Three Benton County school districts are facing significant financial strain, with two of those districts planning millions of dollars in cuts next school year to stabilize their budgets.

Documents released by the State Auditor’s Office show the districts’ cash reserves range from two days of operating expenses to a deficit equivalent to 21 days of expenses.

The audits indicate Richland, Kiona-Benton City and Prosser school districts have struggled to adapt to costs growing faster than their revenues. All three districts also were cited by state education officials and auditors in recent years for their finances.

The boards and administrators of the districts have taken steps towards resolving the budget deficits, but they may not be sufficient to guarantee they can meet their financial obligations, auditors wrote.

Richland School District

Richland is the third-largest school district in the region with 13,700 students and roughly 1,500 employees. The district received financial warnings from the state in the 2020-21 and 2022-23 school years, respectively, in the wake of the Covid-19 pandemic after overspending revenues by millions and having only a few weeks’ worth of cash on hand.

In the fall of 2024, the district announced a series of staffing cuts after its general fund balance fell to $1 million. Its board and administrators have since instituted millions of dollars in cuts and other efficiencies to balance the books.

Auditors said the district showed improvement with an increase to its general fund balance to more than $3 million by August 2025, equivalent to four days of operating expenditures. It was driven by a $10 million interfund loan from its capital fund and redirection of $6.6 million in federal payment-in-lieu-of-taxes, or PILT, revenue.

“Without the additional revenue received from the interfund loan and apportionment advance, the district’s number of days of operating expenditures would have dropped to -27 as of the end of March 2025 before increasing to 2 days as of the end of March 2026,” read the audit report.

Fund balance sufficiency indicates the number of days the district could sustain operations with cash on hand.

District officials, in response to the audit, said they are continuing to make progress toward financial sustainability after adopting a plan that was reviewed by the Washington Association of School Business Officials.

“The district recognizes that rebuilding fund balance to target levels will require multiple years of disciplined financial management,” read the district’s response. “District administration and the Board of Directors remain committed to the ongoing implementation, monitoring, and refinement of financial strategies designed to continue improving the district’s overall financial condition and long-term fiscal stability.

Prosser School District

Prosser, which currently has about 2,300 students across six schools and employs about 450 staff, has relied on interfund loans to maintain its spending in recent years amid enrollment decline. It has estimated general fund revenues for 2026 of nearly $25 million, down from $45.3 million in 2025, and the equivalent of -21 days operating cash on hand.

“Should the availability of interfund cash become unavailable, the district may not be able to meet its financial obligations,” auditors wrote. “Subsequently, the District’s financial condition increases its risk of being unable to sustain operations or provide historical levels of service in the future.”

Prosser school officials said in their response to the audit that they “have been developing a plan to get the district back on a path of long-term financial stability in the next three years.” That plan includes cutting $2.5 million in the 2026-27 budget, through staffing cuts as well as reduced spending on materials and supplies. But it won’t end there.

“Looking ahead to the 27-28 school year, there will be more necessary staffing reductions including the full retirement of the assistant superintendent who is on a .5 FTE contract for 26-27 as well as the CTE director who is on a .17 FTE contract for 26-27. Both positions will not be replaced,” Prosser school officials said in response to the audit findings.

Kiona-Benton City School District

Ki-Be, which has about 1,370 students in three schools and 280 employees, has twice failed to renew its educational programs and operations, or EP&O, levy, which many districts use to support everything from school nurses to student sports.

School officials informed auditors that they are using short-term cash reserves to maintain services and meeting monthly with the Benton County Treasurer’s Office to monitor cash flow. It has general fund revenues of about $11 million, down from $24 million a year ago and -3 days of operating cash expenditures on hand.

The district also will be under binding conditions by the end of July. That status will require the district to annually submit a balanced budget to the Office of the Superintendent of Public Instruction and the local educational service district and work to achieve specified benchmarks, such as staffing ratios or a target ending fund balance.

If a district is unable to meet requirements to exit binding conditions within three years, it could then be assigned a special administrator to manage its spending or be dissolved.

Currently, seven school districts in the state – Bellevue, Mabton, Mount Baker, Marysville, Prescott, Shelton and Yelm – are under binding conditions.

Ki-Be school officials said they plan to use the regulatory flexibility binding conditions provide to bolster its general fund, such as liquidation of its surplus assets and using transportation funds to support overall operations. Additionally, the district has planned $2 million in cuts for the 2026-27 school year.

“Collectively, these rigorous corrective measures are projected to restore a positive fund balance by January 2027,” Ki-Be school officials said in their response to the audit.