People fill the board room for public comment during a Marysville school board meeting on Feb. 5 in Marysville. (Olivia Vanni / The Herald)

People fill the board room for public comment during a Marysville school board meeting on Feb. 5 in Marysville. (Olivia Vanni / The Herald)

Marysville schools face ‘rare and alarming’ audit

The state auditor: “The most alarming audit of a public school’s finances in 17 years.” The district: Audit doesn’t tell the full story.

MARYSVILLE — State auditors last week provided the latest hit to the Marysville School District, questioning the district’s ability to continue operating in a “uniquely perilous” financial situation.

In a report released Aug. 5, state Auditor Pat McCarthy called the results of her office’s audit “rare and alarming.”

The audit found no deficiencies in the district’s financial reporting or internal controls, according to the report’s cover letter. However, auditors issued two findings, including one it classified as “extremely urgent.”

“The District’s financial condition places it at risk of being unable to meet financial obligations or provide services at current levels,” the audit said.

Auditors found the school district’s financial condition has “significantly declined,” and caused “substantial doubt about its ability to operate into the future.” Auditors call this a “going concern” finding.

Marysville is the first district to receive such a finding since the Vader School District shuttered in 2007, according to auditors.

“This is the most alarming audit of a public school’s finances in 17 years,” McCarthy said in a press release. “Local leaders have a financial and a community responsibility to right their ship. The stakes are too high for Marysville and its children.”

On Wednesday, the district responded to the audit, criticizing the auditor’s press release for omitting details of the double levy failure that caused the bulk of the budget issues.

“It is disappointing to read a press release and statements in the audit report that place the district in a position that leads the community to question its viability,” the district wrote. “The district has been working hard to address and correct past practices and solidify systems and structures to produce a balanced budget and eventually exit binding conditions.”

The district also called the press release’s emphasis on the district’s current financial state “unusual,” since the audit’s focus was the 2022-2023 school year.

The auditors agreed 2022-2023 was the focus, but noted the report also included un-audited data from the following school year. State auditors said this is standard practice.

“We haven’t seen the district take any proactive action to address their financial condition,” Kelly Collins, director of local audit for the office, said on Friday.

After projecting an $18 million budget deficit last August, the district entered into “binding conditions,” forcing school officials to work with the state to resolve the financial shortfalls. Marysville is the largest school district in the state to ever face these terms. District leaders agreed to provide a financial plan to recover by the end of the 2025-2026 school year.

The financial health of a government body is often measured in “days of operating expenditures,” or how many days of operating costs the district’s general fund account can support. A healthy benchmark is 60 days, according to state auditors.

Marysville could support just 18.6 days at the end of the 2023 fiscal year, and negative 11.6 days, as of this June, according to the audit. This means the district had more expenses than money available in its account.

“A clean audit does not change the fact that we have significant fiscal challenges ahead of us,” district spokesperson Jodi Runyon said. “The district continues to work diligently to make cuts and rightsize its budget.”

A rocky road

A financial crisis has plagued the Marysville School District for several years.

The district lost out on $25 million due to a double levy failure in 2022. While voters passed a downsized four-year levy last year, the district didn’t start receiving that money until June.

The issues continued from there.

In March, the district learned it had lost membership in its risk management pool, a form of financial protection similar to insurance. The risk pool cited a steep rise in claims, poorly maintained buildings and failure to maintain the district’s end of the bargain on a legal settlement.

The next month, the state superintendent’s office found the district’s first budget plan “incompliant,” with fund balance calculations off by as much as $3 million, numerous inconsistencies and insufficient funds left by the end of the 2025-2026 school year.

The district later submitted a second financial plan the state accepted. This budget included the closure of two schools, eliminated some educational programming and cut several staff positions.

Officials later announced Cascade Elementary, Liberty Elementary and Totem Middle School were on the chopping block.

In May, finance director Lisa Gonzales accused the district of “violations of the law, inaccurate state reports, and cronyism” before her contract expired. In June, both the school board President Wade Rinehardt and Executive Director of Human Resources Alvin Cooper resigned.

That same month, the superintendent’s office told the district its actions hadn’t been consistent with its approved financial plan. This, and the loss of these key staff members, made the district “unable to fully comply with its plan to regain financial stability.”

The state established an unprecedented Financial Oversight Committee to oversee Marysville’s path forward.

Committee member T.J. Kelly said last week the district has provided the committee with information in a timely manner. Runyon said the meetings are going well.

If Marysville cannot get the situation under control, the superintendent’s office will take more drastic steps.

Runyon said district officials have already made $6 million in cuts. Additional cuts will focus on staffing after confirming enrollment for the coming school year. Runyon emphasized these cuts will be made at all levels.

A two-way street

In a statement released Thursday, acting school board President Connor Krebbs called for the community to collaborate. He also encouraged the state to “look inward and determine whether or not its school funding decisions are student-focused.”

Ron Friesen, a Marysville resident and Best Schools Marysville volunteer, agreed.

