2026-27 Olympia School District Budget
Olympia School District is building the 2026–27 budget amid declining enrollment and rising costs. The district’s budget page includes the February 2026 enrollment, staffing, and budget update; the 2026–27 enrollment projections dashboard and equity and staffing allocation (certificated instructional, classified) documents.
Olympia School District Budget in 90 Seconds
Most of Our Funding Comes from the State
Olympia School District receives funding from several sources, with the majority coming from the State of Washington.
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76% - State funding
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17% - Local levies
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4% - Federal funding
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3% - Other sources
Because state funding is largely based on student enrollment, changes in enrollment directly affect district revenue.
Enrollment Has Declined
Olympia School District has experienced declining enrollment in recent years, which reduces state funding annually. Since the 2019-20 school year, enrollment is down 777 students.
A commonly used estimate for Washington school districts is that every 100 fewer students is about $1.5 million less in annual revenue (state and local). If we maintained the same enrollment as in 2019-20, we would have $12 million more in revenue in the 2026-27 school year, along with associated expenses.
Current Budget Outlook
For the 2026-27 school year, Olympia School District is projecting:
Long-Term Financial Stability
The district works to maintain a healthy fund balance to ensure financial stability and protect against unexpected financial challenges.
The district monitors financial health indicators used by the Washington Office of Superintendent of Public Instruction (OSPI). These indicators include a district’s ending fund balance, revenue-to-expenditure ratio, days of cash on hand, and a positive four-year budget projection. One district parameter is to maintain a financial health score greater than 1.75, as districts with a score below 1.75 are more likely to be placed under binding conditions*. A higher score reflects more stable operations and a stronger ability to manage financial uncertainty over time. Based on the 2024-25 statewide rankings, Olympia School District’s Fiscal Indicator Profile Score is 2.15, placing our district 272nd out of 295 school districts in Washington State. Maintaining an adequate ending fund balance is a key part of meeting these indicators and supporting the district’s long-term financial stability and ability to meet students’ needs.
*Binding conditions are a type of state financial monitoring for districts facing serious budget challenges and needing closer oversight to regain financial stability. For additional information regarding School District Budget Challenges and Financial Insolvency, visit this OSPI resource.
Why is Olympia School District working to avoid binding conditions?
We are working to avoid binding conditions because they are not a good outcome nor a budget strategy. In Washington, binding conditions are used only when a district cannot produce a balanced budget. That means the district moves into state financial monitoring and closer oversight to regain stability.
Binding conditions also come with direct repercussions. Districts will be required to meet specific financial benchmarks, provide more frequent financial reporting, and hold regular meetings with the Washington Office of Superintendent of Public Instruction (OSPI) and Capital Region ESD 113. If a district fails to comply, state funding may be withheld pending further review. Binding conditions do not provide additional resources, and OSPI encourages districts to take proactive steps to avoid having them put in place.
Just as important, binding conditions mean less local flexibility at a time when local decision-making matters most. If the financial situation does not improve, a district can move into Financial Oversight and, eventually, Enhanced Financial Oversight.
Financial Oversight means outside experts step in to review the district’s finances, hold a public hearing, and potentially replace the district’s plan with an alternate one. Enhanced Financial Oversight goes further: the state will appoint a special administrator, require approval for spending and contracts, restrict hiring and purchasing, impose a recovery plan on the district, and may ultimately take full control of the district's financial decisions.
For Olympia, the goal is to make responsible local decisions now, protect long-term financial stability, and avoid deeper state intervention later. Put simply, once a district reaches financial oversight, the risk is no longer just budget reductions. It is the loss of local control, the possibility of state-directed asset sales, and in the most serious cases, dissolution and consolidation with neighboring districts.
How do Binding Conditions and the Budget impact future Bonds?
Bond rating organizations closely evaluate a district’s overall financial condition as part of their assessment of creditworthiness. This includes reviewing fund balance levels, structural budget alignment, enrollment trends, and long-term financial planning. A key consideration is whether a district is in, or approaching, binding financial conditions, as this signals increased fiscal stress and reduced flexibility.
Districts nearing binding conditions may be viewed as higher risk because they have limited capacity to absorb unexpected costs or revenue shortfalls. This can lead to downward pressure on bond ratings, which in turn may increase borrowing costs.
Conversely, districts that demonstrate proactive financial management—such as making structural adjustments, maintaining adequate reserves, and implementing multi-year planning—are generally viewed more favorably, even in challenging financial environments.
How Birth Rates Affect Olympia School District Enrollment
Birth trends matter because they directly shape future enrollment in Olympia School District. Fewer births in the district mean fewer students entering kindergarten, which in turn affects total district enrollment over time. Since 2019-20, district births have decreased by 30.2%, and kindergarten enrollment has declined by 29.9% over the same period. In 2014, there were 642 births in the district. Preliminary 2025 data show 448 births. Since 2020-21, kindergarten enrollment has averaged 91.4% of district births, compared with pre-pandemic years when the district typically enrolled more kindergarten students than were born in the district. Additional details are available on the district’s Enrollment Projections Dashboard.
