It just makes sense to save some money for a rainy day, but several area school districts are looking at making a previously informal policy official as budgets get tighter.
Prior to this week, no Washington County school districts had a formal cash reserve policy on the books. The Frontier Local Board of Education, at its regular meeting on Monday, unanimously approved a measure requiring the district to "maintain a general fund/emergency fund cash balance equivalent to at least 40 days of operating expenses."
That amounts to about $800,000, according to Frontier Treasurer Frank Antill.
The policy does not forbid the district from spending into that amount but requires the treasurer to notify the board if and when the money available drops below that threshold.
"It's a safeguard to make sure that we don't wake up one day and say, 'Hey, we don't have any money,'" Antill said.
That doesn't mean district officials weren't already keeping an eye on the bottom line. The 40-day reserve has been a board practice in recent years, and members are advised of the district's finances at the monthly board meetings, Antill said.
district cash reserves
Belpre City - no formal policy; try to have 60 days' worth of reserves, about $1.6 million.
Fort Frye Local - no policy.
Frontier Local - at least 40 days, about $800,000; passed Monday by school board.
Marietta City - no policy; general goal of one month, about $1.5 million.
Warren Local - no formal policy; finance committee goal of two months, about $3.26 million.
Wolf Creek Local - no formal policy.
Washington County Career Center - policy expected to be presented to the board sometime in 2013.
Source: Times research.
"This is making it an official policy," he said.
Frontier has been criticized in the last year for maintaining a seven-figure cash reserve while considering closing Lawrence Elementary School. But district officials have said that additional funding has helped slow the impact of state budget cuts and other revenue losses. Antill has estimated the district would be close to the $800,000 reserve mark by the 2014 fiscal year.
An Ohio School Boards Association spokeswoman said that group does not recommend that boards of education put in a cash reserve minimum policy, instead leaving that up to the treasurer. But Antill said formalizing the practice has been discussed at some meetings of treasurers he's attended.
Barbara Shaner, associate executive director of the Ohio Association of School Business Officials, said the decision on whether to have such a policy and at what level should be made in individual districts.
"We would defer to the local community to see what is the best thing for their district," she said.
Washington County Career Center Treasurer Joe Crone said the concept of a formal reserve policy was included in new forecasting software the center and other school districts recently adopted. He expects to present a recommendation to his board in 2013, but at this point, no amount has been determined.
The career center is currently not in danger of having its reserves drop to a critical level, but Crone said the idea is to have a policy in place two or three years before it's actually needed. The center's most recent five-year forecast shows it in deficit spending through fiscal year 2017, but still maintaining a positive balance at the end of each year. However, that is projected to shrink from more than $3 million this year to just more than $126,000 at the end of fiscal year 2017.
"All of the cash balances are decreasing in pretty much every single forecast" in the area, Crone said.
Contributing factors have been decreases in enrollment, changes to the state funding system and the accelerated reduction of reimbursements for the elimination of tangible personal property tax and electrical and natural gas deregulation.
Melcie Wells, who serves as treasurer for Fort Frye and Warren Local Schools, said the matter has been discussed by officials in both districts.
Although it's not a formal policy, Wells said the Warren school board's finance committee monitors to make sure the district has enough money to cover two months' worth of expenses. The amount varies from month to month, but it averages about $3.26 million.
"We've used it as a target ... and kind of measured our finances off of that," said Sid Brackenridge, finance committee chairman and a former district treasurer. "The real trick is not to get to that point and to do something about it long before you get to that point."
Brackenridge said having such a policy in writing can also be beneficial if a district is trying to receive bonding for a project.
Wells said Fort Frye does not have a cash reserve policy but they are discussing developing one.
Wolf Creek Local Schools board member Tom Kearns said he's not aware of a policy in that district; other district officials were unable to be reached for comment.
Marietta City Schools Treasurer Matt Reed said that district has no formal policy either.
"That being said, I think it is always a goal to have at least a month of expenses reserved for the unexpected," he said, adding that amount is about $1.5 million.
Belpre City Schools Superintendent Tony Dunn said Treasurer Eva Elliott "likes to have 60 days' worth of reserves on hand to make sure payroll and other bills can be paid on time.
"In reality, it is often less than 60 days worth of reserves, but that is what she likes to have on hand," Dunn said.