Unexpected one-time increases in revenue coupled with cuts made over the last 15 months means London City Schools financial future isnt as bleak as previously predicted.
On May 22, treasurer Kristine Blind presented the districts updated five-year forecast. The state requires districts to submit the forecast in October and again in May. In October, Londons estimated ending cash balance for the 2011-12 school year (June 30) was $691. Now, that estimate is $742,546.
“The quarterly school district income tax receipt in April (2012) was higher by over $400,000 than the same time period last year, Blind reported.The majority of the increase was in excess of $300,000 in estimated tax payments made to the Ohio Department of Taxation. The department cannot release any specific information to us but indicated this was a one-time only payment.
The school income tax rate is 1 percent. To generate a $300,000 tax payment, a persons income would have to increase by $30 million. Blind said she inquired several times about the accuracy and the reason for the increase. The Department of Taxation confirmed that the amount was correct, but that information about the payment was confidential, she said.
Other revenue changes include $110,000 (2 percent) more in real estate tax collections the first half of this year compared to the same time last year. Blind said this is due to a shift in the timing of the tax payments, not an increase in revenue. Increased agricultural land values resulted in an increase of $76,000 in taxes to the district. Also adding to this years bottom line are increased Medicaid reimbursements and collection of delinquent tangible personal property taxes.
As for the bigger financial picture, earlier this school year the district predicted a negative $1.3 million cash balance by the end of the 2013-14 school year. In response, the district made $500,000 in cuts, adding to the over $3 million in cuts made over the previous year. Based on the $500,000 in savings multiplied over the next two years plus the unexpected $750,000 in increased revenue and other savings, Blind now estimates a positive cash balance of $774,929 by the end of 2013-14.
“Were not going into state receivership. Its not something around the corner like we thought it would be if a levy didnt pass this year, said Dr. Martha Geib, school board president.Were happy were doing better. Were out of the woods a little bit, but were not all the way out.
Eventually, the district will need to buy textbooks and busses, two of the larger purchases the board has put on hold. Costly state mandates loom, as well, including one that requires schools to conduct online testing by 2013-14, requiring technology upgrades.
At the same time, the district wants to build its cash reserve, which was non-existent at the start of this school year. A reserve would aid in month-to-month cash flow, help to prevent negative cash spending, and help to cover unexpected expenses. The minimum goal, Blind said, is a cash reserve equal to 30 days worth of expenses, which for London City Schools is approximately $1.6 million or 10 percent of the districts overall budget. Blind estimates the district can reach that goal by 2015-16. She noted that most districts aim for a reserve of 45 to 60 days worth of expenses.
“Its necessary to build a small reserve so we dont end up at zero. Just like our (personal) checkbooks at the end of the month, zero is not the goal, Blind said.
As for what all of this means for future levy requests, Geib said the board has called a special meeting for 7 p.m. June 13 to discuss the districts finances. The meeting will take place in the board conference room located on the second floor of London Elementary.
Geib said she thinks the roller coaster thats been London City Schools finances and financial reporting is reaching a leveling off point.
The district has had three treasurers in the last 15 months. After the departure of Britt Lewis, Shirley Dodge served six months during which her primary task was to separate the London Academy and London City Schools budgets. Blind came on board as the permanent treasurer nine months ago, after which the district went through additional budget cuts and two levy campaigns. She and interim superintendent Tom Ben have worked to get a grasp on the numbers.
“Now, I think were finally getting stability in the financial reports were being given. Were starting to get more reliable numbers, Geib said.(The school boards) decisions are only as good as the financial reports (we base them on).