--- title: "General Fund cash seasonality & liquidity risk" ---

IOWA CITY SCHOOLS · LIQUIDITY ANALYSIS

Reading the General Fund cash balance against its season

ICCSD's General Fund cash balance swings by more than **$30 million** within a single year — not because the district is getting richer or poorer month to month, but because property taxes and state aid arrive in a few large, predictable lumps while payroll goes out evenly. This page establishes a baseline seasonal pattern from the district's own monthly cash-flow schedules and shows how to judge whether a given balance — say, *30 days cash on hand in June* — is low, adequate, or comfortable **for that time of year**.

!!! warning "Unofficial community analysis" This page is independent analysis prepared by an ICCSD community member, built from the district's published board materials. It is **not** produced by the district, PFM Financial Advisors, or the Financial Oversight Committee. The underlying monthly figures are *unaudited* cash-flow projections and internal records; with the FY24 and FY25 audits still outstanding, even the beginning cash balances were described by PFM as "unknown variables." Treat the *shape* of the seasonality as reliable and the *exact dollar levels* as provisional. ## The short answer

Aug–Sep

The annual cash trough. Before October property taxes arrive, the General Fund runs dry — FY26 needed a $10M interfund loan just to stay positive.

Oct & Apr

The two annual peaks. Iowa property-tax settlements (~$34M in October, ~$30M in April) refill the account in a single month.

~30 days

A June balance of ~30 days cash is adequate but tight — right at the floor the district steers to, enough for July payroll with almost no cushion.

## Why the General Fund is seasonal The district laid out the mechanics plainly at the February 10, 2026 Financial Oversight Committee meeting: - **Property taxes arrive twice a year.** Local property-tax settlements land in **October and April** and together total roughly **$90 million across all funds** (about **$34M** and **$30M** of that flows to the General Fund). These two months are the only times the account is materially refilled. - **State aid is steady — until FY27.** State foundation aid pays in **~$10 million monthly installments, September through June** (FY26 regime). Beginning **FY27 it moves to quarterly** payments (~$26.5M in August, November, February, and May), which reshapes the trough months — more on that below. - **Payroll is flat and relentless.** General Fund payroll and benefits run **~$16 million every month**, rising to **~$19M in June** as the fiscal year closes. It does not wait for the tax cycle. Put those together and the balance has a fixed annual rhythm: it **draws down steadily between tax settlements**, craters in the late summer before October taxes, dips again in late winter before April taxes, and spikes the month each settlement lands. ## The baseline pattern (FY 2025-26) This is the cleanest near-complete year of monthly data — actual through March 2026, projected through June, from PFM's adopted "Option 1" schedule. Days cash on hand uses the district/PFM operating convention of roughly **$610,000 per day** (≈ FY26 General Fund operating expenditures of ~$223M ÷ 365). | Month-end | Ending GF cash | Days cash on hand | Seasonal index¹ | Read | |---|---:|---:|---:|---| | Jul 2025 | $9.4M | 15 | 0.45 | Draining | | **Aug 2025** | **$6.0M** | **10** | **0.29** | 🔴 Trough (incl. $10M loan) | | **Sep 2025** | **$5.1M** | **8** | **0.25** | 🔴 Annual low | | Oct 2025 | $34.0M | 56 | 1.64 | 🟢 Property-tax peak | | Nov 2025 | $31.8M | 52 | 1.53 | 🟢 High | | Dec 2025 | $26.4M | 43 | 1.27 | Comfortable | | Jan 2026 | $19.6M | 32 | 0.94 | Draining | | Feb 2026 | $16.2M | 27 | 0.78 | Low | | Mar 2026 | $14.2M | 23 | 0.69 | 🟠 Winter trough | | Apr 2026 | $37.1M | 61 | 1.79 | 🟢 Property-tax peak | | May 2026 | $27.8M | 46 | 1.34 | Comfortable | | Jun 2026 | $21.4M | 35 | 1.03 | Year-end floor | ¹ *Seasonal index = that month's ending balance ÷ the 12-month average ($20.8M). 1.00 = an average month; 0.25 = a quarter of the average; 1.79 = nearly double.*

