(May 18, 2015) Westerville City School District (WCSD) Treasurer/CFO Bart Griffith tonight presented Board of Education members with a revised financial forecast indicating the district will end Fiscal Year 2019 with a cash balance of $24.8 million. Several factors, including belt-tightening measures by district officials and increased state revenue, have contributed to the district’s ability to maintain a cash balance through FY19, which is four years longer than originally projected when voters approved an emergency operating levy in March of 2012.
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. Unknown at the time of this latest forecast is the impact of the Ohio’s next biennial budget, which not only determines how much state revenue WCSD will receive for FY 2016 and FY2017, but also shapes revenue assumptions for future fiscal years.
“The state’s biennial budget has been debated at the legislative level for several months now,” Griffith said. “We remain cautiously optimistic that our state revenue will increase as the latest versions of the budget have indicated. However, it’s best for us to keep those income estimates conservative until we have final numbers from the Governor’s budget office. Those figures will then be reflected in our next update this coming October.”
The latest forecast reflects costs associated with several recent initiatives by the district to improve academic opportunities for students, such as:
- Purchasing technology as identified in the Learning & Teaching Roadmap to improve instruction and enhance student learning,
- Increasing resources that are available to support the social/emotional development of students, and
- Re-establishing first grade classes in the Magnet Program.
The budget also supports several facility projects that will help the district maintain its school buildings without returning to the community to request additional capital funds.
“When looking at the big picture, the impact of these various factors means we remain on track to stretch emergency levy dollars at least four years longer than anticipated through Fiscal Year 2019,” Griffith said. “Anytime a publicly-funded institution is able to maintain its ending cash balance longer than expected is good news for taxpayers.”
Due to Ohio’s school funding formula, school districts typically operate on a deficit-spending model. Previous forecasts indicated that district spending would exceed revenue as soon as FY16. However, the district’s continued efforts to carefully manage budget growth, as well as increased state revenues, have yielded positive financial outcomes. WCSD is projected to spend less than it receives in revenue for FY15, FY16 and FY17.
It is not until FY18 that the district’s expenditures are projected to exceed revenue, but that primarily is because the forecast must reflect the expiration of the five-year emergency levy that voters approved in March 2012. Because the emergency levy was not a continuing levy, it creates the need for the community to have a crucial conversation within the next few years.
If the emergency levy is allowed to expire at the end of calendar year 2017, the district would still be able to operate through FY19 but would need to consider returning to the ballot with a new revenue request shortly thereafter. Allowing the emergency levy to expire also has a potential negative financial impact to taxpayers. This is because the last state budget 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 homestead exemption 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.”
Griffith shared that the forecast continues to reflect a $19 million reserve fund. The Board originally established this reserve at $13 million if FY14 and subsequently authorized its increase to $19 in FY15.
“The reserve fund ensures at least 45 days of operating costs to address any unforeseen financial crises,” Griffith explained. “It’s not only good fiscal stewardship, but it’s one more proactive measure that the Board has taken to strengthen its financial position and lengthen the time between levy requests.”
The updated Five-Year Forecast is 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 Department” or by navigating to BoardDocs via the Board of Education page. The May 18, 2015, Board meeting at which the forecast was presented soon will be available to view at the district’s YouTube page at www.youtube.com/WCSDOhio.