Financial Forecast Highlights Include Cash Balance Stretching Emergency Levy Additional Year


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Westerville City School District (WCSD) Treasurer/CFO Bart Griffith on Monday presented Board of Education members with a revised financial forecast indicating the district will end Fiscal Year 2019 with a cash balance of $38.4 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. Griffith noted that a new state funding formula established in Fiscal Year 2014 resulted in additional revenue for the district, but at the same time introduced a funding cap that is preventing the district from receiving all of the state revenue it is owed.  What the state will include in its next biennial budget is unknown and poses one of the greatest challenges to school districts when creating financial forecasts covering a five-year time span.   

The latest forecast also shows that the district is projected to spend an average of $5.28 million less each year over the next four fiscal years as compared to the May 2014 forecast.  Griffith attributes reduced expenditures to changing business practices and operational efficiencies established by district officials.

“We are now on track to gain one additional year and stretch emergency levy dollars four years longer than anticipated through Fiscal Year 2019,” 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.  Previous forecasts 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.

Griffith shared that the forecast now reflects a $19 million reserve fund.  Board members authorized the creation of a $13 million reserve fund in October 2013 and in this forecast are able to increase the reserve amount by $6 million.

“This reserve fund now ensures that we have 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.”

WCSD is projected to spend less than it receives in revenues for FY 15, FY16 and FY17.  It is not until FY18 that the district’s expenditures are projected to exceed revenues, but that is only because the forecast must reflect the expiration of the five-year emergency levy approved by voters in 2012.  Renewal of the levy would continue to generate revenue for the district and expenses would not exceed revenues for several years thereafter. 

Griffith noted that because the March 2012 emergency levy was not a continuing levy, the Board soon must begin to have conversations with the community about its renewal because it will expire at the end of calendar year 2017.  The district would still be able to operate through FY19 if the levy was allowed to expire in 2017, but officials would need to consider returning to the ballot with a new levy request shortly thereafter.

Griffith explained that allowing the emergency levy to expire in 2017 and returning later with a new levy request, even if for the identical millage, would likely have a negative financial impact on taxpayers.  This is because the latest 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 and Board members noted that a healthy financial forecast also allows for conversations regarding academic program needs and capital improvement needs that have been reduced or deferred over the years as officials worked to rebuild the district’s fiscal stability.

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 October 27, 2014, Board meeting at which the forecast was presented is also available to view at the district’s YouTube page at www.youtube.com/WCSDOhio