Where Every Budget Dollar Goes
Most of Olympia School District’s general fund supports the people who work with students every day.
Category
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Approximate Share of Budget
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Certificated Staff (teachers, counselors, librarian, nurse, principals, admin, etc.)
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44%
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Employee Benefits
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22%
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Classified Staff (paraeducators, custodians, district/school office staff, bus drivers, food service, etc.)
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17%
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Operations & Other Costs (utilities, fuel, insurance, supplies, contracted support, etc.)
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17%
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What This Means
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About 83% of the district’s budget supports salaries and benefits.
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Most district employees work directly in schools, supporting students.
How Much of the District’s Budget Goes to District Central Admin Costs?
Central administration includes: Board of Directors, Superintendent's Office, Business Office, Human Resources, Public Information, Supervision of Instruction, Supervision of Nutrition Services, Supervision of Transportation and Supervision of Maintenance and Operations.
School Year
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OSD Central Admin Costs
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Statewide Average
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2024-25
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4.88%
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6.31%
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2023-24
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5.50%
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6.57%
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2022-23
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6.74%
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6.59%
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2021-22
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6.98%
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6.55%
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2020-21
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6.68%
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6.57%
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2019-20
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7.33%
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6.47%
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2018-19
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6.37%
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6.39%
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2017-18
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6.75%
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6.67%
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Note: In 2024-25, a share of Business Services and Human Resources was funded through the Tech Levy as the district implemented Qmlativ. Those costs were returned to the General Fund in 2025-26 and we expect the percentage to increase slightly.
Olympia School District’s central administration accounts for a smaller share of the district’s overall budget than the statewide average for school districts in Washington state.
During the 2024-25 school year, Olympia School District spent 4.88% of its budget on central administration, compared with a statewide average of 6.31%. That means Olympia spent about 23% less of our budget on central administration than the statewide average.
Over the past seven years, total district spending increased from $123.3 million to $175.3 million, while central administration spending increased from $8.3 million to $8.6 million. That means overall district spending grew by about 42%, while central administration spending grew by about 4%.
The district’s current fiscal goal also says right-sizing for 2026-27 will continue, beginning with the district office, which is why this remains an important part of the broader budget conversation.
How Is the District’s Budget Distributed Across Program Groups?
District spending supports more than classroom teaching alone. In addition to regular and specialized instructional programs, the General Fund also pays for transportation, facilities, custodial services, nutrition services, technology systems and other supports that help schools operate. The chart below shows how 2024-25 General Fund expenditures are distributed across these major program groups.
Summary by Program Group
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2024-25 Actual
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2024-25 Percentage
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Regular Instruction
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89,758,095
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51%
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Special Education Instruction
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35,759,924
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20%
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Vocational Education Instruction
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7,590,254
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4%
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Compensatory Education Instruction
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7,400,553
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4%
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Other Instructional Programs
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711,093
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0.4%
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Community Services
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731,224
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0.4%
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Support Services
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33,366,753
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19%
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Total General Fund Expenditures
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$175,317,896
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100%
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Program Group Definition:
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Regular Instruction: Also known as BEA (Basic Education Act), this includes general classroom and student supports, such as counselors and librarians. Also included is ALE (Alternative Learning Experience).
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Special Education: Early intervention, special education and related services to youth with disabilities. Services are based on individualized education plans.
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Vocational Instruction: Career/technical education programs for students in middle and high school programs.
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Compensatory Education: Includes state and federal special-purpose programs such as the Learning Assistance Program, Title programs, Multilingual Learner and Migrant Ed.
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Other Instructional Programs: Includes community services and childcare.
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Support Services: Includes most central office supports, facilities, and custodial support, pupil transportation, and child nutrition programs, property and liability insurance and information systems.
Frequently Asked Questions
Questions:
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Answers:
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Why is Olympia School District making budget reductions for 2026-27?
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Like many districts across Washington, Olympia School District is adjusting its budget due to declining enrollment and rising costs, while state funding has not kept pace with these changes. Enrollment in Olympia has declined by 777 students (8%) since the 2019–20 school year. The 2026 legislative session did not provide significant new funding for schools, leaving districts to manage increasing costs within existing resources. Olympia has already made reductions over the past three years and will continue to adjust spending to align with revenue. Based on historical trends and current projections, district spending is expected to exceed revenues by about $2.1 million, necessitating additional budget adjustments.
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Why can’t the district collect more levy dollars to help close the budget gap?
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State law limits the amount of enrichment levy funding a school district can collect. For 2026 collections, recent legislative action increased the per-pupil levy lid from $3,247 in 2025 to $3,838 in 2026, allowing districts to collect slightly more local levy revenue. Thanks to the School Board’s forward-thinking approach and the generosity of our community, the district was well-positioned to access the full benefit of this increase when the legislative change occurred. While this increase is beneficial and provides additional funding, it does not fully close the district’s budget gap. Districts are still limited by the state’s levy caps and, because levy authority is tied in part to student enrollment, declining enrollment can also reduce the total amount a district is allowed to collect.
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Can the district reduce spending elsewhere besides staff?
