Wenatchee School District hears plan to raise minimum fund balance; proposal due June 3

WENATCHEE, Wash.

The Wenatchee School District on May 26 received a detailed briefing on its minimum fund-balance policy from Executive Director of Business and Finance Sean Fitzgerald, who said the district's current 5% reserve policy does not cover average monthly expenditures and that trustees should consider higher benchmarks.

Fitzgerald told the board the minimum fund balance exists to "provide sufficient cash flow for daily financial needs, secure and maintain investment-grade bond ratings, offset significant economic downturns or revenue shortfalls, and provide funds for unforeseen expenditures related to emergencies." He flagged local and statewide risks including declining enrollment, fluctuations in Local Effort Assistance (state funding tied to assessed value and enrollment), rising costs and uncertainty in federal programs.

As evidence, Fitzgerald showed the district's seasonal cash pattern: revenue peaks in October and April (local property taxes and levies) and again in July and August (state apportionment), with a trough typically in March that increases reliance on reserves between October and April. He said the district's current policy of 5% of total budgeted expenditures "as of March of 2025, that would be about $10,700,000," and noted that 5% would not cover average monthly expenditures.

Fitzgerald compared benchmarks used elsewhere: about 8% (roughly one month of expenditures and the policy used by Eastmont School District), about 10.5% cited in conversations with credit-rating advisers, and the State Auditor's Office/Government Finance Officers Association guidance suggesting roughly 60 days of reserves (about 16%). He also described a legislative episode involving House Bill 2050, saying an earlier draft would have shifted roughly 2.5% of spring payments into August and increased district reliance on reserves; that language was removed before final passage.

Trustees pressed on how the district would grow reserves without sacrificing programs or staff. Fitzgerald said building reserves would be part of the annual budget process: once the board sets a target, staff would set amounts aside and fold that into multi-year budget planning rather than seeking a one-year jump. Trustees emphasized transparency to the public about whether reserve growth would come from available savings or deliberate program cuts.

The district plans to present concrete proposals at the board's June 3 meeting showing what various reserve percentages would look like in the budget and how they could be achieved over time. No formal policy change was adopted at the May 26 meeting.

Quotes from the meeting included Fitzgerald's description of the current policy as "our current minimum fund balance is 5% of total budgeted expenditures" and his March estimate that "that would be about $10,700,000." Trustee comments emphasized a multi-year approach and the need to avoid rapid cuts to staff or programs to build reserves quickly.

Next steps: the district will return June 3 with recommended target levels, estimated budget impacts and proposed timelines for reaching a new minimum fund-balance standard.