Camas School District facing ‘critically low’ reserves, budget cuts

Plagued by lower enrollment rates, state revenues that Camas school leaders say do not keep pace with the needs of modern school districts, the end of supplemental, federal COVID-relief dollars and increasing costs of doing business, the Camas School District is facing substantial cuts to its 2025-26 school year budget. “We’ve made some central (administration) cuts this fall, around $700,000,” Camas School District Superintendent John Anzalone told Camas School Board members during their meeting on Monday, Sept. 23. “Our district’s fund balance is at a critically low level — under 4 percent next school year, and I know that’s not a comfortable level for our Board ... I’m starting to get more than nervous that the fund balance is dwindling away.” Anzalone showed how the school district’s fund balance, or general fund reserves, which can be used for emergency costs and covers expenses during months when the district is waiting for other revenues, such as property taxes, to flow in, has fluctuated over the past two decades, hitting its last low of around 4% during the Great Recession in 2008, but otherwise tending to stay above 8% and rising to around 17% when COVID-relief monies were coming from the federal government. In 2022, Camas school officials approved a four-year budget plan that called for using around $5 million from its nearly $18 million in reserves during the 2022-23 school year and employing cost-contaminant mechanisms – including capping salary increases to 2% during the 2023-24 school year and to 1% during both the 2024-25 and 2025-26 school years – to help prevent major budget cuts. After Camas teachers went on strike on Aug. 28, 2023, postponing the start of the 2023-24 school year for nearly two weeks, the school district agreed to a new two-year bargaining agreement that gave Camas teachers wage increases of 6.4% in 2023-24 and 6.6% in 2024-25. Camas and other Washington state school districts are “spending well above state levels for operating staff,” Anzalone said Monday, adding that Camas spends about 5% more on teachers’ salaries and 11% more on teachers’ aides’ salaries than the district is funded for by the state. Other expenses are increasing, too, Anzalone said. “Insurance is way up,” Anzalone said. “Food costs are up 36% ... repair costs are up 54% and natural gas costs are up a whopping 76% (from 2019 to 2023).” He added that the costs of providing special education in K-12 public schools has also impacted school districts throughout Washington state. “In the 2022-23 school year alone, special education expenses that were unfunded across the state amounted to $529.8 million,” Anzalone said. Major budget cuts are on the horizon, he added, and district leaders will likely need to cut 10% to 12% of the district’s roughly $120 million budget ahead of the 2025-26 school year. “As we have all known for some time, our District’s financial health has been on a decline due to rising costs and lagging revenues,” Anzalone said Monday. “These gaps have resulted in growing deficits that our reserves have covered. ... Recent financial projections have our District fund balance reaching a critically low level of 3.6% ($4.6 million) in 12 months.” Anzalone said if the District decides to “do nothing” to balance its budget, it will “end up in a pretty rough spot” as soon as next winter. “Christmastime 2025 would be the first time we go into the red in our fund balance,” Anzalone said. “We would have trouble paying for utilities and potentially making payroll.” Anzalone said the District’s leaders and elected officials “can sit and hope for the best and be in that red area by December 2025,” but could face serious consequences as a result of not implementing budget cuts and preserving a high enough fund balance to cover unforeseen costs and to cover the District’s expenses before property taxes come in. “Sadly, this is where some of the districts are, up north,” Anzalone said, referring to school districts in the Seattle area that are operating with very low or depleted fund balances. “They’re operating in the red and the state helps keep the lights on. The problem you get into … is your schools can get shut down, closed or you’ll be inherited by another district.” To avoid such harsh realities, Anzalone said Camas school leaders must work together to balance the budget and increase the district’s general fund reserves. “We have to fix this,” Anzalone said Monday. “We have to figure this out together. And we have to return to a sustainable-level end fund balance to ensure that when revenue is down we keep classrooms open, make payroll and make sure the lights are on.” Anzalone showed school board members a plan that started with the $700,000 in cuts the District already made to its current 2024-25 school year budget, which came with shortened, 6-month contracts for six central administration positions, furlough days for Anzalone and his cabinet and management staff, reductions in overtime and stipends, 10% reductions to building budgets, restricting travel and meal costs and asking student-athletes to find their own rides home — instead of using a district-funded school bus — from away games in the Clark County area. “Second, we have to do 10 to 12% (worth of) reductions,” Anzalone said Monday. “That’s a heavy burden. Our budget is around $120 million, so that is a significant cut. We have to be thoughtful about this.” Anzalone said District leaders plan to reach out to stakeholders, including staff, students, families and the general community to help figure out where the District should cut $12 million to $14.4 million from its 2025-26 budget. “Phase one started tonight,” Anzalone said. “We’re engaging in this conversation and publicly saying, ‘Houston, we have a problem.’” Anzalone said he may, at some point, ask school board members to consider setting a minimum fund balance percentage the Board would like to see hold steady in the future. The superintendent added that he and other District leaders began making presentations to parent-teacher groups this week and will present a “State of the Schools” video communication to the entire district in “a week or two.” During the week of Oct. 14, the school district is set to host a “Budget 101” virtual town hall, with a date and time to be announced soon. Anzalone, district leaders and school board members also are planning to host “listening sessions” around the school district, attend community events such as the Downtown Camas Association’s monthly First Fridays, and will host a Google Survey before the winter holidays to gauge the community’s views on what the District should cut from its 2025-26 budget. Beginning in January 2025, the District will move into “phase two” of its budget reduction plan. “We’ll take all of that information — the surveys, town halls, listening sessions — and package some options for the Board on how to accomplish (the needed budget reductions),” Anzalone said. Anzalone said he expects the District leaders and officials to come to an agreement on the budget reductions by March 1, 2025. “That will give us a solid month or so before any notices have to go out to staff,” Anzalone said Monday. “This could adjust based on legislative sessions and (bargaining agreement) negotiations.” The third and final phase, which Anzalone called “the toughest phase,” will begin in April and go through the later months of the 2024-25 school year. This is when District administrators will give notices to staff impacted by the budget cuts. Staff notices are expected to go out the week of April 14, Anzalone said Monday, to ensure that Camas teachers, paraeducators and other staff members have ample time to look for work ahead of the 2025-26 school year. “Our plan is to be as transparent as possible,” Anzalone said. “This is a taxpayer budget ... so we are being open and honest.”

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