Washougal School Board member calls for transparency

A Washougal School Board member is calling for more transparency from Washougal School District (WSD) leaders, who he claimed failed to notify the Board in a timely manner about a financial warning the district received from the Washington Office of Superintendent of Public Instruction (OSPI).

Board member Jim Cooper said during the Board’s Nov. 26 meeting that WSD leaders knew about the warning in February 2024, but didn’t tell the Board until October.

“It sounds like everyone except the Board knew about it. The unions knew about it. We just weren’t told about it,” Cooper said. “That’s a breakdown in communication with the Board. It’s inexplicable and inexcusable to me that the Board was not told about the financial warning (after) the District heard about it. I have not pointed fingers (at) anybody, but I think it’s critical that the Board is in the loop when we get formal warnings from the state OSPI.”

The WSD received a “financial warning” from the OSPI’s School District Financial Health Indicators Model in February 2024. OSPI also posted the warning to its website in February. The label indicated that WSD is “facing potential difficulties” based on financial reporting from the 2022-23 school year.

Interim WSD Superintendent Aaron Hansen informed the Board about the warning during its Oct. 22 meeting. Les Brown, the school district’s director of communications and technology, said WSD staff actually “became aware” that the school district was included on the OSPI’s “warning list” in March.

“It does not appear that OSPI sends any information to a district when they publish the list,” Brown told The Post-Record. “We provided information to the community, via our website, about the financial warning, using the term ‘watch list’ as part of the round-two budget reductions information, which was posted on the website on May 10.”

OSPI created the financial health model after the passing of Substitute House Bill 1431 in 2011, which directed the agency to develop a tool to provide information about the financial health of school districts. The model uses four weighted conditions — fund balance to revenue ratio, expenditures to revenue ratio, days with cash on hand, and a four-year budget summary plan, which measures how many years a district has reported fund balance deficits.

“We had already been communicating concerns about our enrollment, our expenditures versus our revenue, and to see that we are identified on a list based on these indicators was very concerning,” Hansen told The Post-Record in October. “It was alarming. We knew we were approaching a very concerning level with our fund balance. We knew that we were going to need to make some reductions. This just affirmed that.”

The model assigns point values (0 to 4) to districts in each of the four categories. Each district’s total score is the sum of each indicator’s score multiplied by the weighting factor. The combined score, similar to a student’s grade-point average, determines the district’s financial health category.

Districts with scores ranging from 0 to 1.75 receive a “financial warning” label. Nineteen of the 265 school districts in Washington state received that label for the 2022-23 school year, including WSD, which had a score of 1.55. Forty-three districts received a perfect 4.0 score. The Camas School District received a score of 3.35.

“The first (step) is a warning — we got that,” Cooper said during the Nov. 26 meeting. “The second step is binding conditions. In the first phase, (the district) maintains local control. In the second phase, (the district) loses local control over its finances. The third phase is dire — the OSPI can disband the district. I want to stay out of all of these (scenarios), like we all do.”

WSD’s student enrollment dropped 2.7% from 2022-23’s rate of 2,726 full-time equivalent (FTE) students to 2,653 FTE students in 2023-24. The district announced a series of staffing and educational program eliminations in the spring of 2024 to reduce its expenditures by about $4 million for the 2024-25 school year. Currently, the district has 380 employees, down 9.5% from its 416 employees at the start of the 2023-24 school year.

The school district’s year-end fund balance also has been dwindling in recent years, from a high of 18% in 2017-18 to 5% in 2022-23. It increased slightly to 5.71% at the end of the 2023-24 school year.

In response, Cooper called for district leaders to put together a “financial improvement plan” and asked the Board to consider increasing its minimum fund balance to at least 8%. Currently, the Board’s fund-balance goal is 6%.

“We need to get our finances back to being good — not great, but good,” said Cooper, who attended the Washington State School Directors Association’s annual conference, held in Spokane, Nov. 21-23. “After hearing about what’s happened in other districts around the state that go down into that ‘red zone,’ that’s not an experience any of us really want to participate in. I heard that next year, 10% of the school districts in the state, 30 districts, will be in binding conditions. That’s a big number. I just don’t want to be on that list.”

Cooper also asked WSD leaders to provide Board members with monthly budget status reports. Cooper later told The Post-Record that, according to data he had culled by “examining each individual board meeting agenda and the associated document distributions to the Board” since June 2019, the Board failed to receive financial status reports in 14 of 36 months between June 2019 and June 2023.

“I would like us to require that we get a monthly update that’s timely,” Cooper said during the Nov. 26 school board meeting. “I mean, most of those end-of-year updates come in three or four months after the end of the year, when there’s a ‘firehose’ of information coming and all the board members are looking forward (to the next year). When we (receive) a document about last August in December, it doesn’t have the same import as it would have had in September. That’s been a flaw … ever since I’ve been on the Board — going four, five, six months with no budget update.”

District leaders began providing updates during budget presentations at school board meetings during the 2023-24 school year, Brown said.

“Board members (now) receive a budget status report, which includes financial information on revenue and expenditures, each month as part of the preparation for the monthly board meeting,” Brown said. “Aaron Hansen will work with Board leadership to make sure that district staff are providing enough information for (school) board members on our finances.”

Brown said WSD leaders will work to keep the Board informed “about important information.”

“This includes sending the Board information prior to it being shared with the community,” he said. “Our goal is to provide the information in a format that supports the Board’s work and provides them with the opportunity to provide feedback. In response to Jim’s request for more frequent updates and to receive information in a format that is easier to understand, district leadership will work on providing a concise monthly summary that provides board members with ready access to important information to make sure they’re well informed.”