Dear Monroe School District Community, 

As we recently shared, financial transparency is a key focus of our strategic plan. As we begin planning next year’s budget, we want to update you on our current financial status.

You may hear news about the financial hardships many local school districts are facing and wonder how Monroe is doing. To provide context, school districts across Washington have faced financial challenges in recent years due to several key factors:

• Changes in State Funding – In 2017, state lawmakers approved a new education funding model that increased state support but placed new limits on local levies. This change reduced the amount districts could collect locally, and unfortunately, the state’s increased funding was not enough to fully cover inflation or costs like special education, staff salaries, and student support services.

How this impacted the Monroe School District: Before changes to the state funding model, MSD collected about $3.16 per $1,000 of assessed property value from local taxpayers through the School Program & Operations (SP&O) Levy in 2017. When voters renewed the levy in 2018, a new state-imposed cap lowered the rate to $1.50 per $1,000, reducing local funding by approximately $8 million in the first year alone. While rising property values have increased levy revenue, the district is not expected to return to pre-2018 local funding levels until at least 2026.

While the state did increase funding provided to school districts in an attempt to compensate for the decrease in local funding, the 14% increase in basic education funding provided to MSD between the 2019-20 and 2023-24 school years has not been enough to cover the 20% increase in inflation-related costs.

• Expiration of ESSER Funds – During the pandemic, school districts received Elementary and Secondary School Emergency Relief (ESSER) funds in 2020, 2021, and 2022 to help address urgent needs. Many districts used these temporary funds for ongoing programs and staff positions. ESSER funding expired in September 2024 and now school districts must find new funding sources or make difficult budget cuts.

How this impacted the Monroe School District: During the pandemic, MSD mostly used ESSER funding to purchase health & safety supplies, technology devices, and software. Some additional staff were hired (custodians, tech support, nurses), but we have since nearly returned to pre-pandemic staffing levels. Due to strategic decision making and conservative budgeting, the end of ESSER funding has not had a significant impact in our district.

• Declining Student Enrollment – Since the pandemic, many districts have seen a decrease in the number of students enrolled, which directly impacts funding. Because the state allocates money based on enrollment numbers, fewer students mean less funding for teachers, staff, and programs—even though fixed costs like buildings, utilities, and essential staff remain the same no matter how many students are enrolled.

How this impacted the Monroe School District: Like most districts, MSD experienced a decline in enrollment following the pandemic. Between the 2020-21 school year and the 2023-24 school year, our enrollment decreased by an average of 200 students each year, resulting in a roughly $6.6 million total loss in funding. Thankfully, we are beginning to recover and in the 2024-25 school year have gained enrollment by 238 students.

These combined challenges have resulted in significant budget shortfalls for many school districts. While the Monroe School District has been impacted, our financial situation is more stable than most of our neighboring districts. Among the 35 school districts in the Northwest Educational Service District (NWESD)—which includes Snohomish, Island, San Juan, Skagit, and Whatcom counties—only three are not currently on NWESD’s financial “watch list.” We are proud to share that Monroe School District is one of them!

While this is good news for our district and community, we still face financial challenges. Despite careful budgeting and cost reductions, our expenses have exceeded our revenue in recent years due to rising costs and decreased funding (as described above). To cover the gap, we have relied on our fund balance, which functions like the district’s savings account. This reserve helps us manage unexpected costs, emergencies, and needs. Fortunately, we have had a healthy fund balance that has helped us cover these costs and fund necessary one-time investments, such as critical safety upgrades throughout our district. Per district policy, we must maintain at least 5% of our revenue in our fund balance to ensure financial stability in emergencies.

As we work toward a balanced budget, we have had to make difficult cost-saving decisions. In recent years, this has included reducing staff, including seven district office positions—three of which were district leadership (administrator) roles. While not ideal, these reductions have brought our district office staffing levels in line with other similarly sized districts in our area. We are especially grateful to our remaining district office staff, who have taken on additional responsibilities to maintain operations and continue supporting our schools and community. We will continue to evaluate staffing levels and make adjustments as needed.

We are making progress toward balancing our budget, where revenues align with expenditures, but we are still identifying opportunities for cost savings. For example, Monroe High School’s transition from an 8-period schedule to a 6-period schedule next school year is expected to save nearly $1 million. While financial sustainability was not the driving factor in this decision, it was an important consideration.

We remain committed to responsible financial management while prioritizing the needs of our students, staff, and community. As we make major budget decisions, we will continue to keep you informed. If you would like to learn more about our budget, we invite you to explore our new Community Guide to the Budget.

Sincerely,

Shawn Woodward, Superintendent

Brenda Hunt, Chief Financial Officer