Cascade School District sees decline in 2017 general fund

At the Nov. 27 Cascade School Board meeting, Finance Manager Dwight Remick spent considerable time explaining why the balance in the general fund had gone down in 2017. 

The board had some years ago set a fund balance goal of 8.5 percent. Since 2011, the fund balance has steadily increased, from 0.3 percent to 7.9 percent in 2016. In 2017, the fund balance dipped to 7.4 percent. 

“Where are we at in our ending fund balance. This is just the general fund. Looking at it from Aug. 2012 coming forward year by year. It shows you the trends. Originally when we looked at it, the board did not have a policy is place that said they had a goal,” Remick said. “When you look at those numbers and it says zero, any excess funds we had were considered unassigned. Now, that you’ve established a goal. The original goal was 5 percent. Now, it is 8.5 percent, we’ve reclassified those funds.”

Remick said the fund balance has been climbing. 

“Starting out, we were at $39,000. Now, we ended at $1.165 million. Next year, I’ve already worked based upon the enrollment and the budget we adopted, where do I see us going at the end of next August,” Remick said. “When you look at the fact there was a decline during this past year.”

There are various reasons for the decline, he said, such as trying to cover some improvements for the construction projects, remodeling of the high school, special ed department and the construction office. 

Those were covered out of the general fund so the district could maintain additional funds in the capital projects fund to make sure it goes as far as it can, Remick said. 

“We also this past year had five key employees that retired, Mike Hill, Tim Lawless, Bruce Disher, Esther Christian, Dawn Darling. Normally, you’ll see one or two retire a year. That’s not too big a hit,” Remick said. “When you start looking at five, two of them being administrators, one being an employee who had been here 30 years. We had a large amount of money to pay off sick leave balances, which they are entitled to by law. That was part of that dip this past year.”

The fund balance policy amount went down by $10,231, but the fund balance percentage went from 7.9 to 7.4 percent, which doesn’t make sense, he said.  

“It’s because the percentages is based on the total that we spend. So as we spend more, as we have raises that come through from the state, the amount of money we need to maintain that same percentage increases. So even though we went down slightly on our total dollar amount of our fund balance, as a percentage, it had a major impact,” Remick said. 

Next Aug. 31, Remick is projecting a gain of $191,000 to bring that percentage to 8.3 percent. Remick said, basically because enrollment looks to be on the upswing. 

“Last year, even though our enrollment was well above what we budgeted, it was actually only 1.3 FTE (Full Time Equivalent) higher, one student, than the prior year. We had additional things we did as far as the construction projects, the retirements. So our expenditure levels went up even though our FTE was basically the same,” Remick said. “When you look at this year, we’re running way above budget. We’re also running above what we had for last year’s enrollment. When you look at those projections and I’m saying we’re going to see $200,000 increase in fund balance. It’s because those numbers are substantially higher that they were before.”

A lot of the enrollment growth is in K-3, he said, which means they would have to hire additional teachers to capture that funding, but that appears to be changing. 

“One of things different this year, the legislature has not tied a compliance issue with the K-3 funding, so whatever we have got for K-3 students, we’re going to funded for, no matter how many teachers we have,” Remick said. “Last year, as we had extra kids in those K-3 classes, we couldn’t get the additional funding because we weren’t spending it on teachers.”

This was done to help meet the McCleary decision, Remick said. 

“They are funding based on a K-3 ratio, ignoring how many teachers we have. We’ll see a gain this year based upon that,” Remick said. “To see a gain in the following years, we’ll have to be very cognizant enough, plan on additional funds being there, to have the staffing to go with it.”

Board member Kristin Wood said they set a goal for an 8.5 percent fund balance several years ago. She asked about the fund balances at other school districts. Remick said Ephrata was at 25 percent, while Cashmere was at 12-14 percent. 

“Because of their situation with the high school bond project, they have money within their general fund to help meet those needs. Their overall percentage is climbing, but what they are using for operations is similar to where we are at,” he said of Cashmere. “I don’t know Lake Chelan. Typically, they are slightly higher that we are. Wenatchee and Eastmont, based upon their negotiations this past year, I expect a nose dive.”

Wood asked Remick what his recommendation would be for the fund balance. Remick said he would set 8.5 percent, at minimum. 

“One of the real unknowns, when you look at the funding formula, there is the one year we got raises. We’ll see half the amount to contribute to meet McCleary. Then, the year after, it will be at 100 percent,” he said. “There’s a lot of unknowns coming at us. To make commitments below that 8.5 percent, I would be strongly opposed to that. At the same time, with all the unknowns, to go from 8.5-to-10 percent. There are so many different moving pieces.”

To be proactive, Remick said they have to look at it every year. 

“Our initial goal was 5 percent. We hit the 5 percent and board said, let’s reestablish it and go to 8.5 percent. Let’s do that growth without having current students go without. A 10-to-12 percent fund balance is reasonable,” Remick said. 

When the district negotiated with staff, Superintendent Bill Motsenbocker said, they agreed to some increased compensation, which also impacted the fund balance.  

“That did pull that money out of the ending fund balance to do those things. We’re right where Lake Chelan and Cashmere is with their staffs so everybody is even. That was an important step, even though it impacted our ending fund balance,” Motsenbocker said. 

Ian Dunn can be reached at 548-5286 or editor@leavenworthecho.com.