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Updated Financial Forecast Reflects Academic Program and Service Restorations, Maintains Prior Fiscal Timelines

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Westerville City School District (WCSD) Treasurer/CFO Bart Griffith presented Board of Education members with a revised financial forecast indicating the district will end Fiscal Year 2020 with a cash balance of $37.14 million.  The balance reflects expenses the district has incurred while rebuilding academic programs and services impacted by significant budget cuts approximately four years ago.  Even during this rebuilding phase, district officials have stretched the March 2012 emergency operating levy five years longer than originally projected.

School districts must file their five-year financial forecasts with the State of Ohio by October 31 and May 31 of each fiscal year.  These forecasts rely heavily upon past fiscal trends and future assumptions.  Griffith said anticipated revenue from the state’s biennial budgets for fiscal years 2016 and 2017 is reflected in this updated forecast.  However, calculating what may be included in any state budgets beyond those years, as well as any new restrictions that may be imposed, is a challenge for any school district and akin to predicting the future.

Griffith noted that the district has received increased state revenue in recent years, but the state also has kept in place a funding cap that prevents the district from receiving additional state revenue it is owed.  Without the state funding cap, WCSD would have received an estimated $8.6 million in additional revenue this fiscal year.

“Increased state revenues, combined with changing business practices in the district, have allowed us to stretch dollars from the 2012 emergency levy five years longer than anticipated,” Griffith said.  “This is good news for our taxpayers.  We’ve been working diligently to strike that delicate balance between rebuilding our programs and services while managing the resources our community provides.”

Griffith said the district continues to maintain a $19 million reserve fund, which is good fiscal stewardship and covers approximately 45 days of operating costs to address any unforeseen financial crises.

Due to Ohio’s school funding formula, school districts typically operate on a deficit-spending model.  Earlier forecasts indicated that district spending would exceed revenue as soon as FY16.  However, even while rebuilding its programs and services, WCSD continues to project that it will spend less than it receives in revenues until FY18.

Griffith noted that deficit spending is projected in FY18 because the forecast must reflect the five-year emergency levy’s expiration at the end of calendar year 2017.  The district would still be able to operate if the levy was allowed to expire, but officials would need to return to the ballot with a new and possibly larger levy request.  Renewal of the emergency levy would continue to generate revenue for the district and delay deficit spending.

Earlier this month, Board members unanimously voted to place a “Substitute Emergency Levy” on the November 8, 2016, ballot.  This type of levy would not be a new tax to the community because it “substitutes” the five-year emergency operating levy when it expires at the end of 2017.  Approval of the issue would allow the district to continue collecting the same revenue already on the books.  However, unlike other operating issues, the Substitute Emergency Levy allows WCSD to receive additional revenue from new construction in the district.

Because the district would be able to receive additional revenue when new homes and businesses are built, a Substitute Emergency Levy could stretch the time until a new operating levy is needed.  Griffith said allowing the emergency levy to expire in 2017 and returning later with a new levy request, even if for the identical millage, would likely have a negative financial impact on taxpayers.  This is because the state recently added an income means test to homestead exemption applicants and eliminated property tax rollback provisions that help homeowners pay their property tax.

“The state no longer pays 12.5 percent of property owners’ tax bills on new levies or other new tax issues approved by voters,” Griffith said.  “However, the owner occupied credit and property tax rollback continues to apply to any existing tax issues renewed by taxpayers, which means the state would still pay 12.5 percent of the district’s emergency levy if residents approve its renewal.”

The updated Five-Year Forecast and all other Board action items are available online through the district’s web site at www.wcsoh.org.  Visitors can obtain the information by visiting the Treasurer/Fiscal Services page under “Our Departments” or by navigating to BoardDocs via the Board of Education page.

Board meetings are broadcast on WOCC-TV.  Board meetings and presentations also are available to view at the district’s YouTube page at www.youtube.com/WCSDOhio.