First off, let’s convert -3 1/2 into -7/2, which is easier for calculation.
Lets give an easier example for a moment — imagine the water had risen by 12ft in 4 months. That means, on average, it rose about 3 feet each month (12/4 = 3). We do the same here — divide by 4 (or multiply by 1/4):
-7/2 * 1/4 = -7/8
So the water level decreased for about -7/8 feet each month on average.