The Sequim School District Board of Directors were busy at the Aug. 6 board meeting as it approved a new president, the district’s 2018-2019 budget and a policy that establishes a minimum fund balance for the district’s budget.

President Heather Short announced she was stepping down as board president and the board agreed to approve vice president Brian Kuh as its new leader. The board also agreed to approve Heather Short as the new vice president.

In an interview after the Aug. 6 meeting, Short said she stepped down due to increased work responsibilities. At the Aug. 6 meeting, Kuh acknowledged and thanked Short for her time and efforts as the board’s leader.

“It’s been a pleasure working with you and I understand the need to step down at this time,” he said.

The board also held a public hearing to go over the details of the district’s 2018-2019 budget which it approved at the end of the meeting.

The district is budgeting for an enrollment of about 2,770 full-time equivalent (FTE) students for grades K-12, about 209 FTE certificated employees and about 121 FTE classified employees. The district’s budgeted total revenues and other financial services is at about $39,857,767 million and its budgeted total expenditures is at about $39,908,998.

In addition to the district’s new budget, the board also approved a new policy that would set a goal for the district’s current year’s budgeted expenditures and after some discussion on the language and range of the policy board members agreed to amend and approve it.

The amended and approved policy states, “Annually, it is in the best interest of the Sequim School District that the board of directors target a minimum fund balance within a range of five to 10 percent of the current year’s budgeted expenditures to address potential general fund needs and continue to maintain an acceptable and adequate minimum fund balance for district operations.”

At the July 16 board meeting, the policy originally stated it would “target a goal of no less than five percent and no less than 10 percent or higher of the current year’s expenditures…” Director Robin Henrikson expressed hesitation at that meeting to the “10 percent or higher” part of the policy and again expressed her concerns for how that could be interpreted to the public on Aug. 6.

“Again I still have an issue with ‘or higher’ — I don’t know if I agree that we should have a balance of more than 10 percent — shouldn’t that be going back to our students?” she asked. “I think it should go back into the schools if we have more than 10 percent.”

Superintendent Gary Neal agreed with director Henrikson reiterating that some of that percentage should be going back to students.

Fund balance comes to fruition

In a phone interview on July 31, board directors Short and Kuh said the board drafted the policy after recommendations from auditors and the district’s finance and business managers in the past.

“Several years ago, a recommendation came from the state auditors that a district should have a fund balance at any time that is equivalent to one month’s payroll plus one month’s accounts payable,” said Steve McIntire in an email, the district’s interim financial business manager.

In McIntire’s monthly budget presentation to the board at the July 16 board meeting, he said as of June 30 the district’s budget was at a little more than five percent.

“We have estimated the ending fund balance at 8/31/18 to be approximately $1.855 million which is an ending fund balance percentage of 5.44 percent, which is in the range of (what) the Board has been talking about,” McIntire’s said at the July 16 board meeting.

In the phone interview, directors said the policy to their knowledge is the first of its kind for the district and is meant to serve a best practice standard for the district’s budget.

“This is the first time we’ve had a policy for it, but it’s somewhat of a practice we do without a policy anyway,” Short said in the phone interview.

“In case anything happens, whether its funding we get from the district or elsewhere we’re able to pay our people,” Kuh said in the phone interview.

McIntire said districts began adopting minimum fund balance policies with a range of between five and eight percent calculated by taking the total expenditures from the previous year and multiplying that number by whatever percentage is contemplated.

Policy decision

At the Aug. 6 board meeting, Short said “a target of” 10 percent gives the district a lot of wiggle room, for example if it wants to save for a specific project, but it is meant to be just a goal.

“It’s just a target, it’s not saying we want it to be higher,” she said. “I don’t think 10 percent is even feasible in 10 years” she said.

Kuh said he could vote either way to approve the policy with “10 percent or higher” as presented or to change the wording.

“Goals can be exceeded,” Gibson said. “Without the ‘or higher’ it doesn’t mean we can’t exceed that goal.”

Gibson also agreed with Kuh and said he could vote either way. Short said she was willing to drop the ‘or higher’ part of the policy.

Neal said as the district looks to implement it’s next five year strategic planning, having a set goal or target for the district’s budget will be helpful in its future planning.

Short asked for McIntire’s thoughts, and he suggested the wording to say “target a minimum fund balance goal within a range of five to 10 percent.”

“If you look at it this way, you have a $40 million expenditure budget, that would mean a fund balance of $4 million,” he said.

“That’s a range you’re trying to target, I’m not saying you’re never going to make it, but most districts struggle to make to four or five percent.”

The board unanimously agreed to amend the language of the policy to drop the “or higher” wording and change it to say “target a minimum fund balance within a range of five to 10 percent of the current year’s budgeted expenditures”. The board also unanimously agreed to approve the amended policy.

To learn more about the policy, visit sequimschools.org under the “School Board” tab and click on “Current Agenda.” The next regular board meeting is scheduled for 6 p.m. on Monday, Aug. 20, at the district board room, 503 N. Sequim Ave.

Director Robin Henrikson expressed concerns toward the board’s proposed minimum fund balance policy, stating she was not sure if she wanted to support a minimum fund balance policy with a goal of no less than five percent and no less than 10 percent or higher. Sequim Gazette photo by Erin Hawkins