Olympia School District will have around 10 less teaching positions in buildings this fall.

The Board of Directors voted June 25 for a state-funded preschool program to shift into a nonprofit and a $250,000 drop in Title I funding.

The vote followed a public hearing held from 5:30 to 6:30 p.m. at Knox Administration Center, 111 Bethel St. NE. Superintendent Patrick Murphy said at the board's June 18 meeting that this is "not the last year of reductions," citing declining enrollment as the district's most significant financial challenge.

"There's just a structural problem in the way that the district is funded. Declining enrollment contributes to it," Executive Director of Business and Finance Kate Davis told the board at the June 18 first reading.

The adopted budget sets total general fund revenue at $196.4 million and expenditures at $195.7 million, according to the district's budget document. The plan carries a beginning fund balance of $7,692,322 and projects an ending balance of $8,412,765, or 4.4 percent of expenditures.

The budget document describes approximately $3.5 million in proposed reductions for 2026-27. Murphy characterized the figure as $3 million in public remarks, citing operational efficiencies.

Certificated staff drops from 622.9 to 613.3 FTE positions. Administrative staff falls from 41.3 to 39.7 FTE. Classified staff rises from 418.0 to 456.7 FTE, largely to cover increased special education needs, which are projected to exceed revenues by $8.2 million this year.

Three staffing adjustments were made after the board approved its Reduced Education Plan in April: a technology support position was eliminated, saving $95,000 per year; a Family Engagement Coordinator was added at $88,000; and a half-time elementary art support role was added at $70,000.

The Early Childhood Education and Assistance Program preschool has been removed from the district budget entirely. A local nonprofit will now operate the program.

Title I funding is projected to decline from $1,870,239 in 2025-26 to $1,620,236 in 2026-27, a drop the budget document attributes to lower poverty levels in the community compared to state and national averages.

Each student generates an estimated $14,764 in state and local levy revenue. With enrollment at 8,872.8 FTE students and declining, the district loses funding with every departure. About 70 percent of the budget comes from the state.

The district's fiscal health score from the Office of Superintendent of Public Instruction sits at 2.15, ranking Olympia 272nd out of 295 Washington districts. A score below 1.75 triggers mandatory state oversight.

The budget projects additional cuts of $3.4 million in 2027-28 and $895,022 in 2028-29. The district must file its adopted budget with OSPI by Monday, August 31. The next regular board meeting is Thursday, July 16.