The bill adds two new sections to chapter 28A.505 RCW that create a procedural system for formal financial monitoring of certain Washington public school districts and a monthly financial reporting requirement for districts placed under that monitoring. Beginning in the 2027-28 school year, the Office of the Superintendent of Public Instruction (OSPI) must place any district whose year-end general fund balance is below calculated thresholds on formal financial monitoring for one year, and monitoring may be reimposed in additional one-year increments if the thresholds continue to be unmet. OSPI must provide technical assistance to monitored districts and indicate in a district’s financial health indicators when a district failed to meet the applicable fund balance threshold. OSPI may adopt rules to implement these sections. The bill sets the fund balance thresholds to be calculated by OSPI: for districts with 2,000 or more average annual full-time equivalent (FTE) students the threshold is 6% of the district’s prior year state apportionment; for districts with fewer than 2,000 average annual FTE students the threshold is no less than 8% of the district’s prior year state apportionment. Beginning in the 2028-29 school year and each fiscal year thereafter, districts under formal financial monitoring must submit monthly financial data to OSPI by the last day of the subsequent calendar month. Required monthly data for each fund include monthly expenditures, monthly revenue, end-of-month cash balance, interfund loan activity, and any other debt or borrowing transactions. The act references RCW 28A.505.110 concerning OSPI’s authority to impose binding conditions. The text does not define several terms or procedures needed to fully implement the change: it does not define “formal financial monitoring” in detail (beyond the trigger and some duties), does not define “average annual full-time equivalent students” or “state apportionment,” and does not specify what information is included in a district’s “financial health indicators” or any additional enforcement mechanisms or specific binding conditions beyond the reference to RCW 28A.505.110.

Starting in the 2027–28 school year, school districts whose year-end general fund balances fall below thresholds set by OSPI (6% of prior year state apportionment for districts with 2,000+ FTE; no less than 8% for smaller districts) will be put on one-year formal financial monitoring that can be renewed if the shortfall continues. Districts on monitoring will be publicly marked in OSPI’s financial health indicators, must accept OSPI technical help, and beginning in 2028–29 must send monthly financial details (expenditures, revenues, end-of-month cash, interfund loans, and other borrowing) to OSPI by the last day of the next calendar month; OSPI may also adopt implementation rules. The people most affected are district finance staff and superintendents, especially in smaller districts because their reserve threshold is higher; they will likely need more time, staff, or outside help to produce monthly reports and to adjust budgets or reserves to avoid repeated monitoring, which can increase administrative costs and operational pressure. OSPI will need added capacity to calculate thresholds, review reports, and deliver assistance. The statute does not define the full scope of “formal financial monitoring” procedures or the specific binding conditions OSPI might impose under RCW 28A.505.110, so the exact enforcement consequences beyond reporting and technical assistance are unclear.