MISD budget: ‘Financial challenges,’ staff reductions

Published 8:30 am Monday, March 2, 2026

With goals of transparency, accuracy and honesty at the forefront, Mercer Island School District (MISD) Superintendent Dr. Fred Rundle and Associate Superintendent of Finance and Operations Matt Sullivan recently teamed up to record a budget webinar for the Mercer Island community.

For the fourth straight year, the duo discussed the current MISD budget, student enrollment, staffing and more.

MISD posted the update on Feb. 13, three days after King County Elections began tallying the early votes in the general election, which featured a district replacement Educational Programs & Operations (EP&O) Levy. The levy passed and the results were certified on Feb. 20.

In the webinar, Rundle said that levies are important factors in trying to bridge the gaps in state funding for school districts. The webinar notes that since 2021, MISD special education has been underfunded by $20.7 million; materials, supplies and operating costs (MSOC) have been underfunded by $12.2 million; and transportation has been underfunded by $3.3 million.

“I think we’re going to continue to see some financial challenges into the future,” said Rundle as he delved into MISD’s three “big buckets” of revenue and expenditures.

For MISD in 2025-26, its special education is underfunded by $4.6 million, MSOC is underfunded by $1.9 million and transportation is underfunded by $696,000. Although the state is providing the school district $127,756 for an average teacher salary and benefits, that area is still underfunded by $27,852.

According to the webinar documents, MISD faces a $3 million budget shortfall in 2025-26 and a $2 million funding deficit in 2026-27.

On the plus side, MISD has rebounded from an “almost unhealthy” low fund balance of 2.4% in 2021-22, rose to 3.7% in both 2022-23 and 2023-24, and sat at 4% for 2024-25. The district’s goal is to reach between 8% and 10%, Sullivan said.

“As we rebuild our fund balance over these past few years and moving forward in the coming years, we want to be sure that we’re not affecting student achievement, student programs (and) we’re not affecting and getting deep cuts to staff,” Sullivan said of the slow climb.

Sullivan said that school district will have to look at reductions in staffing and in MSOC. He added that it’s part of the equation in breaking even in the budget, in which 84.7% is spent on people through the general and capital projects funds. Other funds within the budget are for transportation, debt service and the associated student body.

Student enrollment, which is the biggest driver of the MISD revenue stream, has been shrinking across the U.S. due to a decline in birth rates, according to Rundle. Across the district in 2025-26, there are 3,825 students (there were 4,361 in 2018-19) and it’s projected that there will be 3,706 students in 2029-30.

As far as open enrollment, MISD has 144 students, split between those students in the open enrollment process (grades 6-12) and those who have parents working in the MISD or for the city of Mercer Island.

MISD is open to continuing that type of enrollment next year, said Rundle, adding: “It is not here to solve our entire enrollment challenge. It’s just meant to make sure that we are softening the impact.”

Rundle noted that concerning enrollment, MISD focuses on how to attract new families, how to retain them once they’ve arrived and how to get them to return if they’ve gone elsewhere. He added that students are the priority and the district’s values focus on what’s best for the whole child.

When eyeing solutions for school funding, Sullivan said MISD monitors the Legislature in Olympia and how it can benefit districts, including advocating for specific bills targeting transportation and enrollment stabilization.

To view the webinar, visit: https://www.youtube.com/watch?v=cjW4w-t0qYc