Superintendent Rundle Message on MISD Budget

Dear Mercer Island School District Community,

In January, Matt Sullivan (Executive Director of Finance and Operations) and I delivered our annual financial update to the community, also known as The Budget Roadshow webinar. Since then, we have also visited schools and the PTAs to give the same or portions of the presentation. I invite you to view the recording if you would like, but will also draw your attention to several key points:

• Washington State does not fully fund education.
• Three critical areas of the budget continue to hamper us: Special Education ($3.9 million), Materials/Supplies/Operating Costs ($2.1 million), and Transportation ($1 million).
• Enrollment is up since last year and well over our projections. This is great news in terms of the budget and how our district is viewed.
• Due to rising costs for materials, supplies, salaries, benefits, and other operating costs, we face a $3 million shortfall for the 2025-2026 year. Difficult decisions must be made this spring.
• The local MISD Enrichment Programs and Operations Levy (EP&O) was legislatively capped back in 2018. Due to this ceiling, portions of our budget once covered by the levy can no longer be covered as a result of rising costs and an artificially capped funding source.
• Based on community feedback, we have made certain decisions that come with financial implications: four elementary schools instead of three, 7-period day at MIHS, full complement of athletic opportunities, 5th grade band, orchestra, choir, and drama. Other districts are cutting in these areas; however, we prioritized them for very student-centered reasons, but they also create budget challenges in other areas.

The Board hired me as superintendent in July 2022, with a clear expectation to repay the $2 million loan the District had taken in spring 2022, improve the fund balance erased during COVID, and create fiscal predictability. We went to work in earnest. While many districts around us have continued to deficit spend even through the current year, MISD repaid the loan by April 2023, and will increase its fund balance for the third straight year this August.

MISD’s schools and departments course-corrected between the 2022-2023 school year and the current year by improving budgeting and accounting practices, reducing staffing (83% of our expenditures), and cutting operating costs. To overcome the looming $3 million deficit, we will again look to these remedies as well as increase our advocacy during the current legislative session in Olympia and raise student fees in some areas to offset costs.

Staff Reductions
Reductions in staffing are never easy. Throughout my career, starting at the outset of the recession, I have made difficult decisions regarding staffing in the face of challenging financial times. Every position we create and every person we hire is brought on because we believe they will positively impact students. However, given the current economic climate for schools, we must carefully evaluate how we operate in order to sustain essential programs and services. This will necessitate change. We recognize that these changes impact valued members of our school community. While we are making these adjustments to ensure long-term sustainability, we remain committed to supporting our students, staff, and families through the transition.

Types of Staff Reductions
Reductions in staffing occurs in several ways, most commonly though one of the below: 

• Reduction in Force (RIF): This refers to layoffs that occur when a staff member is entitled to ongoing employment by contract, their position is eliminated/reduced and there is no available placement for them elsewhere in the District based on their qualifications. A RIF is considered an adverse employment action and must follow specific legal and contractual procedures, including authorization by the Board of Directors.
• Non-Renewal of Contracts: Some employees hold contracts that do not guarantee continued employment or a set number of hours each year. These are called non-continuing or limited contracts. In these cases, reductions occur when we do not renew a portion or all of their contract for the following year. 
• Position Adjustments: In some cases, a job itself may be reduced, but the person in the role may be reassigned to a different position. In these instances, the position is reduced, but the individual remains employed in another capacity.
• Not Backfilling Positions Open Due to Leave: Another method of reducing staffing is choosing not to backfill positions when employees take a leave of absence (e.g., parental leave, medical leave, etc.). This does not constitute a RIF because the District is not denying FTE to an employee contractually entitled to it. Instead, the District simply chooses not to fill a vacancy.

Whenever possible, we seek to reduce costs before impacting staffing. However, with staffing comprising 83% or more of the District’s budget, it is challenging to achieve necessary reductions without affecting personnel. After reducing non-staffing costs, we prioritize staffing reductions that do not result in a RIF. Our last resort is to reduce a staff member who has contractual entitlement to employment. Unfortunately, in some cases, a RIF cannot be avoided.

Last week, we began notifying staff who will be impacted by the contemplated reductions for next year, and additional conversations and decisions will take place in the coming weeks. I want to take this opportunity to share some of the expected changes with our community.

Changes by Area

• School Nursing Services - State funding for elementary schools does not sustain a full time nurse at each of our four elementary schools. Despite these limitations, we have been fortunate to staff each of our elementary schools with a full-time nurse (RN or LPN) for many years. In an effort to improve our financial outlook, we will retain a full time nurse at both MIHS and IMS and reduce our elementary nursing staff to one. The three elementary schools without an on-site nurse will be supported with a health room paraeducator with our nurses serving in a consultancy role. Though this shift represents a new approach to supporting student health needs at the elementary level, this model ensures students at all schools will continue to receive care, and is more in line with many other districts that have already transitioned to similar structures.
• Library Services - Currently, we have certificated teacher-librarians at MIHS and our four elementary schools. IMS has operated with a classified library support for many years. Beginning next year:
  • All schools will follow the IMS model and transition to classified library support instead of certificated teacher-librarians.
  • The District will retain one certificated librarian to oversee library programs and support school teams.
  • This shift aligns with staffing models used in many other districts but represents a change for us.
• Certificated Teaching and Educator Positions - We continue to adjust teaching positions based on student enrollment and program needs. As always, student needs drive our decisions and we strive to provide the best service and support possible given resource constraints. Some key considerations:
  • If enrollment requires an additional kindergarten teacher but fewer first-grade teachers, staff may be reassigned accordingly.
  • At the middle and high school levels, reductions often occur incrementally—rather than eliminating full-time positions, teachers may lose a portion of their assignment (e.g., one class period).
  • Special services staff (e.g., special education teachers, speech therapists, occupational therapists, psychologists) will continue to be staffed based on students' Individualized Education Plans (IEPs), consistent with past practices.
• Instructional Coaches- The District plans to reduce the number of instructional coaching positions at the elementary, middle, and high school levels.
• Classified Positions (non certificated)- Building principals and district administrators will assess staffing needs annually. We anticipate some changes to classified positions to enhance efficiency while continuing to support students, staff, and schools.
• Middle School Administrators- Currently, IMS operates with 3.5 administrative positions, as Aaron Miller has served as both co-principal and part-time human resources director. Next year:
  • Aaron Miller will transition to full-time HR director in 2025-2026, replacing retiring HR director Rosie Burns.
  • IMS will return to a three-administrator model instead of 3.5.

Fees
I have been discussing fees with PTAs and other groups, most recently with the MIHS Booster Clubs last week. To avoid even more drastic staff cuts or eliminating programs, we will need to raise student fees for many programs and services. The goal will not be to use fees to entirely cover all of our programs, instead we need to help offset the diminishing role of the EP&O Levy. A student has not and will not miss out on opportunities because of finances, so budget considerations will be made to make sure we can provide scholarships. More details will come later this spring.

Legislative Relief
The current legislative session does not end until late April. We will continue to relentlessly advocate for our students and schools, pushing for increased funding to close the gaps in special education and materials/supplies/operating costs. Please consider joining our PTAs and the district in our advocacy efforts.

I wish we were in a different economic climate for schools, but that is not reality right now.      

The budget challenges ahead will be addressed with transparency, dignity, and a focus on our students. Please do not hesitate to reach out to your principals, district leaders, or me with any questions along the way. 

Sincerely, 

Fred Rundle