Arlington School Board authorizes $2 million interfund loan as enrollment dips threaten cash flow

The Arlington School District board on Jan. 14 authorized interfund loans of up to $2,000,000 to meet potential cash-flow shortfalls, after staff warned that lower-than-expected student enrollment and uncertainty over federal funding could reduce the district’s state apportionment this fiscal year.

Gina Zutnovs, the district’s executive director of financial services, told the board the district’s unaudited OSPI financial indicator score for 2024–25 stands at 2.6 and that the fund balance at the end of November was $2,370,000. She said a shortfall of just a few dozen students can materially reduce revenue because state apportionment is adjusted to actual average FTE in January. “When we have less than what we planned for the students, then we get less revenue than what we planned,” Zutnovs said.

To bridge possible short months before the next property-tax collections in April, staff proposed and the board approved Resolution 26-01, authorizing interfund borrowing not to exceed $2,000,000. Zutnovs provided illustrative interest costs, saying that an example borrow of $600,000 for 30 days would cost about $1,925 and a $2,000,000 draw for 30 days would cost about $6,415. She said the district expects to fully reimburse any interfund borrowings within the fiscal year, including interest.

Votes at a glance - Resolution 26-01 (Interfund loan authorization, not to exceed $2,000,000): moved by Director Knapp, seconded by Director Watts; approved (Ayes recorded). - Consent agenda: approved (Ayes recorded). - Minutes (Dec. 8): approved (Ayes recorded). - Policy 2420 (grading and progress reports): adopted after second reading (Ayes recorded).

The board’s actions follow a finance presentation that documented a positive trend in fund balance since prior years but flagged future risks. Zutnovs noted that the district is 72 students below its enrollment estimate for the year, which will reduce state apportionment when the district receives its January allocation and is reflected in reports. “So in January, we will drop our apportionment down, and we will see that in our January reports,” she said.

Board President Mary Lebec said the interfund authorization was a cautious step to preserve the district’s flexibility during months with low cash flow. The resolution authorization is smaller than the prior year’s request and is intended as a contingency the district can access if necessary.

What’s next The district will receive its January apportionment later this month and staff said they will continue to monitor cash flow and return to the board if additional authorization or borrowing is necessary. If interfund loans are accessed, staff expect to reimburse the capital projects fund by the end of the fiscal year.