The August–September figures come with an asterisk that *strengthens* the point: those balances **already include the $10 million interfund loan** the district drew from its health-insurance fund in August 2025. Without it, the General Fund would have ended August and September roughly **$4 million in the red**. The natural, unborrowed low point of the year is deeply negative — which is exactly why the district borrows every late summer. ## The flow pattern repeats (FY 2024-25) We only have one full year of *reconstructed monthly balances*, but the FY25 monthly receipts and disbursements (from the Q3 report) confirm the **same seasonal shape** in the underlying flows — large positive months in October and April, persistent ~$5M monthly deficits in between, and a deep negative in June as the year closes: | | Jul | Aug | Sep | **Oct** | Nov | Dec | Jan | Feb | Mar | **Apr** | May | Jun | |---|--:|--:|--:|--:|--:|--:|--:|--:|--:|--:|--:|--:| | FY25 net flow ($M) | −2.6 | −5.5 | −4.5 | **+30.0** | −5.8 | +1.7 | −6.7 | −6.0 | −2.5 | **+25.4** | −1.6 | −22.1 | The two tax months (+$30M, +$25M) and the steady between-settlement bleed are structural, not one-offs. That is what makes a *baseline* meaningful in the first place. ## The catch: a new state law reshapes the season This is no longer a projection. **[SF 2201](https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=SF2201), signed in February 2026, moves state foundation aid from monthly to quarterly payments (≈$26.5M each) beginning July 15** — replacing the old schedule of ~$10.6M monthly payments that didn't start until September. That single change rewrites the seasonality, because a large payment now refills the General Fund at the *start* of the fiscal year instead of leaving it starved until fall. Re-running the model on the post-law flow vector (reconstructed from PFM's FY27 schedule, which already assumes quarterly aid; see [`scripts/cash_seasonality_sf2201.py`](https://github.com/b00mhauer/iowa-city-schools-board-archive/blob/main/scripts/cash_seasonality_sf2201.py)) versus the FY26 pre-law baseline: | Month-end | Pre-law 95% | **Post-law 95%** | Change | |---|---:|---:|---:| | **Jun** | 47 | **31** | 🟢 −17 | | Jul | 30 | 15 | 🟢 −14 | | Aug | 17 | 37 | 🔴 +20 | | Oct | 62 | 52 | 🟢 −10 | | Nov | 58 | 74 | 🔴 +16 | | Jan | 37 | 18 | 🟢 −19 | | **Mar** | 27 | 15 | 🟢 −12 | | Apr | 61 | 40 | 🟢 −21 | *(Days of cash needed for a 95% chance of not running dry over the next 12 months.)* Three things change, and one doesn't: 1. **The summer crunch — the binding constraint in every number above — is relieved.** The ~$26.5M July payment means June only has to bridge a few weeks, not the whole summer. **June drops from ~47 to ~31 days; July from 30 to 15.** 2. **The trough moves from late summer to late winter.** The long dry stretch is now *between* quarterly payments: PFM's FY27 projection bottoms at **March ($6.3M)**, and the months right after a payment (Aug, Nov) now behave like the old Oct/April peaks — flush, with a full quarter to fund. 3. **But the overall reserve requirement does not fall — it edges up.** Replacing 9 monthly payments with 4 quarterly ones makes revenue *lumpier*, which *increases* the within-year swing. The worst-month 95% requirement actually rises **62 → 74 days**. Quarterly aid helps *timing* (no September cliff) but hurts *smoothness*. **The seasonality reshapes; it does not shrink — so the 60–90 day reserve target holds, arguably reinforced.** **The consequence for the headline question:** under the *old* law, the district's ~30-day June target sat below the ~47-day 95% bar — inadequate, which is why it borrowed every summer. **Under SF 2201, ~30 days in June sits right at the new ~31-day bar.** The law is essentially what makes the district's own June target defensible. !!! note "Two caveats on the law" **Payment calendar.** PFM modeled the quarters as Aug/Nov/Feb/May; the statute says "beginning **July 15**," which implies Jul/Oct/Jan/Apr — one month earlier. If so, summer and June improve *even more* and the troughs shift a month earlier. The qualitative story is identical either way. **SAVE diversion is a separate, not-yet-law risk.** The proposed property-tax bill (SSB 3034, Div. IV) would accelerate diverting SAVE sales-tax revenue to property-tax relief (up to 30% by 2029). That threatens the SAVE/capital fund and bond coverage, **not** General Fund operating cash — but because ICCSD lends GF cash to the SAVE fund, a SAVE shortfall could raise GF cash demand. Monitor it; it is not in this model. ### The pre-law transition year (FY26) for reference | Month-end | FY26 ending cash | FY27 ending cash | What changed | |---|---:|---:|---| | Aug | $6.0M | $13.4M | 🟢 Quarterly aid payment cushions the summer | | Sep | $5.1M | $9.9M | Less acute | | Jan | $19.6M | $10.1M | 🟠 No monthly aid; spending down | | **Mar** | $14.2M | **$6.3M** | 🔴 New annual trough (between quarterly payments) | | Jun | $21.4M | $18.3M | Year-end floor, ~30 days | **Implication for your hypothesis:** a single year is enough to read the *mechanism*, but the trough *month* is not stationary — SF 2201 migrates it from September toward late winter. A liquidity model has to track the **payment calendar**, not just the month name. ## Judging a balance: the forward-drawdown test Here is the core of your hypothesis, made precise. The right question is **not** "is this balance above or below the seasonal average?" It is: > **Will the balance survive the largest drawdown still ahead before the next big inflow — without dropping below the operating floor?** The operating floor is roughly **one month of payroll (~$16–19M)** plus whatever minimum buffer the board wants; below it, the district cannot make payroll between inflows and must borrow (interfund loan or anticipatory warrant). The two drawdown "legs" that bind are:

