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Task force debates 'days cash on hand' guidance and charter schools' large balances
Summary
Members raised concerns about rating-agency and bondholder-driven 'days cash on hand' standards that can push public entities to hold large reserves (examples cited: over 300 days for some charter schools); attendees sought targeted trend analysis to determine when such standards drive excessive balances.
Several participants questioned whether rating agencies and bond covenants are driving unusually large reserve targets—especially for charter schools and some enterprise funds. One member said some charter schools were reported to have "over 300 days cash on hand," prompting concern that bond-market expectations can create perverse incentives to hoard cash rather than spend on services.
Speakers recommended the task force examine bond covenants, rating-agency guidance, and differences between fund types (general fund, enterprise funds, debt service, capital projects) to separate legitimately restricted or project-driven balances from potentially excessive unassigned fund balances. The auditor and education representatives said available reporting can support that analysis but entity follow-up will be required to attribute causes.
