EVERETT — In their latest report on Marysville School District’s finances, state auditors removed a rare finding issued last year that questioned the district’s ability to continue operating.
This year’s audit, which focuses on the 2023-24 school year and was released May 20, found that the district’s financial status still warrants significant oversight. But unlike last year’s audit, which focused on the district’s finances in the 2022-23 school year, the latest audit did not include a “going concern” finding.
“Going concern” is a term used by auditors when they have doubts over an organization or government body’s ability to exist about 12 to 15 months after the end of its fiscal year.
The district still has a lot of work to do to right its financial ship, state auditors said, but this year’s finding is a step in the right direction.
“We do see that the district is still trying to work their plan and trying to find those areas where they can cut costs,” said Kristina Baylor, an assistant director of local audits at the Washington State Auditor’s Office. “They’re making those hard decisions to close schools, they’re moving to a K-6 education model instead of K-5. Those are the tough decisions that are going to help them stay within the confines of their available resources.”
As part of its efforts to balance its budget, the district reduced staff and school programs, approved interfund loans and implemented a spending freeze for all nonessential purchases or travel, state auditors wrote in their most recent findings. The district also voted to close Liberty Elementary School and Marysville Middle School while reconfiguring elementary schools to kindergarten through sixth grade in an effort to save more than $2 million per year.
After last year’s audit results were released, the state superintendent placed the district under enhanced financial oversight — the highest level of state oversight before a potential dissolution — and appointed a special administrator, Arthur Jarvis, to oversee the district’s financial status.
The audit still said that the district’s financial condition is at risk of not being able to meet its financial obligations, the same finding auditors described last year and one that “is the highest level of reporting to convey this is still a significant area of concern for the district,” Baylor said in a May 22 interview.
But the district’s spending cuts, combined with the increased oversight, brought a level of stability that led to the auditor’s office decision to not issue a “going concern” finding, meaning auditors do not believe the district will dissolve by the end of the year.
“There’s still concerns out there, and we still have a duty to notify the public and make sure a reader of the financial report has an awareness of that,” Baylor said. “But we’re not as concerned that it is so unstable that something could happen in a shorter period of time.”
Marysville School District will have to make staffing cuts to meet its ending fund balance goals by the 2025-26 school year, interim superintendent Deborah Rumbaugh said at an April presentation of the district’s three-year financial plan. The district will need to reduce 10 certificated staff and 10 classified staff along with cutting stipends, materials and supply costs, according to the plan.
Combined with the just over $2 million in savings from school closures and an additional $1 million cut to administrative positions, the district would be set to end the 2025-26 school year with a fund balance of $5.8 million, the plan reads.
This year’s audit also found no significant deficiencies in the district’s financial reporting.
“The district wants to thank the State Auditor’s Office and the audit team for acknowledging that the district is on track to restore its financial viability by removing the previous year’s audit opinion that raised a substantial doubt about the district’s ability to continue,” the district wrote in a May 19 release. “The district also appreciates the auditor noticing the improvements that are currently occurring in the Marysville School District and is pleased that no significant deficiencies exist and that the district received a clean financial audit.”
In 2024, state auditors had found that the district’s financial condition declined to a point where they had “substantial doubt about its ability to operate into the future,” the audit report read. When the auditor’s office released the “going concern” finding, the Washington State Auditor, Pat McCarthy, called it a “rare and alarming” result.
Auditors issued that finding because of a double levy failure in 2022, along with changes in leadership and the Washington Schools Risk Management Pool dropping the district from its coverage, a form of financial protection similar to insurance.
Marysville was the first Washington school district to receive a “going concern” finding from state auditors in 17 years. The last was Vader School District in rural Lewis County, which dissolved in 2007.
The district’s three-year financial plan will attempt to bring its ending fund balance to 5% of its general fund expenditures by 2028.
“Ultimately, the district is pleased to have received a clean audit and will continue to be diligent in its efforts to meet the goals of the plan, exit binding conditions, while continuing to meet the academic, social, emotional, and overall well-being of the students,” district spokesperson Jodi Runyon wrote in a May 27 email.
Will Geschke: 425-339-3443; william.geschke@heraldnet.com; X: @willgeschke.
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