At a Gadsden Independent Schools work session, Terry Dean, executive director of the New Mexico Association of School Business Officials, told trustees that the district’s cash reserves reflect one-time revenue timing, project needs and prudence against funding uncertainty rather than excess operating revenue.

Dean told the board that “your cash reserve... it’s not extra money because it’s not going to continue all the time,” and said reserves are often needed to float reimbursable federal expenditures, cover large one-time payments such as Public School Facilities Authority risk payments, and support bond ratings when the district issues debt.

The discussion focused on several specific reasons the district’s reserves grew: reimbursement timing for federal grants (reimbursement requests or RFRs), one-time project and construction costs and conservation during COVID-era spending. Dean said districts were told to spend federal COVID relief funds (ESSER/ARP) but also to preserve operating funds; that mix, plus supply-chain delays and grant-reporting timing, often left large cash balances at year end.

District staff and Dean discussed local figures the presenters attributed to the district: about $66,000,000 in emergency reserves at the end of last year and about $154,000,000 in SEG (state equalization guarantee) holdings. Dean said the district’s reserves increased roughly $36,000,000 since early 2020. Board member Ludem Martinez estimated the district’s monthly operational spending at about $13,400,000, which she used to calculate roughly five months of operating coverage from the $66,000,000 figure.

Dean reviewed guidance from professional groups and state practice. He said the Association of School Business Officials International and the Government Finance Officers Association recommend roughly two months (about 17 percent) of operating reserves; he contrasted that with the state’s practice of holding about 34 percent and warned legislators are discussing different approaches to district cash balances. He said some federal funding streams appear likely to continue (Title I and IDEA B), while other programs (Title II, Title IV) were under discussion for reductions.

Speakers emphasized the operational uses of reserves: floating reimbursements for federal grants, meeting early-year large obligations such as insurance or payroll when state payments arrive late, fronting local matches on capital projects, and paying for one-time capital needs such as technology refreshes or HVAC upgrades. Dean and district staff cited current capital projects that depend on local funding or matches, including a $68,000,000 Gadsden Middle School project and additional middle-school projects lined up next.

Board members pressed on transparency and plans for drawing down reserves. Dean and staff said the district should align any use of reserves to mission-focused, one-time expenditures rather than ongoing staffing costs. Dean recommended clear policies and public communication explaining how reserves will be reduced and why particular expenditures advance district priorities.

No formal motion or vote about reserve policy or spending was taken during the work session. District staff agreed to provide further documentation on projected months of coverage and a summary spreadsheet showing anticipated reserve uses so board members can make the case to legislators and the public if needed. Dean offered to be available for follow-up questions and technical guidance.

The work session also included a separate agenda item proposing a revised school calendar; that item was presented as a forthcoming action at the next board meeting and is covered in a separate article.