OTHELLO — While the Othello School District is in good financial condition for 2026-27, things look a little bumpy over the next four to five years unless there’s some advance planning. Othello School Board members reviewed the proposed 2026-27 budget Monday, and Othello Superintendent Pete Perez said there could be some tough decisions ahead. 

“You will see some things today, particularly in the four-year budget section that I think most people would find alarming; that would make you sit back and say, ‘Wow, that’s where we might head,’” Perez said.  

He emphasized that while OSD faces financial challenges, it has time to overcome them.  

“We have another year or two before it gets mission critical,” he said.  

Enrollment has been declining since its peak in 2019-20, but Perez told the Columbia Basin Herald in a separate interview that enrollment is only part of OSD’s challenge. 

“I think the other factor is what everyone is experiencing across the state, is the funding model is broken,” Perez said.  

The district’s general fund was budgeted at $89.2 million for 2026-27. The general fund pays for salaries, supplies and materials, maintenance, and most school operations. 

Amy Suarez, OSD executive director of business services, said expenses will exceed revenues, which could require a transfer from the district’s reserve funds. 

“Just because we’re budgeting $89.2 million, I don’t expect to spend that much, but we will exceed our expenditures over our revenues,” she said.  

Suarez said OSD officials considered what the difference might be in the worst-case scenario and budgeted accordingly, estimating a maximum shortfall of about $4.5 million.  

“Are we spending more than we’re bringing in? Absolutely,” Perez said. “Is it that much? Probably not.” 

Enrollment in 2025-28 was the equivalent of 4,149 students, 85 students lower than the budget projection. For 2026-27, the enrollment projection is the equivalent of 4,052 students.  

Declining birth rates account for some of that, Perez said. The last few years have been challenging ones in the ag industry, with farmers and growers cutting back operations as a result. That too has affected enrollment, he said.  

District officials have to take that into account when thinking about the future. 

“The years of Othello having 400 kindergarten students – we’re past those. I think it really is readjusting the system to respond to what the community is now. The school has got to be right-sized,” Perez said.  

The district’s debt service fund was budgeted at $2.8 million; it pays for voter-approved bonds issued for construction projects. For 2026-27, it includes a $295,000 one-time transfer, which will be added to the existing funding to make the final payment on an existing bond. 

“That’s related to the current bond for the high school,” Perez said. “That bond is from 30 years ago now – it's the final mortgage payment. We’re going to pay that bond off in December of 2027.” 

The capital projects fund is projected at about $1.8 million. Suarez said district officials wanted to set aside some money for emergencies. The district did receive a grant to pay for an air quality assessment of district buildings, Suarez said.  

The transportation vehicle fund budget was projected at $900,000, which reflects the purchase of school buses. Suarez said the state formula used to calculate bus depreciation is changing and OSD may have to space out bus purchases as a result. 

The Associated Student Body fund is budgeted at $775,700. Most of that money is generated from student fundraisers and fees.  

Perez said state legislators are evaluating how schools are funded and are required to come up with an updated funding plan by 2027. Perez said he thought that should improve funding allocations. Board member Isauro Pruneda said he wasn’t sure state officials could or would fix it.  

The district has a reserve fund that exceeds the target, he said. 

“My biggest deal is, it took us how long to save that? Previous boards made sure that we have it,” he said.  

Other school districts statewide have little to no reserves, and Pruneda said he doesn’t want to see Othello in that situation. He said he was uneasy about deficit spending, or at least too much of it.  

“You don’t want to cut jobs or anything else, but we do not want to be in a (Kiona-Benton) situation where we’re having to make even worse cuts,” Pruneda said. 

Othello, Perez said, could accommodate deficit spending in 2026-27, even up to the worst-case scenario, and still stay within its targets for its reserve fund. But that won’t always be the case.  

“Next year, if they don’t fix it or it doesn’t look hopeful, we’ve got to tighten the belt more,” Perez said. “We just don’t want to tighten it too much at the wrong time.” 

While Othello is in good financial condition now, district officials are looking ahead. Perez cited a state analysis that rates every school district statewide. 

“It’s like the high school – red, yellow and green. You want everything to be green," he said. "What we’ve seen coming for us is, more of those are turning yellow – and we know that’s happening. The data you’re seeing here is: ‘Hey, you should be alarmed a little bit. You should be paying attention.’”