District Continues to Stretch Resources as Reflected in Latest Financial Forecast

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Westerville City School District (WCSD) Treasurer/CFO Bart Griffith this week presented Board of Education members with the district’s latest financial forecast indicating the district will end Fiscal Year 2021 with a cash balance of $4.5 million. 

Increased state revenue, continued belt-tightening measures by school officials and other factors have allowed the district to stretch the March 2012 five-year emergency operating levy several years beyond original projections.  The levy is set to expire at the end of December 2017 but will appear on the November 8, 2016, General Election ballot as a renewal request.

If the emergency levy is renewed during the November election as a permanent “no new tax” issue, it will allow the district to maintain longer-term financial stability and delay the need for a new operating levy request.

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 noted that while the state established a new funding formula in Fiscal Year 2014 that resulted in additional revenue for WCSD, it also introduced a funding cap that is preventing the district from receiving additional state revenue it is owed.

Griffith said without the state funding cap, WCSD would receive an additional $6.5 million in FY17 revenue.  However, he does not see the state removing the cap anytime soon.  Anticipated revenue from the state’s biennial budgets for fiscal years 2017 and 2018 is reflected in this forecast, though estimating what the district will receive in future state budgets, as well as any new restrictions or requirements that may be imposed, is a challenge for any school district.

The forecast continues to reflect a $19 million reserve fund.  Griffith said the Board of Education authorized the creation of a $13 million reserve fund in October 2013 and subsequently was able to increase the amount to $19 million.  This reserve provides WCSD with approximately 45 days of operating costs to address any unforeseen financial crises.

“Maintaining a reserve fund is good fiscal stewardship,” Griffith explained.  “It’s one of the many proactive measures this Board has taken to strengthen its financial position and lengthen the time between levy requests.”

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, WCSD is projected to spend less than it receives in revenues until FY18.  Deficit spending begins at that time only because the forecast must reflect the expiration of the five-year emergency levy.  Griffith said renewal of the levy would continue to generate revenue for the district and expenses would not exceed revenues for several years thereafter.

“We’ve gone to great lengths to manage the funds our community provides and are pleased to share this forecast with taxpayers,” Griffith said.  “The bottom line is that we’ve stretched our resources, avoided deficit spending and maintained a positive cash balance years beyond what was originally anticipated.”

“Allowing the emergency levy to expire in 2017 and returning later with a new levy request, even if for the identical millage, would have a negative financial impact on taxpayers,” Griffith said. “That’s 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.”

Due to recent changes in state law, the state no longer pays 12.5 percent of property owners’ tax bills on new levies or other new tax issues approved by voters.  The homestead exemption and property tax rollback continue 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 voters approve Issue #59 in November.

A healthy financial forecast has allowed district officials to begin addressing academic program needs and capital improvement needs that have been reduced or deferred over the year as officials worked to rebuild the district’s fiscal stability.  The updated Five-Year Forecast, a “Performance Accountability Report” and all other Board action items are available online through the district’s web site at www.wcsoh.org.  Visitors can obtain this information by visiting the Treasurer/Fiscal Services page under “Our Department” 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.