Short-term Financing

Puyallup School District is addressing an unusual cash flow challenge tied to the timing of major construction expenses and funding sources.

To return Ferrucci students to their home campus and maintain progress on voter-approved projects, the district is considering short-term bridge financing, formally known as a Limited General Obligation (LGO) Bond.

Key facts:

• This financing supports school construction and facility improvements only
• It cannot be used for district operations
• It will not increase property taxes
• It is designed to be repaid within a shorter timeframe

Why this is needed now

The district is experiencing a timing gap between when construction costs must be paid and when funding is received.

This includes:

• Reconstruction of Ferrucci Junior High following the fire
• Ongoing projects approved in the 2024 Capital Levy

Insurance is expected to cover much of the Ferrucci reconstruction. However, reimbursement occurs over time, while construction costs must be paid during the project.

This creates a cash flow challenge, not a funding shortfall.

Without short-term financing:

• Construction timelines could be delayed
• Students could remain in temporary spaces longer
• Previously approved projects could be postponed

Important clarification about district finances

The amount under consideration is based on construction cash flow needs.

While it is similar in size to the district’s operating budget shortfall, the two are:

• Unrelated
• Funded separately
• Governed by different legal requirements

Why classroom funding cannot be used

Washington state law strictly separates school funding by purpose.

Classroom funding is protected

• General Fund and Educational Programs and Operations (EP&O) levy dollars can only be used for:
  • Teaching and staffing
  • Learning materials
  • Day-to-day school operations
• These funds cannot be used for construction or building repairs

School buildings are funded separately

• Construction and major repairs must be funded through:
  • Voter-approved capital levies
  • Bonds (including LGO bonds)
  • State matching funds
  • Impact fees
• These funds are legally restricted to facility needs only

What this means

• The district cannot shift money from classrooms to construction
• School facility funding requires planning with and approval from voters

What financing is being considered

The district is considering short-term interim financing, formally called a Limited General Obligation (LGO) Bond.

This functions like a temporary cash flow tool, allowing the district to:

• Pay construction costs as they occur
• Continue projects on schedule
• Repay funds as insurance and other revenues are received

Proposed amount: up to $15 million

While the district's Limited General Obligation (LGO) bond authorization will not exceed $15 million, the total estimated cost of the identified capital projects is anticipated to exceed the available bond proceeds. As a result, project prioritization and/or additional funding sources may be required to address all identified capital needs.

How the financing works

1. The district accesses short-term financing
2. Construction costs are paid as work progresses
3. Insurance reimbursements are received over time
4. Funds are used to repay the financing

This approach keeps projects moving without delay.

Projects supported

Ferrucci Junior High School

• Reconstruction following the fire

Roof replacements

• Ballou Junior High
• Edgemont Junior High
• Spinning Elementary

HVAC improvements

• Aylen Junior High
• Emerald Ridge High School
• Stahl Junior High

Timeline

• June 15, 2026
  First reading by the Board of Directors

• August 3, 2026
  Public hearing and consideration

• August 6, 2026
  Financing finalized, if approved

Project Examples and Funding Initiatives 

The primary focus of the capital budget is major construction, renovation, and improvement of our facilities and infrastructure. As these facilities age and our wear and tear increase with our growing enrollment, it becomes even more vital to care for district assets. The capital budget has played a pivotal role in ensuring these resources are well-preserved, enabling students to thrive in conducive learning environments. 

Learn more about capital projects across the district

Learn more about our 906 Capital Levy Projects 

More School Construction News