Here’s what bond analyst Steve Willson suggests:
The amount of money a school district keeps is not a function of what other districts keep.
The amount of money needed is a well defined function in business.
It’s based on the variability of revenues and the greatest differential between revenues and expenditures during the year.
If revenues are difficult to forecast, then greater reserves are needed.
If revenues arrive with a high degree of regularity, then smaller reserves are needed.
Given that the District receives the vast majority of its revenues in property taxes, and that they know with a very high degree of confidence how much they’ll receive and when, this variable essentially disappears from consideration.
That leaves the greatest differential between revenues and expenditures during the year, i.e., the worst day of the year for cash flow imbalance.
Based on the monthly financial data, I would estimate the District really needs no more than 45 to 60 days cash on hand.
Any greater amount is simply excess taxation.
Now, if anyone can refute this argument or provide evidence to dispute the conclusion, I will withdraw my conclusion.
But unless or until that, this argument that they need the money, or what other school districts do, is simply irrelevant.