The New Albany-Plain Local School District is projecting a year-end cash balance of $16.4-million, not including an estimated $21-million that will be collected from the 24.4-mill levy approved in November.

The New Albany-Plain Local School District is projecting a year-end cash balance of $16.4-million, not including an estimated $21-million that will be collected from the 24.4-mill levy approved in November.

District treasurer Brian Ramsay's updated five-year forecast, which was submitted to the state May 19, shows the ending cash balance as $4.4-million more than the district had at the end of 2008.

By law, Ohio school districts are required to end the year with a positive cash balance, and the district's high reserves have contributed to its recent bond-rating upgrade from Fitch's Rating Service (AA) and Moody's Investors Service (AA2).

John Payne, of Bradley Payne Financial Advisors, said the rating agencies typically like to see a carryover balance of roughly 25 percent of a high-rated, growing district's yearly general fund.

"It's different from district to district," Payne said.

Ramsay said the year-end balance is the result of a few factors. The district recently moved from a guaranteed-funded district to a formula-funded district, thus giving the district about $500,000 more in 2009, he said. He said the change is based on the district's assessed valuation, which is determined by the total worth of the district's commercial and residential tax bases.

The district's wealth (tax base) did not increase as fast as the number of students. This is called ADM (average daily membership).

"Next year, I have us going back onto the guarantee; however, that can all change starting July 1," he said.

Ramsay said the $16.4-million ending balance also is a result of spending within the limits of the district's revenue, the recent supply-account freeze and a one-time lump sum of income-tax revenues from a local business.

In 2008, the district ended the year with $4,545,676 more in receipts than in expenditures.

The five-year forecast shows the district is expected to begin deficit spending in 2010, by an estimated $160,594. Therefore, the previous year's ending cash balance is used to make up the difference. The estimated cash balance for 2010 is $16,279,604, or $160,594 less than in the previous year.

Ramsay said that figure could change when new hires for next school year are completed in August.

"What you are doing is spending down your cash balance," Ramsay said.

The 24.4-mill levy replaced a 20.7-mill levy that expired in December 2008. The new levy is expected to collect about $3-million more per year than the expired levy.

The district's increase in salary spending, along with possibly less state funding, likely will force the district to dip into the 2009 carryover, Ramsay said.

He said the new five-year forecast, which is based on both actual figures and projections from the finance committee, represents the district going back to voters in 2012 to approve an operating levy to avoid deficit spending. Without such a levy, the district is expected to end the 2013 fiscal year with an $861,069 cash balance after four years of deficit spending, he said.

"Eventually, we are going to have to pass levies," Ramsay said. "We would have to be on the ballot in 2012 to make sure that we can get funds for 2013."

Castle said administrators are trying to make appropriate cuts that wouldn't influence what goes on in the classroom.

"We are trying to hold back as much as we can on staff hires, but not at the expense of educational quality or educational excellence," Castle said. "We have looked at every supply, equipment and material line item of every department in this school district."

None of the updated forecast figures represents recent discussions of allowing the district's permanent-improvements levy, which expires this year, to lapse.

During last week's board meeting, Castle said the current 1.72-mill PI levy brings in about $1.6-million annually.

Ramsay said district administrators plan to discuss what could be done with the carryover.

During the May 18 board meeting, member Mark Ryan brought up the idea of forming a group -- a cross between the former 70-member finance committee and the five-member community financial advisory committee -- to review district spending possibilities.

"I think we should explore some of those types of questions in a similar finance committee," Ryan said. "What should we do with the carryover balance? I would like to see us move down that path."

He said the district is in a good place to do this.

"Fortunately, we are in a position that we are pretty-well-funded for the next three years," Ryan said. "What are the options? Should we use this carryover balance for the permanent improvement (levy)? For us, I think it is more of a question for the allocation and the spending. What are our options going forward?"

Members of Citizens for Fiscal Responsibility and Accountability say they're angry -- but not surprised -- over the New Albany-Plain Local School District's projected $16.4-million year-end cash balance.

The watchdog group released a statement last week, calling for district officials to examine spending and revenues and to make the right choices for taxpayers.

Two points they made were to keep the 1.72-mill permanent-improvements levy, which expires in December, off the November ballot and extend the operating levy voters approved in November 2008 to either four or five years rather than the previous estimated three years.

Chris Luffler, one of six co-chairs of the group, said he believes the carryover is a result of underestimating revenue for the past four years.

"From our perspective, it does not appear to be conservative budgeting and doesn't appear to be cost savings," he said. "It is a consistent pattern of underestimating revenue."

He said administrators and board members should take a closer look at how to use the money.

"We were hoping that the board would consider using this excess to fund the current PI millage," he said. "We would like to have someone look at that."

Luffler said his group is looking for answers and possible spending and taxing options. He said he also wants the board to detail the exact causes for the $16.4-million surplus and the dollar amounts that contributed to it.

"If the district is referring to cost savings, what are those items and what do they represent?" he asked about the estimated ending balance.

Harry Lehman, an active and vocal member of the registered civic association, said he thinks the school district's surplus is unusual.

"Generally, when a school district builds a surplus, they build it to spend it down," he said. "That didn't happen here. That's very unusual."

Lehman said the problem with the large carryover balance goes back to the school board's decision to increase the operating levy from 20.7 mills to 24.4 mills.

"Those that appeared before the school board in 2008 and said to simply go with a renewal were accurate," he said. "The school board did not need the additional millage."

He said the recent teacher raises and discussions about putting the expiring PI on this November's ballot show irresponsibility.

"It demonstrates there is a need for an organization like ours to keep tabs on what the administrators and the school board is saying and doing about the taxpayers' money," Lehman said.