For the second budget cycle in a row, Seattle Public Schools is closing a gap in the neighborhood of $100 million. The district adopted a $1.35 billion general-fund budget on July 2, 2025 that eliminated a projected $104 million deficit for 2025-26, and its board is scheduled to vote August 26, 2026 on a package that closes another $75–87 million for 2026-27. The clearest way to see the squeeze isn't the deficit itself — deficits get closed on paper every year. It's the savings account.
SPS Budget Study Session, May 6, 2026 (“Fund Balance Projections (preliminary)”, status-quo scenario).
Every year since fiscal 2022, the district has ended the year with less in its general fund than the year before: $175.8 million in FY22, $134.2 million in FY23, $121.2 million in FY24, $97.5 million in FY25, and a projected $28.7 million for FY26. That is a drawdown of roughly $147 million in four years.
Under the status-quo scenario the district presented to its board on May 6, 2026, the balance turns negative in FY27 (−$38.4 million) and keeps falling, to roughly −$72 million by FY31. The district's parallel “goal” scenario stays positive — but only by making the ongoing cuts described below.
Where a $100 million deficit comes from
The gap has three causes, and each one closes off an escape route.
First: state money follows students, and Seattle has about 4,850 fewer of them than at its peak. Washington funds districts per pupil through its “prototypical school” formula. In the district's 2025-26 budget book, that works out to $823.1 million of state revenue for 48,518 funded students — about $17,000 per student per year.
That is a number in the same league as the deficits the district has been closing. Fewer students do mean fewer teachers to pay, so the net damage is smaller than the gross number. But the rest of the cost base barely moves: the district's own closure plan valued the shed-able overhead of an elementary building — administration, office staff, utilities, custodial — at roughly $1.4 million a year, while the ~400 students inside one generate about $6.8 million in state funding. A student brings in several times more revenue than a building costs to run, which is why enrollment decline blows a hole that closures alone cannot fill.
OSPI Report Card Enrollment files, 2018-19 through 2024-25.
Enrollment, though, is not the whole story — and the district is blunt about this. The slide has stopped, with headcount ticking up to 51,200 in 2024-25. The deficit didn't shrink with it.
Second: the state's funding formula pays for a theoretical school that costs less than the one Seattle actually runs. The prototypical model funds a set staffing level and set operating costs. SPS told its board in May 2026 that what it actually spends on compensation, special education, transportation, and multilingual services exceeds what the model provides; that inflation has outpaced the state's revenue adjustments since 2021; and that it “can't simply enroll its way out of the structural deficit.” The district's own December 2025 budget review is candid that its past spending choices belong on the cause list too.
Third: the district can't tax its way out, because state law caps what local levies can collect. Seattle's tax base is enormous and its voters are willing. In February 2025 they renewed both district levies by landslide margins: 77.7 percent for the $673 million, three-year operations levy, and 71.9 percent for the $1.8 billion BEX VI capital levy.
But since the McCleary settlement, “enrichment” levies have been capped per student — $3,779.63 per pupil in 2024 for districts over 40,000 students, a category that contains only Seattle. Renewing the levies renews capped funding; the district's own levy page says plainly that they “will not resolve the district's budget shortfall.” And because the lid is calculated per pupil, enrollment decline shrinks Seattle's local taxing capacity right alongside its state funding.
Put the three together: a district that cannot grow its state revenue or its local revenue, and whose costs rise with inflation, covers the difference from reserves. That is the line falling in the first chart.
The enrollment pressure, at least, is not unusual. Among Washington's fifteen largest districts, all but two — Bethel (up 4.3 percent) and Auburn (up 1.2 percent) — enroll fewer students than they did in 2019-20, and Evergreen (Clark County) and Issaquah have lost more of their enrollment in percentage terms than Seattle has.
| Evergreen (Clark) | -12.5% | |
| Issaquah | -10.3% | |
| Seattle | -8.7% | |
| Kent | -7.2% | |
| Vancouver | -6.2% | |
| Bellevue | -6.0% | |
| Spokane | -4.9% | |
| Tacoma | -4.6% | |
| Northshore | -4.4% | |
| Federal Way | -4.4% | |
| Lake Washington | -2.6% | |
| Puyallup | -1.9% |
OSPI Report Card Enrollment files. Seattle highlighted.
What sets Seattle apart is the scale of the structural gap and the pace of the reserve drawdown. Even so, it has avoided the fate of two neighbors: Bellevue has been under state-imposed binding conditions since July 2025, and Marysville under enhanced financial oversight since August 2024. Seattle, as of mid-2026, is not on OSPI's financial-oversight list.
Two deficits closed, a third on the table
In October 2024 the district projected a $94 million shortfall for the 2025-26 school year. By adoption in July 2025, the gap had grown to $104 million. It was closed largely with money that can only be spent once: extending an interfund loan (with up to $17.6 million to repay in 2025-26), spending down the 2023-24 unrestricted fund balance, deferring repayment to the rainy-day fund, and cutting central-office budgets.
