Yakima School District warns of potential federal cuts, cites healthy cash and clean audit

At the June 17 meeting of the Yakima School District Board of Directors, district finance staff warned that potential federal and state funding changes could tighten the district’s 2025–26 budget even as the district reported a clean financial audit and improving cash balances. Jake Cooper, who presented the monthly financial update, said federal Title I allocations for 2025–26 were about $700,000 lower for the district and that a possible federal “pocket rescission” could reduce funding later this fiscal year.

Cooper said those rescissions are a presidential tool that can become law if Congress fails to act and that state revenue forecasts also “are not looking good.” He added that the state Office of Superintendent of Public Instruction (OSPI) will short-pay districts in June and estimated Yakima’s short payment at roughly $30 per student — about $450,000 — though he said a one-time legislative increase will partially offset that amount.

The district also reported operational indicators the board asked to monitor. Cooper told the board that enrollment is “plodding along” but that kindergarten enrollment is down from historical levels; he said a typical kindergarten class has been 1,200–1,300 but the most recent class was “just under a thousand.” Cooper repeatedly emphasized cash management, saying, “Cash is king,” and noted the district’s cash is now above projection after expenditure reductions. He said the district’s cash position includes a $4.5 million tax anticipation note that the district will repay in December.

On external review, Cooper and other staff noted the district’s annual financial and federal audit returned no findings. Assistant superintendent and legal counsel materials presented to the board included the state auditor’s work; the district’s presentation to the board stated the audit was “clean” and that the auditors had completed about 300–350 hours of fieldwork for the financial and federal audit portion. The accountability portion of the state audit remains in progress.

Board members asked clarifying questions about what triggers OSPI binding conditions; Cooper said binding conditions typically follow if a district ends a year with negative cash or adopts a budget with a negative fund balance. He warned that some districts across Washington face “binding conditions” and that Yakima’s earlier reductions have improved its comparative position.

Cooper summarized possible next steps if midyear federal reductions occur: the district would need to take actions to align expenditures with revenues rather than carry unfunded programs forward. “If the feds do take money midyear, we will have to take some type of action,” he told the board.

The presentation preceded the board’s formal receipt of the annual audit report, which district staff characterized as evidence of the district’s current financial condition.