Two letters were written on this. First was on June 4th with a early release summary of a public medium post. The second was sent on June 9th after the public medium post, Manufacturing a Deficit: Why we always have 100M+ in the bank but keep having to cut staff, was made public.
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Date: Jun 4, 2025, 11:57 AM
Subject: Budget book shows SPS never had a 100M in deficit actuals. What's happening?
To: schoolboard@seattleschools.org, bjones@seattleschools.org, bredmond@seattleschools.org, ratorres@seattleschools.org, fhpodesta@seattleschools.org, sjpritchett@seattleschools.org, krbuttleman@seattleschools.org
Hello SPS Board and senior staff,
Key question: As of June 1st, what is actual General Fund Balance and best prediction of actual deficit by Sept 1st? Do we actually have a surplus?
I have started reconciling budgets vs actuals and came to a shocking discovery. The actual deficit in 2022-2023 and 2023-2024 was only 44M, and 13M respectively (compare with the predicted 101M and 80M deficit). This is before accounting for the inter-fund loan would reduce that amount even more. This is a follow up to my last letter and related public medium post showing that 31% of the District Budget is allocated to staffing that is not examined during the budget planning process,
Looking at 2023-2024, it is as if most of the deficit almost completely evaporated into thin air.
See this picture lining up the general fund summaries from the last 4 budget books and showing how they do not match actuals by many tens of millions.
For 2025-2026 in particular, we're predicting a $12M higher beginning balance than last year indicating that we're forecasting that we will end with a large surplus. What is actually happening?
Furthermore, when the actuals were reported, we started 2024-2025 with 134M in the bank. If we are now predicting a surplus, did we even need the $27M dollar loan? Was it only required to balance the paper deficit caused by the systemic, multi-tens-of-millions overestimation of expenditures that has been common in the past decade? Something else?
Also, after collating a decade of data, I can show that nearly every year since 2009 we have estimated a far worse deficit than reality. In 2023-2024 it was 67-million too large. Gallingly from 2014-2021 we frequently ended up with 20M to 40M surpluses -- actual extra "profit" put into the bank account.
I can also show the reported actual opening balance is frequently tens of million underestimated in the budget planning.
Can you please dig into what the actuals are for 2025-2026 before approving the budget?
Liza, to you in particular, given your long tenure on the board, I would suggest you focus on sorting out how this went unnoticed for so long before talking more about governance frameworks. Understanding the systemic deficit prediction error is both more important and more urgent.
I have started passing this information out and expect to have a full write-up of findings in the next week or so. It will also compare our predictions accuracy against those of neighboring districts.
If there are any questions or corrections, please feel free to reach out to me! It's important everyone is on the same page here!
-Albert
Date: Jun 9, 2025, 4:00 PM
Subject: Budget book shows SPS never had a 100M in deficit actuals. What's happening?
To: schoolboard@seattleschools.org, bjones@seattleschools.org, blredmond@seattleschools.org, ratorres@seattleschools.org, fhpodesta@seattleschools.org, sjpritchett@seattleschools.org, krbuttleman@seattleschools.org
FYI, the public version of this post is up now
It charts SPS's actual vs budget balance vs end balance (which is based off the "Deficit") with complete data back to 2009 and some data even further back than that.
The general conclusion is that, absent true-ups in the budget process, it is nearly impossible to understand the financial status of the district during the budgeting process. This is evidenced that it took nearly 10 of us with very amounts of analytical experience in multiple domains including finance 3 weeks to be able to sort out where the conflicts where.
The fact that the district forecasting has shown a multi-ten million budget deficit for 16 but still maintained a steady grown in the General Fund balance indicates a systemic error in the budgeting.
Please let me know if there are mistakes. It's currently traveling around the web and I woiuld love to make corrections ASAP.
-Albert
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