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District business managers and superintendents urge 25–30% cash reserve measurement; say figure reflects cash‑flow not savings
Summary
Multiple district officials told the committee that the statutory reserve figure functions as an operational cash‑flow requirement, not a savings account; recapture districts and seasonal tax timing complicate a single percentage measurement and speakers urged keeping a June 30 measurement or otherwise accounting for local variation.
School district business managers and superintendents told the Select Committee on School Finance that the reserve percentage in statute primarily measures operational cash flow and varies widely by district depending on tax timing and recapture status.
Jeremy Smith, a district business manager, told the committee that ‘reserves’ are a cash‑flow mechanism rather than a savings account and that measurement timing matters. “Some like our district, which is an entitlement district, we get chunks of money August through May. We get nothing in June and July… at some point you have to have some amount of cash on hand just to pay your bills that show up every single month,” he said, and recommended a 25–30% guideline when measured June 30.
Jed Ciccarelli, another CFO, added that audited financial statements and district obligations (purchase orders, payroll and grant reimbursements) make the calculation nuanced. He explained that districts that estimate local tax collections incorrectly may unintentionally increase reliance on cash balances and that recent monthly mineral tax changes have altered cash‑flow patterns for some districts.
Superintendent Charles Oski (Johnson County School District #1) described a recent district experience that shifted the district from entitlement to recapture and said the result was a multi‑month cash‑flow crunch: “This 25 or 30% is not about a savings account… it’s about a cash flow for us so that we can pay that payroll and pay those months where we have technology coming in that we know is part of the funding model,” he said.
Staff from the Department of Education described the loan program from the school foundation program account (short‑term loans to cash‑flow districts) and noted qualifying rules and a repayment schedule typically due by mid‑December; staff said Campbell County did not qualify for a loan because its monthly mineral tax receipts improved cash flow.
Committee members asked staff to supply historical district‑level breakout data on activity and transportation expenditures and to return with more detailed comparisons of cash‑flow measures and alternative measurement dates where appropriate.
