Jacob Dimond / jake@yelmonline.com
TJ Kelly, Office of the Superintendent of Public Instruction’s (OSPI) Chief Financial Officer (CFO), stood before a packed audience on Tuesday, Sept. 15, inside of a Yelm Cinemas movie theater during Yelm Kids First’s 2026 levy campaign kickoff to answer questions from Yelm-area community members about the upcoming levy measure in November for Yelm Community Schools.
First, an audience member said to Kelly, in reference to the Prescott School District, near Walla Walla, that it dissolved its schools into multiple surrounding districts. He asked Kelly if he was under the impression that, if dissolved, Yelm schools would be split into either North Thurston School District or Bethel School District?
“When we looked at Prescott, we looked at where do the kids actually reside? The majority of the kids resided along the western border of the district, which made real sense for them to go to the neighboring district,” Kelly said. “The other kids lived south of the main district school building. Again, we were looking for geographic landmarks and what makes the most sense.”
Kelly added that there has to be a conversation with neighboring districts about if they even have the capacity to absorb more students.
“Dissolving Yelm School District doesn’t necessarily mean that Yelm High School doesn’t exist anymore,” Kelly said. “It’s a perfectly fine high school. It could be Yelm High School, but it could be within North Thurston School District, hypothetically. The answer is yes. It is true and more than likely that if we had to dissolve Yelm School District, that Yelm would not go as an entire unit into another district. It would be partoned off into whatever pieces make sense to kind of keep school communities together, and also give the districts that are receiving the districts an opportunity to actually absorb, if the event of school closures actually occurred and was necessary.”
Kelly added that it’s possible that YCS “stays together as a unit” through dissolution, but claimed it’s not likely.
Another audience member stated that YCS employees are contracted through the district itself. She asked Kelly if current YCS employees would move into the new district, if absorbed, or if they would be “free agents to move around?”
Kelly said that his official, non-legal opinion is that the employees’ contracts would terminate since there isn’t a binding agreement with the new district absorbing the schools.
“You would essentially be free agents, to use a sports term,” Kelly said. “But again, we didn’t have to go all the way down that road with Prescott, but it doesn’t necessarily make sense for you to be part of a contract with a union that you didn’t get a chance to vote in that process.”
Another audience member asked Kelly if Yelm schools are absorbed by another school district, would local taxpayers be automatically paying into the new district’s tax rates?
Kelly told the audience member that it wouldn’t happen automatically.
“For levies, my hunch is what would happen is the Yelm community houses would get absorbed into North Thurston, the district,” Kelly said. “And then, either the levy would apply to you but it would be at a lesser rate, because remember, it’s a system that determines how much you collect.”
Kelly added the legal aspect that needs to be figured out is if Yelm taxpayers would be subject to a levy they didn’t vote for. He claimed the absorbing district could run a supplemental levy immediately, and then see if it can get the broader community to vote “yes” in support of a levy.
“At that point, you would be subject to those tax rates much sooner,” Kelly said.
Another audience member stated that everyone in the room has current concerns about the district’s ongoing financial situation and what the road ahead might look like. They asked Kelly how much longer these struggles will go on in Yelm, and other districts throughout Washington, before Washington state gets involved?
“What we don’t want to do is release a district from binding conditions and then two, three months later turn around and put them back on because that makes us look like we don’t know how to do our jobs,” Kelly said. “It’s a careful monitoring process. As I said, Yelm is missing one of the targets in its binding conditions letter. Not a big deal. We’ll stick with them. We worked with them through August with their budget to get their budget where we felt more comfortable as the state and as the ESD in order to show that you guys could end 26-27 with a positive fund balance.”
He added that the process is always evolving, and if the levy goes through and passes, the revenue will begin to arrive in April — creating a much brighter outlook for the district.
“That doesn’t mean we can necessarily go back to status quo,” Kelly said. “If status quo is what got us here, then status quo isn’t necessarily the healthiest thing to get us out. That doesn’t mean we’re like, deep breath, and back to business as usual. There’s still some things we can work with the district on and analyzing and figuring out how we can move forward to avoid this happening again.”