One-time fixes make a deficit disappear for a year — and then it comes back. It came back: for 2026-27, the district's recommended solutions (presented May 6, 2026, with data as of April 30) total $75.3–$87.3 million. This time roughly a quarter of the package is ongoing — higher classroom staffing ratios and permanent central-office cuts.
| Measure | Type | Amount |
|---|---|---|
| Unused interfund loan capacity | One-time | $16M |
| Federal (IRA) energy rebate | One-time | ~$12M |
| Fund-balance drawdown | One-time | $10–20M |
| Delayed rainy-day-fund repayment | One-time | $7.2M |
| Capital-fund interest transfer | One-time | $5M |
| Central-office reductions (69.3 FTE) | Ongoing | ~$9.8M |
| School staffing-ratio changes (57.1 FTE) | Ongoing | ~$9.6M |
| Transportation changes | Ongoing | $3.5–5.5M |
| Other reductions | Ongoing | ~$2.2M+ |
Recommended solutions as of April 30, 2026, presented at the May 6, 2026 board study session. Public hearing July 8, 2026; board adoption vote expected August 26, 2026. Total range: $75.3–$87.3 million.
The staffing-ratio line is the one families will feel: the recommendation moves grades 6–12 to a 32:1 staffing ratio (37.7 FTE, $6.5 million) and grades 4–5 to 28:1 (7.2 FTE, $1.1 million). The central-office line eliminates 69.3 positions — 55.75 classified, 10.05 certificated, and 3.5 administrators, plus $1.6 million in non-staff spending.
The closure plan that lasted five weeks
Closures were supposed to be part of the answer to the fixed-cost side of the problem — fewer students spread across the same hundred buildings. In October 2024 the superintendent recommended closing four elementary schools for 2025-26: North Beach (consolidating into Viewlands), Sacajawea (into John Rogers), Stevens (into Montlake), and Sanislo (into Highland Park). Earlier drafts had contemplated closing as many as 17 to 21 buildings.
The four-school plan would have saved about $5.5 million a year. On November 26, 2024, facing sustained public opposition, the board withdrew it. No Seattle school closed for 2025-26, and closures are not part of the 2026-27 package.
What Olympia changed in 2025
The 2025 legislative session went at two of the three causes directly — the underfunded formula and the levy lid. It delivered the largest K-12 funding changes in several years, though as statewide sums spread across 295 districts:
- SB 5263 (special education): raised the special-education funding multiplier to 1.16, eliminated the tiered structure, and removed the 16 percent cap on the share of a district's enrollment the state would fund — $295.6 million in new state funding for the 2025-27 biennium, aimed at the single largest gap between what the formula pays and what districts spend.
- SB 5192 (materials, supplies, and operating costs): raised MSOC allocations to $1,614.28 per student, plus $214.84 per student for grades 9–12 — $81.4 million for the biennium.
- ESHB 2049 (levy lid): raised the per-pupil cap on local enrichment levies by $500 above Seattle CPI in calendar 2026, with every district converging at a single $5,035 per-pupil limit by 2031. For Seattle, $500 across 48,518 funded students is about $24 million a year in new local taxing capacity — the arithmetic behind Sen. Jamie Pedersen's estimate that the expanded authority is worth more than $25 million a year to SPS. The above-inflation enhancements in 2027–2030 apply only to districts under 40,000 students, so Seattle's durable gain is essentially that $500 step.
What does that do to per-pupil funding? Seattle's local tax revenue rises from about $4,000 per funded student in 2024-25 ($191.1 million) to about $4,280 budgeted for 2025-26 ($207.8 million) — an 8.7 percent jump, in the first budget written under the new authority. Stacked on the roughly $17,000 the state provides, Seattle's two main funding streams now carry about $21,300 per student. But scale matters: $24 million of new levy capacity covers roughly a quarter of a $90 million structural gap. The deficit SPS is closing for 2026-27 already sits on top of these increases, and its fund-balance forecast still goes negative in FY27 without the ongoing cuts.
What to watch
Three dates matter next. July 8, 2026: the public hearing on the 2026-27 budget. August 26, 2026: the board's adoption vote, which decides whether the staffing-ratio increases and central-office cuts land as recommended. And the fall 2026 enrollment count: the district's forecast assumes the deficit persists regardless, but a second straight year of enrollment growth would change the out-year math at the margins.
Do the deficits ever end? Not through the levers that come up most often:
- Enrollment recovery would mean winning back nearly 4,900 students — and the district itself says it can't enroll its way out.
- Staffing ratios are a small lever. The entire ratio increase in the 2026-27 package nets about $9.6 million a year against a roughly $90 million problem; closing the gap that way would take classroom ratios no district would adopt.
- Closures shed about $1.4 million per building. Even a consolidation several times the size of the plan that died in 2024 covers a fraction of the gap.
What the out-years actually turn on is already visible in the district's own forecast. The status-quo table that goes negative in FY27 shows the annual slide slowing sharply after it: a $67 million drop in FY27, $14 million in FY28, then $6–7 million a year through FY31. The levy math helps explain why: $24 million a year of new capacity can't close this year's gap, but it is larger than every annual slide the table shows after FY27. On the district's own preliminary numbers, the structural gap narrows to a size the new revenue is built to cover.
The crisis, in other words, is not a hole that widens forever. It is that four years of one-time fixes spent the reserves that would have bridged the narrow years. That is what the August 26 vote is really about: whether the district crosses FY27 and FY28 with ongoing cuts, or with a cushion it no longer has.