Decreased expenditures and increased projected revenue is allowing the Westerville City School District to stay in the black at least a year longer than originally anticipated.
District Treasurer/CFO Bart Griffith recently presented a five-year financial forecast to the district's board of education, projecting an additional year of financial stability and the district maintaining a cash balance of $70.85 million for fiscal year 2022.
The most recent forecast reflects nearly a $1 million decrease in actual expenditures for FY 2017 as compared to prior projections.
The district was forecasting $163.35 million in general fund expenditures last year, but at the close of the fiscal year, its actual expenditures were $162.40 million.
Griffith said the savings has a compounding effect, meaning future expenditure projections are lower than anticipated in prior forecasts.
Contributing to the district's financial health is a $2.18 million increase in revenue over prior projections for FY 2017.
Griffith said the district experienced this increase due to slightly higher state funding, receipt of a federal grant and increases to other revenue and financing sources.
Revenue projections in subsequent fiscal years continue to reflect the positive impact of this increase to FY 2017 revenue.
"We continue to manage our resources wisely on behalf of the taxpayers in our community," Griffith said. "As a result, we continue to avoid deficit spending while adding another year of fiscal stability to our schools."
School districts must file their five-year financial forecasts with the state of Ohio by Oct. 31 and May 31 of each fiscal year.
The forecasts rely heavily upon past fiscal trends and future assumptions.
The most recent forecast includes actual revenue from the state's biennial budget for fiscal years 2018 and 2019.
"School funding continues to be debated at the state level, so we will continue to take a conservative approach to our estimates beyond FY 2019," Griffith said. "By projecting revenue conservatively, if funding comes in better than anticipated, it improves our financial picture.
"Should projected state revenue end up lower than anticipated, we're better able to manage the impact," he said.
The district continues to maintain a $19 million reserve fund, which Griffith said is good fiscal stewardship and covers approximately 45 days of operating costs to address unforeseen financial crises.
Due to Ohio's school funding formula, school districts typically operate on a deficit-spending model.
Much earlier forecasts indicated that district spending could exceed revenue as soon as FY 2016.
However, even while rebuilding its programs and services from significant budget reductions five years ago, Westerville stretched its resources and now projects that it will delay deficit spending longer.
"Last May, we projected that deficit spending would begin in FY 2019," Griffith said.
"The forecast indicated that we would spend approximately $700,000 more than we received in revenue that year, but now we expect to avoid deficit spending until at least FY 2020."
The forecast indicates deficit spending of approximately $4.87 million at the end of FY 2020 and $11.7 million at the end of FY 2021.
The district has effectively slowed the rate of projected deficit spending by approximately $3.8 million as last May's forecast projected the amount for FY 2021 to be $15.5 million, according to Griffith.
The current forecast shows $18.5 million in deficit spending for FY 2022, which Griffith said is likely significantly less than if the district had continued on its prior expenditure trajectory.
He said the updated forecast continues to reflect the phase out of the district's 30-year-old "Win-Win" agreement with Columbus City Schools.
This results in an annual 20 percent reduction to Westerville's Win-Win payments to Columbus annually until the payments are eliminated completely.
No payments will be made to Columbus after FY 2021, and no property transferred in either direction as part of the agreement.
District officials' efforts to stabilize and stretch finances recently yielded a significant benefit as Moody's Investors Service upgraded Westerville schools' general obligation unlimited tax bond rating from Aa2 to Aa1, the second highest possible ranking. Westerville joins a group of just 22 school districts in the state that have earned the highest or second highest standing.
"This is a significant achievement for our district and community," Griffith said. "If and when the district would borrow money, the interest rate should be cheaper because of this rating. We earned this upgrade because everyone is working toward the same goal."
David J. Conley, the district's financial consultant and president of Rockmill Financial Consulting LLC, agrees with Griffith's assessment.
"Moody's upgrade is proof that the district's ongoing efforts to improve its financial condition through prudent management of resident's taxes is working," Conley said.
"Continued practices of spending wisely and in managing the district's debt could position Westerville City Schools for yet another upgrade to the highest possible rating of Aaa."
The updated five-year forecast and all other board action items are available online through the district's website, wcsoh.org.
Visitors can obtain the information by visiting the Treasurer/Fiscal Services page under "Our Departments" or by navigating to BoardDocs via the board of education page.