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State delays June payments, district officials warn payroll and operations could be squeezed
Summary
Prosser School District officials told the board that the Washington State payment schedule changed in May, with some June funds deferred until July. Administrators said the holdback threatens cash flow for payroll and vendors and may force borrowing at unreimbursed interest costs.
Prosser School District officials told the school board on June 11 that the state reduced scheduled June payments and will “make it up to you in the month of July,” creating a short-term cash shortfall the district is working to manage.
The change was described as a legislative decision by district staff and comes from the OSPI Financial Services Department, according to administrators. Kim (Staff member) read the OSPI notice for the board and said the state “gave you less money” this month and deferred the balance until July, moving money from one fiscal year’s payout cycle into the next.
District leaders said the timing matters because the state’s fiscal year begins in July. “What people don’t understand … is that the state of Washington doesn’t work that way,” Kim said in the meeting. The district received a follow-up OSPI email listing local banks “that will lend you money” but warned that any interest incurred on borrowed cash “is not reimbursable.”
Finance staff said the deferral left the district scrambling to preserve basic operations. “We’re barely gonna have enough money to make payroll,” Dolis (Staff member) told the board. Administrators described calls to utility providers to request partial payments or payment delays, use of credit cards as a stopgap and other short-term measures to keep services running while avoiding interest whenever possible.
Board members and staff repeatedly framed the issue as a state-level timing and budget decision rather than a local mistake. Kim said the action was a “legislative action,” not a district choice. Board members urged community outreach to state legislators and said the cash-flow problem is affecting planning: purchase orders remain on hold and some year-end orders cannot be completed until revenue is certain.
District administrators also reported a sharp drop in a key state aid payment for local effort assistance (LEA). The board was told that a typical May LEA payment of about $5.6 million dropped to roughly $200,000 this year; officials said they did not receive prior notice of that reduction and were still seeking clarity from OSPI.
Administrators said they are prioritizing payroll and essential utilities, are contacting vendors to arrange staggered payments, and are evaluating borrowing options only as a last resort because interest costs would come out of district funds. Several board members and the superintendent urged parents, staff and community members to contact state representatives to press for timely and stable education funding.
The district said it will put correspondence from OSPI in the public record and that the situation remains fluid; staff said they would update the board at future meetings.
