Financial Stability Webinar (01.29.25)-Financial Stability- 2025 Fiscal Health Tools

Financial Stability- 2025 Fiscal Health Tools

Pdf Summary

This presentation, “Taking a Bath: Financial Health Tools,” explains how Washington school districts can monitor financial stability using “bathtub” measures (how many resources you have today) and “faucet/drain” measures (how fast resources are increasing or being used up). It highlights two statewide tools: OSPI Financial Health Indicators (four indicators using prior-year reports and a four-year forecast, scored to show trend and adaptability) and the State Auditor’s Office Financial Intelligence Tool (three General Fund indicators rated Good/Cautionary/Concerning, primarily backward-looking).<br /><br />Key “bathtub” indicators include the Fund Balance-to-Revenue Ratio (12.5%+ strongest, with attention to revenue anomalies and local policy) and Days Cash on Hand (90+ days strongest; 48-day state average; 60-day benchmark; under 30 weakest, with seasonality considerations). “Faucet/drain” indicators include Expenditures-to-Revenue (under 100% strongest; over 110% weakest), four-year forecast deficits (none strongest; four weakest), Governmental Funds Sustainability (benchmark 0%; negative indicates weakness), and Change in Fund Balance (benchmark 0%; negative signals drawdown).<br /><br />The presentation identifies where to find district data (F-195 budget, F-195F forecast, F-196 financial statements, and monthly F-198 reports) and warns about restricted fund balance, which may limit usable reserves and worsen cash-flow risk.<br /><br />Common risks increasing the need for reserves include shifting regionalization/staff-mix factors, benefit-rate changes, levy cycle timing and inflation assumptions, enrollment declines, contractual class-size commitments, uncertain federal/state revenues, and property valuation volatility affecting levy capacity and Local Effort Assistance.<br /><br />Pros of higher fund balance include planning time, job stability, crisis resilience, and smoother cash flow; cons include perceptions the district needs less funding and pressure to increase spending. Recommended actions include conservative budgeting, transparency using OSPI/SAO tools, annual board review of fund balance policy, early corrective action, monitoring cash flow and projections, finance staff training, and continued advocacy.

Keywords

Washington school district financial health

bathtub and faucet drain measures

OSPI Financial Health Indicators

State Auditor Financial Intelligence Tool

Fund Balance-to-Revenue Ratio

Days Cash on Hand

Expenditures-to-Revenue ratio

four-year financial forecast deficits

Governmental Funds Sustainability indicator

restricted fund balance and cash flow risk