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Board hears business office defense of reserves, cautions on 4% fund-balance rule
Summary
Hayden told the board that a strict 4% fund-balance rule is often infeasible because of summer cash-flow needs for payroll, health insurance, BOCES and accounts payable; the district's reserves currently represent roughly 52% of the annual budget and are a deliberate part of long-range planning.
Hayden, who presented the financial projections, told the board that a flat 4% unallocated fund-balance target does not reflect the district's cash-flow realities. He outlined July/August obligations (payroll, health insurance and BOCES monthly bills) as the primary reason districts need higher liquidity.
"Our health insurance bill every single month is $320,000," Hayden said when explaining why a low fund balance can trigger fines and collection notices in some districts. He added that the district's reserves are intentionally managed and that the district avoids borrowing from reserves for routine cash-flow needs.
Dr. Meyer and Hayden highlighted that reserve strategy and attrition-driven staffing changes have allowed the district to build a large capital and transportation reserve since the merger. Dr. Meyer noted reserves of around $88,500,000 and estimated reserve percentages near 52% of the annual budget, which he said is an outcome of long-term planning. They said the district has not relied on one-time merger aid to balance recurring budgets and will continue monitoring projected retirements and operating needs.
