The Upper Arlington Board of Education has approved an updated five-year financial forecast that shows district expenses continuing to exceed incoming revenue.
Treasurer Andy Geistfeld presented the updated figures at the Monday, Oct. 14, meeting.
He said school districts are required by law to submit original financial forecast information to the Ohio Department of Education in May and October each year showing three years of actual data and five years of projections.
"It is important to remember that the forecast is a living, breathing document that we will continue to revise," he said.
Total revenue at the end of fiscal year 2013, which ended in June, were listed at $76,339,969 on the new forecast. Total expenditures were listed as $81,092,748. An unreserved fund balance of $28,036,228 on June 30 kept the district from operating with a deficit.
As expenditures continue to exceed revenue on the forecast, that fund balance is projected to dwindle until it reaches $11,536,544 by the end of fiscal year 2016 and $1,348,466 by June of 2017.
The forecast shows a projected budget deficit of $11,609,258 by the end of fiscal year 2018.
Geistfeld said he did not include any funds that might come from the district's 4-mill levy request on the Nov. 5 ballot, if it is approved. He also did not include the $4.5 million expected to be saved through the district's efficiency project by the end of the 2016-17 school year.
He said the district's financial goals include maintaining an unreserved fund balance equal to about three months' worth of operating costs, or about $24 million.
"That balance helps to mitigate risks and would protect our triple-A bond rating," he said.
The revised forecast shows the district maintaining more than that amount at the end of the 2013 and is projected to have a little more than $24 million on hand by the end of fiscal year 2014, but the dwindling balances anticipated after that take the district well below that number.
"We are one of four districts in central Ohio that is triple-A bond-rated," Geistfeld said.
He said the state's biennium budget for 2012-13 caused a wide range of funding decreases, which resulted in a reduction of about $2.2 million in revenue compared to 2011 and an additional reduction of about $540,000 this year.
He said the latest biennium budget, approved for 2014-15, will have "little impact" on the Upper Arlington district over the next two years. The funding formula includes a guarantee that allows districts to receive at least the same gross funding as they received in fiscal year 2013.
Geistfeld said real estate taxes accounted for about 78 percent of the district's general fund operating revenue in 2013.
He said projected real estate collections each year through 2018 remain relatively flat, staying between $58 million and $60 million.
The district did experience an increase in the public utility personal property tax by almost $800,000, according to Geistfeld, who said that is expected to continue each year due to a new power transmission line installed under Lane Avenue by American Electric Power.
Personnel services accounted for 64 percent of total expenditures this year, Geistfeld said
He said salaries and wages are based on negotiated agreements which expire in December for support staff and December 2014 for teachers.
He said the district eliminated 30 staff positions as part of about $3 million in reductions after the failure of a 5.8-mill operating levy in 2013, which is estimated to cause a decrease in salary expenditures of $2 million by the end of fiscal year 2014 and an additional $400,000 in fiscal year 2015.
Geistfeld said the forecast predicts that annual health insurance premiums will increase by 10 percent to 12 percent after this year, based on current insurance trends and additional costs associated with the Affordable Health Care Act.
"Benefits are a challenging area, but next year, teachers will pay 25 percent more of their health care costs than they paid last year," he said.
Geistfeld said if the 4-mill levy is approved by voters, and the district's efficiency project succeeds, the bottom line would look much better. Instead of a budget deficit in 2018, he would predict a fund balance of about $27 million in 2017 and $22 million in 2018.
"This would be right where we want to be," he said. "We have to be focused not just on one year's needs, but on five years."