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Finance director warns 5% reserve policy leaves Wenatchee schools exposed to revenue volatility
Summary
The district's executive director of business and finance told the board that the current 5% minimum fund balance policy risks tight cash positions if state or federal funding is delayed; he presented scenarios showing Moody's and GFOA guidance exceed the current target and urged gradual reserve increases to avoid abrupt program cuts.
WENATCHEE, Wash. — The Wenatchee School District's finance director told the board on Oct. 14 that the district's current 5% minimum fund balance policy may not be sufficient to absorb revenue shocks and recommended a cautious, gradual increase in reserves rather than abrupt reallocations.
Executive Director of Business and Finance Sean Fitzgerald reviewed the purpose of a minimum fund balance — cash flow for operations, protecting bond ratings and covering unanticipated expenditures — and walked trustees through historical context: the 5% policy was adopted in August 2011 and reflects a different enrollment and assessed‑value environment than today. Fitzgerald noted the district had to use nearly $640,000 of reserves earlier in the fiscal year to manage a shortfall caused by delayed state funding.
Fitzgerald compared the district's 5% policy with external guidance: Moody's has recommended an amount that translates to roughly 10.5% for bond‑rating review, and the Government Finance Officers Association (GFOA) recommends about 60 days of cash (roughly 16%). He showed modeling for a hypothetical year (based on the 24‑25 pattern) where a 5% policy would produce a very small unassigned general fund balance in June if a mid‑year shortfall occurred; increasing the minimum to 6% would have provided roughly $1.3 million more cushion in that scenario.
Trustees discussed implications for upcoming budgets. Board members noted rising budgetary volatility (state revenue projections and possible federal funding uncertainty) and asked about operational consequences of dipping below the minimum fund balance. Fitzgerald said the district could petition OSPI for an advanced payment to cover shortfalls but that option carries interest costs and reduces future apportionment. He emphasized the trade‑off between using reserves to avoid immediate disruptions and the need to rebuild reserves over time.
No formal policy change was proposed at the Oct. 14 meeting; trustees framed the discussion as long‑term fiscal planning and directed staff to bring updated forecasts and options back for further consideration.
