OTHELLO — Superintendent Pete Perez and Executive Director of Business Services presented the district’s proposed 2026-27 budget to board members Monday. Perez warned that Othello’s budget, while stronger than some neighboring districts, still faces challenges in the years ahead.

“I don’t want to downplay the seriousness of the concern,” Perez said. “You will see some things today, particularly in the four-year budget section, that I think most people would find alarming.”

The district’s projected budget for the new fiscal year is $89.2 million, up from $87.2 million in 2025-26. Projected revenue is $85 million. Executive Director of Business Services Suarez said she does not expect the district to spend the full $87.2 million, but warned that expenditures will exceed revenue. Staff salaries and benefits make up 82.5 percent of projected expenditures, up from 79.8 percent in 2025-26.

The district will use reserve funds, built up over several years, to cover the gap between expenditures and revenue. This approach is unsustainable and will eventually force cuts unless funding or enrollment increases.

School funding in Washington depends on enrollment. Districts set their budgets using enrollment projections, which determine initial funding for the year. After the new year, the state adjusts funding based on actual enrollment.

Othello projects 4,052 students for the coming year. In 2025-26, enrollment came in 85 students short of projections. Enrollment peaked at 4,646 students in 2019-20.

For now, the district is comparatively well-positioned to weather financial challenges as it and the state work to maximize budget impact and improve funding formulas. Perez said the district “may have to tighten the belt more” after the new fiscal year, but he will make those decisions when the time is right. “We have another year or two before it gets mission critical,” he said.

The OSD Board of Directors will vote on adoption of the 2026-27 budget on August 24.