Is another levy the best option for strapped Spokane Public Schools?

Spokane Public Schools has almost hit the fork in the road, fiscally speaking.

Facing a projected $21.5 million deficit next year, the district must decide by midsummer whether to place a supplementary levy on the November ballot.

The levy would raise up to $15 million annually, saving many jobs and programs, but potentially at the cost of goodwill from voters, who last year approved a $495 million capital bond partly with the expectation that taxes wouldn’t increase.

Or the board of directors could stay the course, leaving the cuts intact but leaving more than 200 teachers and classified staff unemployed.

Superintendent Shelley Redinger acknowledged that reality Thursday, confirming that she expects only minor deviation either way from that $21.5 million figure.

“We don’t expect dramatic swings either way,” said Redinger, who added that the board of directors is in the early stages of discussions on the budget.

Those discussions will center on the levy and what programs and personnel it might save.

But did it have other choices? Yes – and it still does, though none appear practical or palatable for the district.

Even before the district announced layoffs and program cuts, suggestions have poured into The Spokesman-Review from citizens and officials on how to address the shortfall.

The most popular include:

• Across-the-board pay cuts or a wage freeze for teachers, administrators, or both.
• A reduction in administrative staff, especially at the downtown office.
• Reconsideration of the offer from the Spokane Public Facilities District to build a combined SportsPlex-football stadium north of downtown.
• Alternate financing, the latest in the form of a low-interest bridge loan from Spokane County.

The district is not considering any of these options, though all are still feasible.

The latest idea was floated three weeks ago by Spokane County Treasurer Michael Baumgartner, who offered all districts in Spokane County a short-term, low-interest bridge loan.

Some districts have expressed interest. Which ones? Baumgartner couldn’t say, but he thinks the county is in a good position to lend a hand.

“If it’s appropriate, I would like our office to play a role in keeping teachers employed,” Baumgartner said. “We just want to be a resource. What I don’t want is schools shutting down or folks being laid off.”

So far, no one has taken him up on the proposition, perhaps because most districts are seeking long-term solutions in the post-McCleary era.

“It may not be a workable solution, but it would be an option that should be considered,” Baumgartner said.

School districts have done so in the past. Recent examples of direct district financing include the North Pines Middle School in the Central Valley School District and the recent Conservation Futures Etter Ranch land sale agreement.

“Bridge financing,” as Baumgartner calls it, is an option for school districts to cover budget gaps while exploring long-term financial options.

That describes Spokane Public Schools, which last month issued layoff notifications to 172 teachers and 72 classified staff.

A loan has some advantages over a levy, which carries a significant risk. In order to restore some jobs before the next school year, the district would need to dip into its reserve fund to meet expenses.

If the levy passed, that part of those funds would go back to the reserve fund and the rest applied to expenses in 2020. However, if it failed, the district would have the worst of all worlds: higher expenses and a depleted reserve account.

The treasurer’s offer is simpler and easier, with no risk of failure. Terms include a 3 percent interest rates for a term of one to five years. With compounded interest, repayment of $15 million within one year would mean payments of about $1.29 million per month.

In search of long-term answers

A short-term loan wouldn’t require voter approval. However, the loan is just that: a short-term solution.

“We’re looking at long-term, sustainable solutions,” said district spokesman Brian Coddington. “Some one-time solutions may not be the best fit for what we are trying to accomplish.”

It’s the same story in Mead, which recently cut $11.3 million in expenses for the coming year.

“I could understand interest in this program if a school district found itself in a temporary unforeseeable budget crunch that would resolve itself in the short term,” said Wayne Leonard, the district’s chief financial officer, in an email.

“However, our current financial situation is the result of transitioning away from a system that was in place for more than 40 years to a completely new K-12 financial structure,” Leonard said.

Despite its political risks, a levy offers a longer-term solution in that it could run for several years, while districts and the Legislature continued to settle their differences over what constitutes fully-funded basic education.

In the recently concluded legislative session, lawmakers gave some relief to districts, but not nearly enough.

However, Baumgartner, who served eight years as a state senator before being elected county treasurer last fall, said districts are partly responsible for their fiscal woes.

“Make no mistake, school districts and teachers’ unions have put themselves in this situation by agreeing to unsustainable budgets leveraged on substantial teacher salary increases,” Baumgartner said in a statement.

“With that being said, as the steward of the public resources I believe that we should be exploring every option to ensure our children receive the best education without having to continuously raise taxes or ask the legislature for a bailout.”

Pay cuts for all?

An across-the-board wage cut or freeze would save millions of dollars in Spokane Public Schools. Out of a current budget of $466 million, roughly 70% goes toward salaries and benefits.

Assuming about $300 million in salaries alone, a 3% across-the-board cut would yield about $9 million.

Two problems: like a loan, a cut or freeze would be a short-term solution. A bigger obstacle is that no one has even brought up the subject – in Spokane or the rest of the state.

A Google search for “teacher pay cuts 2019” didn’t yield a single reference to cuts enacted by any district in the nation.

The issue is immensely complex, said Redinger, who noted that the district handles dozens of separate entities – with different terms – in its collective bargaining agreements.

Moreover, Redinger has steadfastly defended the 13.2% average pay hike earned by the district’s certificated staff last summer.

“We need to be competitive in teacher compensation,” she said recently.

Not surprisingly, the issue is a nonstarter for the Spokane Education Association, which represents teachers and other certificated and classified staff.

After years of losing ground against professionals with comparable education levels – as well as the loss of cost-of-living hikes from 2009 to 2016 – teachers regarded last year’s raises as a “catch-up.”

“We need teachers, and we are always going to need teachers,” said Katy Henry, president of the SEA.

“They should be able to go into the profession knowing that they will be earning a professional wage,” Henry said.

Can we please trim some fat?

As critics point out, the district’s central office employs many administrators who earn $100,000 and more.

That’s true, but so does every other large district in the state. They are the brains of the operation and educated accordingly, and are responsible for setting policies, and coordinating programs at dozens of buildings.

As it turns out, review of the state superintendent’s database shows Spokane’s central administration is the leanest among the state’s largest districts, accounting for 4.2% of total expenditures.

By comparison, Everett and Vancouver spend 5.1% on central admin, Seattle 5.6% and Tacoma 6.7%.

“We have a lean operation; that’s always been a priority,” Redinger said.

And what about that stadium?

It could be argued that the board left millions of dollars on the table a few months ago.

Perhaps it did, but those funds would have been sitting on a different table, far out of reach.

On Dec. 12, representatives from the Spokane Public Facilities District pitched a proposal to combine funds into the city’s SportsPlex project.

The district had $31 million earmarked toward replacing Albi Stadium, but in an advisory vote held in November, 64% of Spokane voters opted for building the new facility at the current site in northwest Spokane.

That number was too much for the board, which voted not to give the PFD a few weeks to work up numbers on possible savings.

Moreover, according to state law, monies associated with a capital bond cannot be used for operating expenses.

The state provides for exceptions, but only if the board holds a public hearing and determines to move forward with changes. After a second public meeting, it could adopt a new resolution and repurpose those funds.

It’s technically not too late for an about-face, as the SportsPlex is still in the design phase and the district has yet to hire a design firm at the Albi site.

However, that’s unlikely.

Responding to an email inquiry from The Spokesman-Review earlier this month, board President Sue Chapin said, “The school board made a decision to move forward with construction of Albi stadium on the current north side location.”

“That decision is final,” Chapin wrote on behalf of the board.