Washington state auditor Pat McCarthy called a recent review of the Marysville School District “the most alarming audit of a public school’s finances in 17 years.”
At a time when many school districts are slashing their budgets, state officials have identified this Snohomish County school system as uniquely troubled. The district, which suffered a double levy failure in 2022, continues to spend more than it takes in, the audit found. And that’s after making cuts and submitting to more state oversight of its finances.
If the situation doesn’t improve, the district risks financial collapse and dissolution, the audit warned. In an ideal world, school districts have enough money saved to cover 60 days of operating expenses. Marysville has negative 11.6 days of operating expenses, according to the auditor’s office.
The district has made cuts to its programs and staff and implemented a spending freeze on nonessential expenses. As of June 2024, the district’s deficit was $14.8 million.
Dozens more school systems are considered financially distressed. Enrollment declines since the pandemic and the expiration of federal aid are common contributing factors. Those factors are also affecting Marysville, as are a recent slew of resignations from high-ranking officials, including the School Board president and finance director. On her way out, the finance director wrote a letter accusing the district of cronyism and breaking the law.
The communication coming from the auditor’s office has been unfairly negative toward the district, a statement from the Marysville School District said, especially since the district scored well in some areas reviewed. The district argued the audit was supposed to cover the 2022-23 school year and instead focused heavily on the district’s current financial challenges.
“The district has been working hard to address and correct past practices and solidify systems and structures to produce a balanced budget,” the statement, forwarded through spokesperson Jodi Runyon, said. “This type of negative public communication harms the district and undermines its ability to restore trust in the community, ultimately negatively impacting students, families, and staff.”
The statements in the audit are meant to be a call to action, said Kathleen Cooper, a spokesperson for the state auditor. It’s also normal for auditors to look at data beyond the year they are auditing, she said.
Since June 2023, Marysville and four other districts have been working to fix their finances under an agreement called “binding conditions.” Under this agreement, school districts that are in the red are able to get an advance on their monthly allowance from the state coffers. In exchange they must submit to enhanced financial reporting to state education department, or the Office of Superintendent of Public Instruction (OSPI). They must also make up for what they borrowed.
But in May, OSPI found the district had “not demonstrated an intent to implement the budget reduction measures” they’d provided to the state, OSPI spokesperson Katy Payne wrote in a statement. As a result, the state convened an oversight committee to figure out next steps for the district. State Superintendent Chris Reykdal will decide what to do based on the committee’s recommendations in late August.
The Vader School District, in Southwest Washington, was the last school district to dissolve because of financial struggles. In 2007, it was combined with the nearby Castle Rock School District.
