The Washougal School District (WSD) has received a “financial warning” from the Washington Office of Superintendent of Public Instruction’s (OSPI)’s School District Financial Health Indicators Model, indicating that the district is “facing potential difficulties.”
OSPI created the model after the passing of Substitute House Bill 1431 in 2011 that directed the agency to develop a tool to provide information about the financial health of school districts. The model uses four weighted conditions — fund balance to revenue ratio (40%), expenditures to revenue ratio (35%), days cash on hand (15%), and four-year budget summary plan (10%), which measures how many years a district reported a negative fund balance deficit.
“We had already been communicating concerns about our enrollment, our expenditures versus our revenue, and to see that we are identified on a list based on these indicators was very concerning,” WSD’s interim superintendent, Aaron Hansen, said. “It was alarming. We knew we were approaching a very concerning level with our fund balance. We knew that we were going to need to make some reductions. This just affirmed that.”
The model assigns point values (0 to 4) to districts in each of the four categories. Each district’s total score is the sum of each indicator’s score multiplied by the weighting factor. The combined score, conceptually similar to a student’s grade-point average, determines the district’s financial health category.
“This tool uses financial information to provide a snapshot view of the district’s overall financial health,” according to OSPI. “The snapshot is as of the end of the last fiscal year and the most recent four-year budget summary plan. The summary plan includes an estimate of funding necessary to maintain the continuing costs of program and service levels and existing supplemental contract obligations. Also included are the three previous years of financial indicator scores for each district in order to provide a basis for comparison and analysis. The tool will be updated on an annual basis using the most recent year-end financial data when available.