Five-year forecast Treasurer: District finances are solid
Southwestern City Schools' finances are in good shape, according to the latest five-year financial forecast.
On Monday, Oct 28, the SWCS board of trustees voted unanimously to accept the forecast presented by district Treasurer Hugh Garside. Required by law, the forecast is presented annually in October and adjusted in May.
"I think we're in excellent shape," Garside said. "We've never been in such good financial shape."
Revenue is expected to grow from $213.2 million in fiscal year 2014 to $222.7 million in fiscal year 2015 and remain relatively flat through fiscal year 2018. the district's fiscal year, like the state's, runs July 1-June 30.
Little to no growth is anticipated on existing real estate values over the next five years, but an increase in overall valuation due to new construction is expected.
Garside said the district also anticipates see an increase over the next two fiscal years in unrestricted grants-in-aide, the district's primary source of state funding. That amount is projected to be $98 million in 2014, an increase of 6.25 percent, and $107.1 million the following year, an increase of 10.5 percent.
The amount in 2013 was $92.9 million. Those grants are based on the number of pupils, but since SWCS is considered a "capped" district, it will not see additional funding with increased enrollment.
Overall, total state funding will see an increase in fiscal 2014 to $114.7 million from $110 million in 2013, but that remains below what the district got in 2012 -- $116.4 million.
Expenditures also are expected to grow. Fiscal year 2013 is projected to have $199.9 million, and that is projected to be $249.9 million by 2018. The cost of personnel services -- employee salaries and benefits -- remains the bulk of the district's operating cost. Under the Affordable Care Act, the district will be required to provide single health coverage to all employees who work more than 30 hours a week, and this is reflected in the forecast.
The district is projected to end fiscal year 2013 with a cash balance of $82.7 million. By the end of fiscal year 2015, that will grow to $91.5 million.
"In fiscal year '16, '17 and '18 ... we start to deficit spend," Garside said.
At the end of those years, the cash balance respectively will be $84.7 million, $68 million and $39.8 million. Garside said it is fiscally healthy for the district to have between three and six months worth of cash on hand, which is between about $45 million to $90 million.
"We're in good shape cash-wise," Garside said. "If something happens ... it gives us that time."
Garside said as the district opens its new buildings, it will have to be prepared to accommodate additional students.
"We need to be ready for that," he said.
In other news from the board:
* The board went into closed session Oct. 28, "to prepare for, conduct, or review negotiations or bargaining sessions with public employees." The district is currently negotiating a new collective bargaining contract with the Southwest Education Association. Though no action was taken on a new contract, the five-year forecast factored in a 2-percent increase from fiscal year 2016-2017 through fiscal year 2017-2018 based on "historical local educational sector trends."