Summer leg — April peak → late-summer troughFY26: $37.1M → $5.1M = −$32M over 5 months (≈ −$42M before the $10M loan)

Winter leg — October peak → late-winter troughFY26: $34.0M → $14.2M = −$20M over 5 months

A practical rule for any month *m*: > **Liquidity-safe if: starting cash ≥ (worst cumulative net outflow from month *m* to the next major inflow) + (minimum operating floor).** The same dollar balance is therefore safe in one month and dangerous in another, because what's *ahead* differs: | If you're holding ~$18M (≈30 days)… | …entering this month | Verdict | |---|---|---| | $18M | **June** | 🟡 Adequate — only July's gap to bridge before August aid | | $18M | **September** | 🟢 Comfortable — October taxes are days away | | $18M | **December** | 🟠 Thin — the Jan–Mar bleed is ahead of you | | $18M | **April (post-tax)** | 🔴 Alarming — you should be near $37M; the whole summer leg is ahead | That is precisely why "30 days" cannot be judged without a month attached. ## So: is 30 days in June low, adequate, or high? **Adequate, but at the floor — not comfortable.** Three reasons: 1. **June is the year-end handoff balance.** Its only job is to carry the district through **July** — one payroll — until the next inflow. In the FY27 regime that next inflow is the **August quarterly state-aid payment** (~$26.5M), so the forward drawdown from June 30 is relatively short. The district's own advisors size the June-30 target to exactly this: PFM calls **35 days "sufficient to make July payroll,"** **30 days** still sufficient, and **18 days "NOT sufficient to make July payroll."** Thirty days sits just above the line that fails. 2. **It is the bottom of the comfortable band, not the middle.** The summer leg is the binding constraint of the whole year. Going *into* it with 30 days leaves essentially no cushion for a bad July or a delayed payment — it works only if the next six weeks are clean. 3. **It is thin by any external yardstick.** Thirty days is ~8% of annual operating spending. Rating-agency "available reserves" benchmarks for an A/A+ Iowa district sit near **17% of revenue**; ICCSD's full-year reserves are already only ~9.5%. Thirty days of *cash* in June is consistent with a district operating with little margin — fine if managed tightly, fragile to any shock. **Bottom line:** 30 days in June is a *passing* grade, not a *strong* one. The same 30 days in April would be a red flag; in September it would be reassuring. ## Putting a probability on it: required cushion by month The deterministic test above answers "what's the *expected* worst point." Adding the *variability* of the flows turns it into a probability — exactly as you'd expect. Model each forward month's net operating flow as a random draw, **flow = seasonal mean (μ) + noise (σ)**; the cash path is then a seasonal random walk, and "running dry in the next 12 months" is the chance its *running minimum* falls below zero (a [first-passage / ruin problem](https://en.wikipedia.org/wiki/First-hitting-time_model)). The balance needed for confidence *p* is: > **Required balance(month) ≈ (mean forward