Westerville City School District (WCSD) Treasurer/CFO Bart Griffith on Wednesday presented Board of Education members with a revised five-year financial forecast, confirming that several factors, including continued belt-tightening measures by district officials, will allow the district to remain cash-positive through Fiscal Year 2017. Maintaining a cash balance through FY17 is two years longer than originally projected when voters approved an emergency operating levy in March of 2012.
Financial forecasts, which school districts must file by October 31 and May 31 of each fiscal year, rely heavily upon past fiscal trends and future assumptions. Griffith’s latest update to the document reflects actual FY13 financial figures, whereas the forecast filed in October of 2012 used projected figures for FY13.
Griffith said that revised FY13 revenue figures include approximately $2.5 million more income than originally projected in the October 2012.
“This fiscal year we received $1.2 million more in general property tax than projected last October, which primarily is due to delinquency collections and more people paying their property taxes on time,” Griffith explained. “Additionally, we received approximately $500,000 more in state revenue than originally forecast last October. These are the two main factors of several that have had a positive impact on our bottom line.”
As compared to the October 2012 forecast, district FY13 expenditures also are lower in several categories, which Griffith attributes to changing business practices and continued belt-tightening by district officials.
“Actual cost for personal services is $1.6 million lower in FY13 as compared to last October’s forecast,” Griffith said. “We use an average figure when projecting salary and benefit costs, so when employees are hired at salaries below this average cost, it has a positive impact on our projected expenditures.”
Every employee group also has made salary and benefit concessions, such as freezing salaries and paying more toward health insurance, which has helped contain personal services expenses.
Griffith noted that the revised forecast also includes actual benefit costs in FY13 that are $1.3 million less than projected last October, which primarily is due to reduced premium rates and decreased employee benefits. Purchased services for FY13 came in $1.29 million less than last October’s projections due to reduced utilities usage and the district’s efforts to renegotiate its gas costs.
“When looking at the big picture, the impact of these various factors means we remain on track to stretch emergency levy dollars two years longer than anticipated through Fiscal Year 2017,” Griffith said. “Anytime a publicly-funded institution is able to revise its ending cash balance upwards is good news for taxpayers.”
Due to Ohio’s school funding formula, school districts typically operate on a deficit-spending model. WCSD is still projected to spend less than it receives in revenues for both FY14 and FY15; it is not until FY16 that the district’s expenditures are projected to exceed revenues.
Griffith said that considering the forecast projects a cash balance through FY17, conditions are right for the district to begin a new financial best-practice.
“Given the fact that we’ve taken proactive measures contributing to an increase of our bottom line, I’m recommending that we earmark $13 million of our cash balance as a reserve fund,” Griffith said. “It’s considered a standard business practice to reserve 30 days of operating costs to address any unforeseen financial crises. It’s also good fiscal stewardship and one more proactive measure that the Board can take to strengthen its financial position.”
Griffith said that even with the implementation of this cash reserve, he is still projecting an $8.2 million cash balance at the end of FY17.
The updated Five-Year Forecast will be 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.