Medical Lake schools come out ahead in state budget

If Medical Lake School District finance director Chad Moss had his way, school funding would be much simpler and less fluid.

So much for wishful thinking.

“There’s a lot of unknowns still,” Moss said of budgeting in general, a newly mandated state health benefits package that takes effect in 2020, and how it all will affect school district finances.

The good news is the budget, which has yet to be completed for the next school year, appears to be well in the black with some wiggle room for known budgetary unknowns.

Now that the dust has settled on the 11th hour budget finalized by the 2019 state legislature, Medical Lake has projected approximately $500,000 in additional revenue from all revenue sources for the coming 2019-2020 school year.

While that sounds good — there are no layoffs or reductions-in-force through attrition planned — that number would be higher, but the district is the victim of positive growth in the region’s housing market.

In 2017, district voters passed what was then a $1.50 per $1,000 of assessed value (AV) supplemental levy. But calculating a levy is a white knuckle, best guess proposition.

It works like this: school districts determine how much money they need to supplement state-funded basic education, then convert that to a levy rate per $1,000 of the district’s total combined assessed value.

That calculus requires administrators to break out their crystal ball and take a guess at how much the district’s assessed values will rise or fall during the levy period.

Medical Lake decided to go with a 6 percent growth rate that they then used, in part, to determine the $1.50 per $1,000 AV levy rate, which taxpayers overwhelmingly approved.

But projected growth didn’t hit 6 percent — it surpassed it, by several percentage points. Good for taxpayers, who will pay less per $1,000 of assessed tax value.

Not so good for the district, which also relies on a state funding mechanism called Local Levy Assistance (LEA) that’s tied to supplemental levies.

LEA is additional state revenue intended for smaller, cash-strapped school districts with lower overall property values. The LEA funding formula is based on a district’s levy revenue.

To receive full LEA funding, a district must have a supplemental levy of at least $1.50 per $1,000 AV. But because Medical Lake took a conservative approach to the levy, and the value of property in the Medical Lake School District exceeded the projected 6 percent growth, and due to the method of calculating levy rates, the district’s levy rate fell below the initially estimated $1.50 per $1,000 AV threshold to $1.44 per $1,000 AV.

The result? The district is receiving less LEA dollars.

“Now we’re getting penalized for positive growth,” Moss said.

And while the Legislature, under pressure to fix inequitable basic education funding, raised the levy lid from $1.50 per $1,000 AV to $2.50 during the last legislative session, Medical Lake has no plans to ask voters for more money.

“We haven’t discussed it much,” Moss said. “I don’t think we’re there yet.”

The other known unknown is the recent state mandate that all state school districts provide health benefits through the School Employees Benefit Board, or SEBB.

Much like funding basic education, which does not fund all of a school’s financial needs, SEBB only funds part of a school’s benefit needs, but at the same time requires school districts to provide full health benefits to all employees working 630 hours per year.

Previously, Medical Lake provided a prorated amount of benefit to part time employees. If a substitute teacher worked half time, they received half the benefit, according to Moss.

Under SEBB rules, the district is now saddled with more health care costs. What those costs are remains to be nailed down. The school district is taking a wait and see approach.

“We still don’t know how many will qualify,” Moss said. “There’s a lot of unknowns still.”

The SEBB open enrollment period begins in September, with SEBB going into affect on Jan. 1, 2020.

Moss praised Superintendent Tim Ames and the school board for working to build the wiggle room necessary to weather the coming unknowns.

“It buys us some time to be able to make adjustments,” Moss said, noting that other districts have been forced to cut positions to make ends meet.

“My biggest thing is just trying to hold onto and maintain our staff,” he said.

The district receives funding from state, local and federal dollars.

The district’s budget is due for review by July 10.

Lee Hughes can be reached at lee@cheneyfreepress.com.