drawdown to the binding trough) + z_p × (σ of that drawdown)**, with z = **1.645** (95%), **2.326** (99%), **3.090** (99.9%). The table below is that calculation run as a 400,000-path Monte Carlo from each month-end, using the FY26 cash-basis operating flows as μ and a **$2.5M/month** flow volatility as the base case. It reports the **days of cash on hand** a balance must clear to have a given chance of *not* needing an emergency loan or warrant over the next 12 months. (Reproduce or re-run with your own σ: [`scripts/cash_seasonality_model.py`](https://github.com/b00mhauer/iowa-city-schools-board-archive/blob/main/scripts/cash_seasonality_model.py).) | Balance held at end of… | 50% (mean) | **95%** | **99%** | **99.9%** | Binding trough | |---|---:|---:|---:|---:|---| | Jul | 24 | 34 | 39 | 46 | upcoming Sep (near) | | Aug | 4 | 22 | 32 | 43 | next Sep (far) | | Sep | 0 | 23 | 32 | 43 | next Sep (far) | | Oct | 47 | 69 | 78 | 88 | next Sep (far) | | Nov | 44 | 64 | 73 | 83 | next Sep (far) | | Dec | 35 | 55 | 63 | 72 | next Sep (far) | | Jan | 24 | 42 | 50 | 59 | next Sep (far) | | Feb | 18 | 36 | 43 | 51 | upcoming Sep | | Mar | 15 | 31 | 38 | 46 | upcoming Sep | | Apr | 53 | 67 | 74 | 82 | upcoming Sep (near) | | May | 51 | 65 | 71 | 78 | upcoming Sep (near) | | **Jun** | **41** | **52** | **57** | **64** | upcoming Sep (near) | *All figures are days of General Fund operating cash (≈ $610K/day). September is the **universal binding trough** — every starting month is ultimately tested against the late-summer low before October property taxes arrive.* Three things to read off it: - **The low-balance months are the low-risk months.** August and September need only ~22–23 days at 95% — *less* than June — because October's refill is imminent. The peak months (April, May, October) need the *most* (65–69 days) because from a peak you must self-fund the entire run down to the next trough. Required cushion tracks *forward drawdown*, not current level — your original point, now in numbers. - **The near-trough rows are the trustworthy ones.** April–July starts are tested against the *upcoming* September (1–5 months out), where the model is on solid ground. The fall/winter rows are tested against the *following* September (6–11 months out); because the model assumes independent monthly noise, their high-confidence numbers are inflated (real seasonal-timing noise partly reverses month to month). Treat those as upper bounds. - **σ is the swing input.** At a conservative **$4M/month** (consistent with the FY25-vs-FY26 summer-drawdown gap), every 95% figure rises ~10–18 days — June, for instance, goes from **52 → 62 days**. The *shape* of the table is robust; the *level* moves with σ. ### What this says about 30 days in June The model puts hard numbers on the earlier verdict. To make June 30 genuinely safe *without* summer borrowing you'd want roughly:

~41 days

50/50 — the expected worst case (the Aug–Sep trough) just reaches $0.

~52 days

95% confidence of clearing the summer with no loan or warrant.

~64 days

99.9% — effectively never short over the next 12 months.

