Westerville City School District (WCSD) Treasurer/CFO Bart Griffith on October 28, 2013, presented Board of Education members with a revised five-year financial forecast, confirming that several factors, including belt-tightening measures by district officials and increased state revenue, will allow the district to remain cash-positive through Fiscal Year 2018. Maintaining a cash balance through FY18 is three 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 financial information from the state biennial budget, which was not known when the forecast was filed in May of 2013. At that time the forecast included the assumption that state revenue would remain flat.
Griffith said now that the state budget is finalized, revised FY14 figures include increased revenue totaling approximately $1.9 million for FY14 and $3.4 million for FY15. As compared to the May 2013 forecast, district FY14 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 $4.3 million lower in FY14 as compared to last May’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 in FY13 the district’s actual benefit costs came in at $1.3 million less than projected in October of 2012, which primarily was due to reduced premium rates and decreased employee benefits. Purchased services for FY13 came in $1.29 million less than October 2012 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 three years longer than anticipated through Fiscal Year 2018,” 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’s previous forecast indicated that district spending would exceed revenue as soon as FY16. However, the district’s continued efforts to reduce expenses, as well as increased state revenues, have yielded positive financial outcomes. WCSD is projected to spend less than it receives in revenues for both FY16 and FY17. It is not until FY18 that the district’s expenditures are projected to exceed revenues.
“Given the fact that we’ve taken proactive measures contributing to an increase of our bottom line, we’ve been able to 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 has taken to strengthen its financial position and lengthen the time between levy requests.”
Griffith said that even with the implementation of this cash reserve, he is still projecting a $31.5 million cash balance at the end of FY18.
The updated Five-Year Forecast and Board Presentaton is available by clicking here or by navigating to BoardDocs via the Board of Education page.