Westerville News & Public Opinion

5-year financial forecast

District's books improve $4.5 million in 6 months

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By increasing revenue and decreasing expenditures, the Westerville City School District increased its cash balance significantly from last fiscal year to this year.

By state statute, Ohio school districts are to create a five-year budget forecast by Oct. 31 and an update by May 31 each year. Westerville Treasurer Bart Griffith presented his updated forecast at the Westerville Board of Education meeting Monday, May 19.

"The overall message is we are better off this year now than we were in October," Griffith said. "Based on what the state gave us, based on what we know right now, we know we're $4.5 million better than we were in October."

Since the last update six months ago, the $4.5 million increase in overall cash balance is a result of the district's increase in revenue and savings on expenditures.

Revenue is primarily comprised of state grants-in-aid and taxes. From last year to this year, the district saw a 7.7-percent increase from $150 million earned in fiscal year 2013 to $161.6 million in fiscal year 2014. The amount is $1.5 million more than in the October forecast.

Last October, the district forecast it would receive $1.9 million in state funding, but instead received $3.1 million because of a recalculation.

State legislators approved a new formula to calculate state funding that combined the district's per-pupil property valuation index and district's median taxpayer income.

Other operating revenues contributed to the increase as well, such as pay-to-participate fees, building rental fees, student fees and tuition from other districts. That revenue more than doubled from last year, from $521,342 to $1.2 million, Griffith said.

As revenue increased, spending decreased.

Expenditures were $2.9 million less than forecast in October. The bulk of the district's expenditure savings came from personnel services, where the district saved $1.5 million.

Griffith said various factors contributed to savings, such as hiring practices and fulfilling minimum staffing needs.

"Some of that was because we didn't hire staffing, some of it was we didn't need as many substitutes," he said.

Next year, the district might not see similar savings in personnel services. Much of the savings came from an agreed salary freeze for two years. This year is the second year of that contract freeze, which means the district will have to renegotiate teachers' contracts for next year.

Another significant savings was $1.4 million in capital outlay. Although capital outlay appears to be decreased by 65 percent from the October forecast, that savings will be utilized next year as part of a $2 million technology upgrade.

The district budgeted that money for the 2015 fiscal year and it will go toward technology upgrades and updating each building's audio and visual capabilities.

From last year to this year, the district reduced total expenditures and other financing uses by $5.1 million. Spending is expected to increase next year mostly because of expected jumps in personnel services, retirement and capital outlay.

From October to now, the district's cash balance is up 12.7 percent from $35.9 million to $40.5 million. However the more drastic change is from last year to this year's cash balance: A 139-percent increase from $16.9 million to $40.5 million.

Griffith says one reason the district's cash balance could be higher is because the district uses only 78 percent of its general fund expenditures on salaries and benefits, whereas most other districts in the state use between 83 and 85 percent.

"For a district this size, 78 percent is huge. For us, it's a low number," Griffith said. "We're not spending all our money in salaries and benefits."

The increase trend is expected to continue through the next five years. Although the district forecasts increased expenditures next year and the years to follow, overall the district also projects increased revenues and cash balances.

Next year, district forecasts a 35-percent increased cash balance to $54.6 million, and a $67.4 million cash balance in 2017.

However, the district can only forecast for a short period because it will have to renew the 2012 emergency levy in November 2017 to maintain the black ink in its financial books.

Because the district is unable to know which direction residents will vote, it is difficult to estimate accurate changes in 2018.

Griffith says the income from the 2012 levy "is expected to provide a full five-year life cycle," lasting through 2017.

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