Favorable Five-Year Forecast sees projected ending balances grow slightly
Westerville City School District (WCSD) Treasurer/CFO Nicole Marshall recently informed Board of Education members that the district’s strategic use of federal pandemic relief dollars, combined with a one-time influx of revenue from property tax settlements and increased interest rates on investments, is projected to allow the district to delay entering deficit spending for at least one more fiscal year.
Marshall shared the news with Board members as part of her annual Five Year Financial Forecast presentation, which occurred during the Board’s most recent regular meeting on November 21, 2022.
In the spring of 2020, just two months into the pandemic, projections indicated the district would be left with only $16 million in its unreserved fund balance by the end of Fiscal Year (FY) 2024. Even though voters had earlier approved additional operating funds for the district, the collection of which was intentionally delayed by one year, district officials immediately sought ways to curtail expenses, maximize the use of federal relief dollars, and lessen the effect of the pandemic on district finances.
“In addition to our efforts over the past two years to proactively address the fiscal impact of the pandemic, we recently learned that we will be receiving a one-time influx of approximately $6 million this fiscal year due to the elimination of Board of Revision settlements in House Bill 126,” Marshall explained. “Given this, our projected annual cash balances have grown slightly.”
While the most recent Financial Forecast adds projections for FY27, Marshall said the cumulative impact of revised revenue projections can best be seen by comparing FY26 unreserved cash balances as projected in the May 2022 forecast to projections in the new November 2022 forecast.
“Our projected unreserved cash balance for FY26 increased from $43.1 million in the May 2022 forecast to $72.1 million in this latest November 2022 forecast,” Marshall explained. “This is welcome news because these updated figures further result in a projected unreserved cash balance of $22.7 million for FY27 in our most recent forecast.”
Marshall explained that her updated projections also allow WCSD to delay entering deficit spending by an additional year. The May 2022 forecast projected WCSD’s expenditures would begin to exceed revenue in FY23, but the most recent forecast indicates deficit spending will not begin until FY24.
“The fact that we have been able to delay deficit spending by an additional fiscal year is great news,” Marshall said. “We’ll continue our efforts to reduce the impact of deficit spending and are pleased that this new forecast continues to project a positive unreserved fund balance for each of its five years.”
Marshall explained that while district officials have been able to meet and exceed recent financial targets, they are doing so despite significant decreases in state revenue when school budgets were cut due to the pandemic and interest revenue due to declining interest rates on investments. The work district leaders have done to delay deficit spending is important because of the compounding effect it has on future balances and the amount of new revenue ultimately needed to balance the budget.
Marshall and other district officials had aggressively lobbied legislators for a better school funding model. The collective efforts of districts around the state resulted in Ohio’s new Fair Schools Funding Plan, which first took effect in FY22. As a result of this new model, the state now makes direct payments to charter and non-public schools instead of transferring the money directly from school districts to those schools. Under the previous model, WCSD was sending approximately $8.6 million to charter schools and private institutions, but the current funding formula simply reduced state revenue by that same amount.
“Ohio’s Fair School Funding Plan continues to underfund WCSD by approximately $6.4 million per year,” Marshall explained. “While our latest forecast reflects flat funding from the state in future years, we would love to see the legislature fully fund its public schools as this would help districts to assess the frequency and amount of local operating levies that they must request from their respective communities.”
School districts must file their five-year financial forecasts with the State of Ohio by November 30 and May 31 of each fiscal year. These forecasts rely heavily upon past fiscal trends and future assumptions. 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 and presentations also are available to view at the district’s YouTube page at www.youtube.com/WCSDOhio.