New Albany's projected income-tax revenue - which includes money from new businesses - could bolster the New Albany-Plain Local School District's finances over the next five years.

New Albany's projected income-tax revenue - which includes money from new businesses - could bolster the New Albany-Plain Local School District's finances over the next five years.

District treasurer Brian Ramsay on Oct. 18 showed the projected figures to the financial review and reporting committee (FRRC). Ramsay recently prepared the district's five-year forecast, a financial projection from 2012 to 2016, which includes estimates of revenue and expenditures during that time period. Ohio law requires school districts to pass a five-year forecast prior to Oct. 31 each year and update it between April 1 and May 31 each year, so figures in the forecast change annually.

The school board on Oct. 24 unanimously approved the five-year forecast.

New Albany has revenue-sharing agreements in place with the local school districts to share a portion of income taxes collected from companies in the business campuses. The income taxes are shared because property-tax revenue is lost to the districts when businesses receive tax abatements. Abatements are used as incentives to lure new companies to the area, according to city officials.

The city's revenue-sharing agreement uses the first 30 percent of income taxes collected to pay off infrastructure debt incurred from developing the business campuses. The remaining 70 percent is split equally between the city and the school district that has jurisdiction over the land on which the business paying income taxes is located. Much of the campuses are within New Albany-Plain Local's boundaries, but some portions are in Licking County, meaning Licking Heights and Johnstown-Monroe are also involved in the revenue sharing.

Ramsay's figures, received from New Albany finance director James Nicholson, show that the school district can expect to receive $4.41 million in fiscal year 2012, $6.12 million in fiscal year 2013, $6.46 million in fiscal year 2014, $6.83 million in fiscal year 2015 and $7.23 million in fiscal year 2016.

Those figures change the projection of how long the district can operate without a negative cash carryover. Estimates provided to the FRRC last week projected the district would have a negative ending cash balance of $644,107 in fiscal year 2014. A renegotiated contract with the Ohio Association of Public School Employees (OAPSE), which reduced step increases and froze salaries for bus drivers and food-service workers, would reduce the negative balance to $450,486, a $193,621 difference. The school board unanimously approved the new contract Oct. 24.

However, the estimated city income-tax revenue would allow the district to enter fiscal year 2015 before the ending cash balance becomes negative $2.69 million.

For the five-year forecast, Ramsay asked the FRRC if he should use the city's projections, keep future projections flat using fiscal year 2012's $4.41-million increase over the next five years or calculate an average based on previous income-tax revenue to present to the school board.

Of those three options, the estimates made using a three-year average of past income-tax collections show the district with a negative ending cash balance of $534,465 in fiscal year 2014. The other two scenarios allow the district to reach fiscal year 2015 before the ending cash balance is negative.

"We can manage 2014 with additional cost savings," committee member Phil Derrow said of the negative $534.465 balance. "But, any way you slice it, we're going to need more dough in 2015."

Derrow said using a three-year average of previous income tax collections is too negative and doesn't account for new businesses that have announced they are building in the city. The flat-line estimate also is too conservative, he said, but using the full income-tax collection estimates is probably too positive.

Ramsay agreed to talk to Nicholson and determine how he arrived at those figures.

Nicholson, who did not attend the Oct. 18 FRRC meeting, told ThisWeek, "The projections for the business-park revenues were developed on a detailed, i.e. company-by-company, basis.

"We used company-specific income-tax revenue (net profit and withholding) for 2010 and 2011 year to date, and incorporated a general growth rate depending upon our perception of their potential for growth or decline over the next five years," Nicholson said. "Additionally, I incorporated the business plans of the previously announced growth of new businesses in the business park."

Nicholson said he did not estimate any further potential downturn from a second recession but, "that being said, I believe that we have conservatively estimated the estimated growth factors to avoid overestimating potential income."

The five-year forecast approved by the board used the flat-lined income-tax projections based on 2012 projected revenues.

The board typically has tried to be conservative in estimates of revenue projections. School board president Mark Ryan said the district last year anticipated property values would lower more than they did, for example.

He called the city's income-tax projections "fantastic," saying the funding from new businesses could help the district add programs. As it stands, he said, total revenues are declining and student population continues to grow.

"I think this (five-year forecast) manages expenses in a positive manner while trying to meet that declining revenue," he said.

New Albany has attracted 2.1-million square feet of new business construction in the business parks since 2009, according to the city. Those businesses are adding 2,500 new cmployees to the city's tax base. Many of those businesses are not yet open, which means revenue from their facilities is anticipated based on company projections.