So **30 days in June is well below even the coin-flip (~41-day) threshold** for self-funding the summer — which is exactly why the district draws an interfund loan or warrant every late summer. Thirty days isn't sized to *avoid* borrowing; it's sized to make *July* payroll and then borrow for August–September. Read against this table, ~30 days in June corresponds to a *high* probability of needing the summer backstop — consistent with what actually happened in FY26. ### Caveats (so the table isn't over-trusted) - **One clean year of μ, an assumed σ.** FY24/FY25 audits are still open; PFM flagged even beginning cash as an "unknown variable." The means come from a single cash-basis year (partly projected) and σ is an assumption, not an estimate. - **A moving calendar.** The FY27 shift of state aid to quarterly payments relocates the trough (Sep → March); the μ vector should be re-cut for FY27+ before applying the table forward. - **Month-end, not intra-month.** The true low is mid-month (payroll before late-month receipts), so add a few days of buffer. - **Floor = $0.** If the board wants a standing minimum buffer above zero, add it to every cell. The honest upgrade path: once three-plus years of *reconciled* monthly balances exist, estimate σ (and its seasonal/serial structure) from data instead of assuming it, and the same script returns calibrated probabilities rather than well-reasoned estimates. **Component refinement.** A first step down that path is already in the repo: [`scripts/cash_seasonality_components.py`](https://github.com/b00mhauer/iowa-city-schools-board-archive/blob/main/scripts/cash_seasonality_components.py) replaces the single assumed σ with one built from the volatility of each flow *component* — letting the ~85% of the flow that is statutory/contractual (payroll, state aid, the property-tax *amount*) contribute almost no forecast error, and concentrating uncertainty in the lumpy "other local/federal" residual plus property-tax *timing*. It tightens the table by roughly 5 days (June 95%: 52 → **47 days**) and is more defensible, though still bounded by the same data-quality limits. ## Why the target is 60–90 days Read across the table, the binding months — the post-tax peaks, which must self-fund the entire run down to the next trough — require **~60–76 days** at 95–99% confidence. A single reserve policy has to satisfy the most demanding month, which is exactly why a healthy target lands at **60 days (minimum) to 90 days (prudent)**, even though ICCSD currently steers to ~20–35. A standalone, self-contained visual explainer of this — built for sharing — lives at **[why-cash-reserve-targets.html](why-cash-reserve-targets.html)** (generated by [`scripts/make_reserve_onepager.py`](https://github.com/b00mhauer/iowa-city-schools-board-archive/blob/main/scripts/make_reserve_onepager.py)). ## Sources - **ICCSD Board of Education.** [Capital Outlay Borrowing Need Memo Update for 4/1](https://simbli.eboardsolutions.com/SB_Meetings/ViewMeeting.aspx?S=36031992&MID=29357) (Curt Pratt, COO), April 1, 2026 work session. Source for the FY26–FY28 days-cash narrative and the interfund-loan history. - **PFM Financial Advisors LLC.** *Year-to-Date General Fund Fiscal Progress & Update Regarding the Need to Issue Warrants*, presented [April 28, 2026](https://simbli.eboardsolutions.com/Meetings/Attachment.aspx?S=36031992&AID=566782&MID=28495) and [May 12, 2026](https://simbli.eboardsolutions.com/Meetings/Attachment.aspx?S=36031992&AID=569351&MID=29980). Source for the monthly General Fund cash-flow schedules (Exhibits 1a–2c) and the 18 / 30 / 35-day payroll thresholds. - **ICCSD Business Services.** [Third Quarter Financial Report, FY2026 (Financials as of 3/31/26)](https://simbli.eboardsolutions.com/Meetings/Attachment.aspx?S=36031992&AID=569770&MID=29980), May 12, 2026. Source for FY25 and FY26 monthly revenues and expenditures and quarter-end cash/investment balances. - **ICCSD.** [District Financial Update — Financial Oversight Committee](https://simbli.eboardsolutions.com/Meetings/Attachment.aspx?S=36031992&AID=512711&MID=27354), February 10, 2026. Source for the structural drivers (October/April property taxes ≈ $90M; ~$10M monthly state aid). - **PFM Financial Advisors LLC.** [Iowa City CSD SAVE Cash Flow Analysis as of 6/4/2026](https://simbli.eboardsolutions.com/Meetings/Attachment.aspx?S=36031992&AID=579295&MID=29982), June 9, 2026. Source for the multi-year fund-level cash trajectory. --- *Independent analysis. Not produced by ICCSD, PFM, or the Financial Oversight Committee. Built from unaudited board materials; figures will firm up as the FY24 and FY25 audits are completed. Spot a methodology issue or have a better data series? Open an [issue](https://github.com/b00mhauer/iowa-city-schools-board-archive/issues).*