Board weighs raising general‑fund minimum from 7.5% to 10% after audit flags low reserves

The Pullman School District finance committee recommended the board revise Policy 6000 to increase the district’s minimum general‑fund balance from 7.5% of annual expenditures to 10%, citing an audit that found the district currently holds roughly 32 days of operating reserves — below a 60‑day benchmark many consider a sign of fiscal health.

“Increasing the minimum fund balance to 10% will maintain adequate cash flow and improve days of operating reserves,” Diane, who presented the finance committee recommendation, told the board. She said the aim is to ensure the district can meet one month’s payroll and accounts payable obligations in high‑demand months.

Diane discussed figures the committee used to frame the recommendation: the average monthly payroll was reported in the meeting as about $3.32 million and September historically carries the district’s highest accounts‑payable load, commonly above $1 million in the transcript discussion. The recommended 10% floor is intended to prevent the reserve from dropping below an amount sufficient to cover payroll and typical high AP months.

Board members asked whether the policy would require 10% to be maintained every month or represented as an annual average; presenters said the intent is to maintain a 10% minimum and not allow balances to dip below it.

Why it matters: A higher reserve requirement reduces the risk that the district will need to borrow to cover timing mismatches in state revenue or unexpected costs, but it also constrains funds available for programs if the board opts to build reserves rather than spend.

What’s next: The proposal was discussed as a recommendation from the finance committee; any formal policy revision and vote will follow at a future meeting once the board frames the final policy language.