CFO urges raising Wenatchee's minimum fund balance to 6%; board refers policy to committee
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Summary
Sean Fitzgerald, the district's executive director of business and finance, reviewed fund-balance history and forecasts, recommended raising the board's minimum fund-balance policy from 5% to 6% to reduce the risk of running out of cash during low-apportionment months, and the board referred Policy 60-22 to the policy committee for further work.
Executive Director of Business and Finance Sean Fitzgerald presented the district's minimum fund-balance analysis to the board and recommended increasing the board's minimum reserve target from 5% to 6%.
Fitzgerald said minimum fund balance serves three goals: provide cash flow for daily operations, maintain investment-grade bond ratings and offset revenue shortfalls or emergencies. He reviewed the policy's history (adopted at 5% in 2011), noted the district began the school year at about 9.6% total reserves and finished at 8.2% for the 2024–25 year, and recounted last year's shortfall when the district drew about $640,000 from reserves pending state apportionment.
"There is no required minimum fund balance threshold. It is set by the school board," Fitzgerald said, and added that the Office of Superintendent of Public Instruction (OSPI) circulated an early draft that could codify reserve percentages in state law but that nothing has been filed.
Fitzgerald walked through comparative guidance — examples included Moody's recommended 10.5% and a Government Finance Officers Association standard of roughly 60 days of cash — and illustrated how different policy percentages would shift unassigned balances in future-year forecasts. He recommended moving to 6% and showed forecasts that, under current projections, a 6% policy would reduce the district's exposure without requiring immediate staffing cuts.
Board members asked operational questions about interfund loans, the timing of a policy change and whether raising the percentage now would force staffing reductions. Fitzgerald clarified that many restricted funds cannot be used to backfill general fund operations and that a move to 6% could be adopted and revisited in future years. Members asked for policy language options (for example, a revisitable "renewable" 6% target) and agreed to send Policy 60-22 to the policy committee for further drafting and to return to the full board for first and second reads.
No formal vote to change the policy was taken; the board referred the matter to the policy committee for revision and formal consideration.