“I agree with the auditors that this is a very, very dire situation, and it is unprecedented in the state,” Friesen said Friday. “What the auditors do not acknowledge is the impact that the state of Washington has had on this as well. We made a mess here, but we had a lot of help from the state.”

Friesen said the double levy failure that caused these financial problems is only a piece of the puzzle, and that the state has failed to support the district given its number of low-income families. This past school year, over 57% of Marysville students came from low-income families, according to state data. In Everett, that’s down to 44.5%. In Lake Stevens, less than one-third.

“Levies should be for extras, not for basics,” Friesen said. “Because levies have to provide basics, we’re losing our extras.”

School district officials said rising inflation and stagnant or declining enrollment has been difficult on many schools nationwide. Since the 2018-2019 school year, Marysville’s enrollment has dropped over 1,200 students, to just over 10,000 this most recent school year, state data shows.

“The financial strain schools are experiencing today is uncharted territory for everyone,” Runyon said.

As a community member, Friesen called for more state funding and more power handed to the teachers and school board.

“I have no confidence that people in the administration office can provide the leadership that’s needed to get us out of this,” Friesen said. “The teachers in the classroom, the people on the front line are going to come up with the solutions.”

The district stands firm it will continue to operate in spite of these challenges.

“Every child will have a classroom and a teacher, and school will start on time,” Runyon said. “The district is committed to providing a high-quality education for all students, even in the face of this financial crisis.”

Correction: A previous version of this story misidentified T.J. Kelly.

Connor Zamora: 425-339-3037; connor.zamora@heraldnet.com; Twitter: @cgzamora02.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Employees and patrons of the Everett Mall signed a timeline mural that traces the history of the 51-year-old indoor mall that was once considered the premier place to go shopping in the city. Thursday, March 20, 2025 (Aaron Kennedy / The Herald)
Mall mural offers nostalgic trip into the past

Past and present Everett Mall employees joined customers Thursday to view an artistic timeline of the once popular shopping mecca.

Edmonds Mayor Mike Rosen gives his State of the City address on Thursday, March 20 in Edmonds, Washington. (Will Geschke / The Herald)
Edmonds mayor talks budget at 2025 State of the City

Mayor Mike Rosen discussed the city’s deficit and highlights from his first year in office.

Public’s help needed to find missing Arlington man

The 21-year-old left the house Sunday night without his shoes, cell phone or a jacket, and was reported missing the following morning.

The Marysville Tulalip Campus on the Tulalip Reservation, where Legacy High School is located. (Will Geschke / The Herald)
Marysville board votes to keep Legacy High at current location

The move rolls back a decision the school board made in January to move the alternative high school at the start of next school year.

The former Marysville City Hall building along State Avenue on Tuesday, April 30, 2024 in Marysville, Washington. (Olivia Vanni / The Herald)
City of Marysville, school board amend property exchange

The city will relocate its public works facility to the district’s current headquarters, which will move to the former City Hall.

Snohomish County Elections employees Alice Salcido, left and Joseph Rzeckowski, right, pull full bins of ballots from the Snohomish County Campus ballot drop box on Monday, Nov. 4, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
County to mail ballots for Edmonds, Brier elections

Registered voters should receive their ballots by April 9 for the April 22 special election.

A stormwater diversion structure which has been given a notice for repairs along a section of the Perrinville Creek north of Stamm Overlook Park that flows into Browns Bay in Edmonds, Washington on Thursday, July 18, 2024. (Annie Barker / The Herald)
Edmonds Hearing Examiner decides on Perrinville Creek saga

The examiner revoked the city’s Determination of Non-Significance, forcing Edmonds to address infrastructure issues on the creek

Don Sharrett talks John Wrice through his trimming technique on Friday, March 14, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
Everett barber school offers $5 haircuts — if you’re brave enough

Students get hands-on practice. Willing clients get a sweet deal.

Our Lady of Hope Fr. Joseph Altenhofen outside of his parish’s building that will be the new home of Hope ‘N Wellness on Wednesday, March 5, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
New Hope ‘N Wellness location to open Wednesday in Everett

Our Lady of Hope Church will host the social service organization at 2617 Cedar St. in Everett.

Amtrak Cascades train 517 to Portland departs from Everett Station on Saturday, Sep. 2, 2023, in Everett, Washington. (Ryan Berry / The Herald)
Limited train service to resume on Amtrak Cascades

Trains will have less capacity for now, but service is expected to resume for some routes as early as Tuesday.

Marysville
Police: 66-year-old Marysville man dead from fatal stabbing

A neighbor found the man unconscious on the sidewalk as the result of an apparent stabbing. Police said they are looking for suspects.

Logo for news use featuring Snohomish County, Washington. 220118
Driver, suspected of DUI, hits WSP vehicle on I-5 near Everett

The trooper was blocking the HOV lane for a previous collision when his vehicle was struck Saturday morning.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.