in recent levy campaigns, a levy likely would have passed in April.

But what about next time? Five months after winning overwhelming passage of a $495 million capital bond in November 2018, the district declared a financial emergency last April.

As schools suffered painful losses of people and programs and the red ink deepened, skeptical taxpayers waited for the next shoe to drop.

But it didn’t. Forgoing the levy will restore a measure of trust for the next levy, as voters applaud the district’s commitment to belt-tightening.

In fact, that had already begun. Last year, targeted reductions totaled $8 million, and the district continues to search for savings.

The other intangible is time. Instead of moving into campaign mode for an April 28 election, district staff and board members will be able to focus on taking a deeper dive into next year’s budget.

They also will know exactly how much aid is forthcoming from Olympia, especially on the contentious issue of assistance for special education. Last week, Superintendent Shelley Redinger was in Olympia with big-district colleagues, asking for more help.

This year, special education in Spokane Public Schools is underfunded by about $5.5 million, the district says.

As it stands, the board is in broad agreement to spend about $6.2 million to restore workload provisions – that is, add staffing and reduce class sizes. More than half of that, $3.5 million, is earmarked for special education.

The district also hopes to restore the elementary school week schedule and revamp the specialist model. That will cost about $5 million, but half of that money is expected to be recouped through alignment of K-3 class sizes.

Moving forward, the district currently expects total revenues for next year at $464.9 million and total expenses of $474.8 million – a deficit of $9.9 million.

However, program restorations as currently envisioned will total about $9 million, minus about $2 million in more targeted reductions.

Bottom line, that means a deficit next year of $16.9 million. That will reduce the district’s projected fund balance from $26.2 million down to $9.3 million, or barely 2% of the overall budget.

For a district accustomed to carrying a fund balance of at least 5%, that leaves little margin for error. For example, a cumulative shift of 1% (in lost revenues or cost overruns) would mean a loss of $4.7 million, or half the district’s reserves.

Long-term, the biggest problem for Spokane and other districts is the $2.50 per thousand cap on levies. Lifting that lid would give districts more flexibility in ballot requests, but potentially upset voters.