Just before the school year started, Seattle Public Schools (SPS) and the Seattle Education Association negotiated a three-year, $137 million contract, greenlighting the second consecutive year of double-digit raises for educators.

Amid SPS forecasts of financial doom and gloom, the details of how the district will afford the contract long-term are somewhat foggy. While the state and the district’s technology levy will cover a good portion of the cost, SPS will spend $67 million from its general fund and cash reserves to cover the remainder.

On paper, the costs of the deal add to the rapidly increasing gap between the district’s revenues and projected expenditures, originally estimated at close to $100 million in this school year’s record-breaking $1 billion budget. In reality, though, the district often overestimates its spending and winds up with extra money at the end of the year.

Still, district officials say the contract may risk depleting the district’s $136 million in cash reserves — which are tapped during funding shortfalls — beyond what School Board policy allows.

If the paper version of the contract’s financial impact becomes reality, there will be only $6.6 million in that account by summer 2022. That estimate is far below the Seattle School Board’s required minimum 3% revenue in savings, which would amount to about $30 million. To dip that far, the district must seek special permission from the Board before approving the 2021-2022 budget.

It’s a risk that might eventually lead to layoffs, the district’s chief finance officer said, but worth preventing a strike.

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 “We’re gonna be going into the hole on this, but if we can’t [offer] our teachers a wage to stay living in this unaffordable community … then what do we have? Not a good situation at best,” Board President Leslie Harris said at a meeting last week, just before she and other members gave their unanimous approval to a summary of the contract. 

While it’s hard to say how many teachers leave the district because of compensation, the union’s public remarks during negotiations pushed for salaries that were consistent with Seattle’s cost of living and competitive with surrounding school districts. By the end of this contract, teachers will make anywhere between $63,000 and $124,000. A 2017 study from the University of Washington found that just to scrape by in Seattle, a family of four should be making around $76,000 a year — a figure that jumped 86 percent since 2001.

Three years is a long time in school-district finance, said SPS Chief Financial Officer JoLynn Berge. A lot could change in the district’s revenues by the time — as they did over the lifetime of the most recent contract, with the state’s relaxing of local property tax collection for school districts. For at least the remainder of the current contract, she said she doesn’t foresee any need to make staffing or program cuts unless enrollment changes. After that, though, layoffs may be on the table.

When asked via email what the alternative or consequences would be for taking the spending risk, Berge responded: “A strike and not starting school on time, which disproportionately impacts our students furthest away from educational justice … Again, we planned for the bargain.”

“It is also important to make clear that there won’t be reductions if our enrollment stays stable at the district level; staffing always varies school by school as we match staffing to support student enrollment,” she added.

Seattle Education Association Vice President Michael Tamayo said the union wouldn’t have bargained something that would bankrupt the district.

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“We are confident the contract doesn’t impact FTE (full-time equivalent teaching) resources,” he said. “Does it concern me? It’s the same message we’ve had in the district my entire career, and I don’t see it changing.”

Raises for teachers and non-certificated educators make up 76% and 13% of the total contract cost, respectively. The rest goes toward additional nurses and counselors and funding several racial equity initiatives, including the expansion of teams at schools that deal with instances of racial bias.

Without more detail on the district’s game plan, state education department Chief Financial Officer T.J. Kelly said on Tuesday that he couldn’t weigh in on whether Seattle’s financial forecast was concerning. There is no state-mandated balance minimum for school-district coffers. A bill proposed by state schools chief Chris Reykdal in the last Legislative session suggested one, but it didn’t go far.

“The education funding system in this state has gone through four once-in-a-career transformations in the last decade,” said Kelly, alluding to the changes lawmakers made in the court-ordered overhaul of Washington state’s school finance model. “The system right now is in a state of flux, and districts are just trying to figure out what their new reality looks like with more money in the allocation to pay for salaries.”

The School Board will vote on the full version of the contract on Oct. 16.