Could Marysville schools have to close amid 'uniquely perilous' financial troubles?

A new state audit is sounding the alarm on the Marysville School District's dire financial state.

The report, released Monday, says the district's financial condition creates "substantial doubt about its ability to operate into the future."

"This is a call for action for the superintendent and school board," said state Auditor Pat McCarthy.

She compared Marysville's budget crisis to the much-smaller Vader School District, which was dissolved in 2007 because of severe financial problems, including the failure of a maintenance and operation levy.

Similarly, in Marysville, a double levy failure in 2022 cost the district about $25 million in funding.

"We haven't seen any school district in this rough of shape since then," she said.

The Marysville district has been in turmoil over the last year, since leaders failed to submit a balanced budget, and the state Office of Superintendent of Public Instruction stepped in to oversee the district's finances on so-called "binding conditions."

Since then, OSPI convened a financial oversight committee, an even higher level of intervention, to help the school district out of the financial crisis, and several top administrators — including the heads of finances and human resources, as well as the school board's president — have left Marysville.

While many districts across Washington state are grappling with budget challenges because of declining enrollment, rising costs, and expiring Covid relief funds, Marysville is in a "uniquely perilous financial position," McCarthy wrote in the report.

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Instead of focusing on what caused the crisis, McCarthy says the district should be focused on finding a solution — especially with the new school year starting soon.

"They need to be embracing their situation and recognizing it and saying, 'OK, all of these things may have happened, but we've got a school district with 9,700 kids and we better figure this out,'" she said.

In a statement responding to the audit report, Marysville officials said the district has made significant budget cuts and is continuing to work towards getting out of binding conditions with the state.

Still, the audit paints an alarming picture of the district's current financial health.

McCarthy says schools should, ideally, have more than 60 days' worth of operating expenses available in its general fund. As of last August, auditors found Marysville had only 18.6 days of funding. And this June, the district was running a negative 11.6 days' worth of funding.

Another sign of Marysville's grim financial situation: State auditors had originally been scheduled to review just the fiscal year ending in last August, but they extended their inquiry of Marysville to the current fiscal year because of alarming developments.