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The district is using multiple strategies, not just staffing adjustments. Over the past several years, the district has already made significant reductions, including $7 million in 2023–24, $1.3 million in 2024–25, and $364,000 in 2025–26. Many of those reductions were weighted more heavily toward the district office and central services. In addition, the district is continuing a modified hiring and travel freeze during the 2025–26 school year and will continue to right-size for 2026–27 based on enrollment, beginning with the district office. At the same time, staffing remains the largest component of a school district budget, so non-staff reductions alone typically cannot close a significant budget gap. OSD Budget Reductions Since 2023.
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How will decisions be made about school allocations and staffing?
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All reductions will be run through the Board’s Process and Parameters. School allocation and staffing decisions are being informed by projected enrollment and the district’s published allocation documents. Our budget page includes the 2026-27 enrollment projections dashboard, equity allocation, certificated instructional staff allocations, and classified staffing allocations, which help show how staffing and resources are distributed across the district. Right-sizing for the 2026-27 school year will continue based on enrollment.
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Will class sizes be larger because of budget reductions?
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Class sizes may vary by school, grade level, and enrollment. As the district proposes reductions in staffing, class size is one factor being considered, including establishing minimum enrollment thresholds for a class to operate based on student demand for subjects and electives. Actual class sizes vary each year depending on how many students enroll at a particular school or request a particular course. We have also identified elementary class-size flexibility as one of our top legislative priorities. More flexibility would help schools align staffing with actual enrollment, create more balanced classrooms, and protect services during enrollment declines. Staffing decisions for 2026–27 will also be reflected in the district’s posted allocation documents. Class sizes may end up moderately higher in grades 4-12.
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Why does the district offer choice programs or low-enrollment programs?
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The district continues to offer choice programs because they meet diverse student needs and help many students stay engaged and successful in school. These programs are an important part of a responsive public education system.
At the same time, we must ensure all programs are financially sustainable. Some smaller enrolled programs and schools can cost more to operate, so the district regularly reviews enrollment, costs, and impact to ensure we are using resources responsibly while maintaining meaningful options for students.
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How will staffing reductions be made if they become necessary?
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Any staffing reductions would be developed through the regular district budget process, using the board budget process and parameters as a guiding filter, and informed by enrollment projections, staffing allocation documents, collective bargaining agreements, and other budget planning materials posted on the district’s budget page.
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Is this only a local issue, or is state funding part of the problem, too?
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This is not only a local issue. School districts across Washington are facing similar challenges, as state funding has not kept pace with rising costs. At the same time, districts like Olympia are experiencing declining enrollment, which further reduces revenue since much of school funding is tied to student counts. Statewide data and analysis from the Washington Office of Superintendent of Public Instruction highlight these ongoing funding pressures and enrollment trends affecting districts across the state.
While the district has continued to advocate for greater flexibility and stronger state investment in areas where costs are outpacing funding, such as special education, materials and operating costs, and staffing support, the 2026 legislative session did not result in significant new funding in these areas. As a result, districts must continue making local adjustments to align spending with available revenues.
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What is Olympia asking the Legislature to do?
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Olympia’s legislative priorities have focused on two broad areas: greater flexibility for districts experiencing enrollment declines and stronger investment in areas with high student need. During the most recent legislative session, the district and other school systems advocated for K–5 class-size flexibility, a rolling three-year enrollment average for districts with declining enrollment, and additional investments in areas such as special education, substitutes, MSOC, early learning, and updates to the state staffing model. While these priorities were raised, the legislative session has now concluded and these areas were not significantly enhanced this year. The district will continue working with legislators and education partners to seek progress on these issues in future legislative sessions.
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Where can families and staff find the most current budget information?
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The district’s budget webpage is the main place to find current materials for 2026-27. It includes the February 2026 enrollment, staffing, and budget update; the enrollment projections dashboard; and equity and staffing allocation documents. The 2025-26 Budget Book also provides a foundational look at how the district receives funds from state and federal sources and how those resources are allocated to schools.
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How does the recently approved Technology, Safety and Facility Improvement Replacement Levy factor into this budget?
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The Technology, Safety and Facility Improvement Replacement Levy is separate from the district’s general operating budget. It supports specific voter-approved technology, safety, and facility improvement needs, while the budget challenges outlined on this page relate to the district’s day-to-day operating budget, including staffing, enrollment and rising costs. We are grateful to our community for its continued support in approving these levies and investing in our schools.
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| Can Olympia School District sell land or property to cover operating costs? |
Olympia School District can sell surplus property no longer needed for school purposes, but under Washington law, proceeds from the sale of school district real property generally must be deposited into the debt service fund and/or the capital projects fund—not the general fund, which is used for day-to-day operating expenses. State law allows limited exceptions only for districts in binding conditions* or under enhanced financial oversight, including certain temporary interfund loans from the capital projects fund. Olympia School District is not in either of those situations, so selling property is not a general solution for covering ongoing operating costs. See RCW 28A.335.130 and RCW 28A.320.340.
*Binding conditions are a type of state financial monitoring for districts facing serious budget challenges and needing closer oversight to regain financial stability. For additional information regarding School District Budget Challenges and Financial Insolvency, visit this OSPI resource.
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