Another audience member asked Kelly if dissolution is two years down the road if the levy fails? They wanted clarity on whether or not dissolution is just around the corner if the levy fails.
“I would have a hard time definitively saying that a district of Yelm’s size would be able to figure that out between December and next August,” Kelly said. “I just don’t think that’s realistic, given the size of the neighboring districts and the complexity. Prescott, as I said, was 800 students in one school building. Prescott is not Yelm. No promises, but as I stand here today, I can say that it’s very unlikely that we would be able to move fast enough through all the hurdles to where that dissolution would be for the 27-28 school year. It doesn’t seem like we could get things through everything that quickly.”
Additionally, Kelly was asked if dissolution were to happen, is there a mechanism where a community is able to regain its school district?
“There is nothing that I’m aware of in state statute that explains how we establish a new school district,” Kelly said. A”s I stand here today, I think it’s permanent, done forever. And legislators make laws and if they wanted to craft a solution where they wanted to be able to form a school district, it’s not impossible, I suppose. As we stand here today in the current structure and the current system, once it’s done, it’s done.”
YCS Superintendent Chris Woods asked Kelly, based on what he knows about YCS and its current standings, that if the levy doesn’t pass, what’s the likelihood that the district goes into dissolution?
“If the levy fails, we will form a financial oversight committee. I mean, it’s 50/50. I think maybe worse,” Kelly said. “My biggest fear is what would be left of the Yelm School District after transportation was cut, athletics were cut, programming was cut. It wouldn’t be attractive enough to retain the families and the enrollment. Therefore, it might not be immediate but over the course of time, families would make different choices about where to send their kids. While it might not be an immediate dissolution, it would be a very slow regression. I can confidently say that. I can’t confidently say that it’s a 50% certainty there would be no Yelm in 27-28. I hate saying it this way because the purpose of school is teaching and learning, but if there are no extracurricular activities, if there are no clubs, if there are no electives, if you are showing up for school and taking math, science and reading and then going home, families are going to make different choices.”
Kelly believes, with these variables in mind, that enrollment will continue to decline and revenue will continue to drop — which is not what OSPI wants to see.
Following Woods’ question, an audience member asked Kelly about how long until cuts take place if the levy doesn’t pass? Is it January? Is it the day after the vote is counted? Would it be the 2027-28 school year?
Kelly said, depending on how close the levy vote count is, they’d wait for results to be certified — which is closer to Thanksgiving.
“Then, we would issue a letter that says we’re formally convening the financial oversight committee and requiring the district to provide the oversight committee these documents by this date,” Kelly said. “That would be the state’s process. When 85% of your costs are salary and benefits, and the majority of those costs are tied up with certificated staff that are part of a collective bargaining agreement, there isn’t a whole lot you can do to make reductions in the middle of the school year.”
While there are some minor items or programs that can be cut in the middle of the school year, Kelly said it wouldn’t be possible to make drastic cuts to save $3 million once school has resumed. He believes it would be the 2027-28 school year when YCS would begin to feel the additional losses of 80-to-90 teachers.
Woods clarified that a reduction in force (RIF) plan would begin to form in the spring, and that RIF notices specifically would be delivered to staff while school is still going on.
“That would happen in the spring. This coming spring,” Woods said. “We immediately have to start planning to create a balanced budget for the next year, so we’d have to go through the reduction in force process in the spring, which absolutely disrupts the end of the school year. It did two years ago. It would be much, much deeper than what we had to do two years ago. That would start in the spring.”
Lastly, an audience member asked Kelly that if the levy doesn’t pass, are levies off the table from that point forward? Kelly specified that school districts are able to run levies twice within a calendar year, but that’s it.
“You could rerun your levy in February for collection in 2028, provided that all of this other stuff worked out to where we could still sustain operations into the 27-28 school year,” Kelly said.
Woods added, for clarity, that the district could run the levy twice per calendar year, but November would be the last opportunity for YCS to increase revenue for the 2026-27 school year, which would begin arriving in the spring.
If YCS runs a levy in February and it passes, the district wouldn’t see those dollars until 2028 and would have to make the same cuts in order to balance its budget.
