By Rick Palsgrove
The failure of Groveport Madison Schools’ levy/bond issue on May 7, as well as uncertainty in future state funding, has implications for the district’s finances in the next five years.
“A five year financial forecast is laden with risks and uncertainty, not only due to economic uncertainties, but also due to state legislative changes (in the upcoming biennium state budgets),” wrote Groveport Madison Schools Treasurer John Walsh in his report on the forecast.
Walsh said the district is fortunate to have received more state funding for fiscal years 2018 and 2019 than had been expected from the state budget.
“Being that 53 percent of the funding for the district is from state dollars, this increase is very beneficial to the overall operations and for the education of our students,” said Walsh. “However, the district must be very mindful of future state budgets and their effects on our district.”
The district’s most recent five year forecast also shows the district with positive cash balances of $20 million in 2019; $18 million in 2020; $11.7 million in 2021; and $3.4 million in 2022. However a deficit of $6.9 million is projected in 2023 depending on levy results. (The forecast’s cash balances do not include levy renewal revenue funding because that money cannot be included as revenue until the levy is passed, according to Walsh.)
The district’s 6.8 mill operating levy was passed in May 2014 and expires on Dec. 31, 2019. According to information provided by Groveport Madison Schools officials, the failure of Issue 5 means the district will see deficits of $2.7 million in 2020 and $5.6 million in 2021.
“The levy will have to be renewed in 2019 for collection to continue in 2020 in order to maintain fiscal stability for the district in the future,” said Walsh.
“Because, if the revenue is not there, the district will have to change how it spends its money.”
According to the five year forecast, the district’s general fund revenue for fiscal year 2019 is $85.3 million and $83.6 million for 2020. (The forecast’s general fund revenues do not include levy renewal revenue funding because that money cannot be included as property tax revenue until the levy is passed, according to Walsh.)
The district receives 53 percent of its revenue from state funding. Real estate property taxes make up 42 percent of the revenue with the remaining 5 percent coming from other local sources.
Walsh said potential and unknown future changes in state funding would have an affect Groveport Madison’s finances. He said the district has to wait until the state enacts its next two biennial budgets to know what their impact would be on the amount of state funding Groveport Madison would receive in the future.
In this report, Walsh notes that revenue increased $1.12 million due to the
decreased rate of delinquent property tax payments by property owners, new construction, and additional state funding. He said the stabilization of the economy has allowed property values to rebound.
According to the forecast, the district’s expenditures for fiscal year 2019 are $80.2 million and $84.3 million in 2020.
District employee wages and benefits account for 65 percent of the district’s expenditures.
“People costs are the biggest item and they are what drive your operation,” Walsh said.
Purchased services make up 30 percent of expenses while materials are 3 percent, capital is 1 percent and miscellaneous is 1 percent.
Purchased services expenses include payments for contracted services, utilities, gas, electric, property insurance, and transportation. However, 37 percent of purchased services expenses come from Groveport Madison being required to make payments to community (charter) schools. Likewise, the Educational Choice Voucher program and open enrollment schools are also expenses.
According to Walsh, 56 percent of the purchased services expenses to the district comes from the cost for students who live within the Groveport Madison district borders but who attend school elsewhere. In Ohio, state money follows the student so Groveport Madison loses dollars to other schools where these students choose to attend instead of Groveport Madison. Walsh said this amounts to approximately $11 million annually the district loses for area resident students who choose to be educated in another district.
Walsh said the number of students who live within the Groveport Madison district but who attend school elsewhere “fluctuates up and down, but typically we have over 1,200 students who attend other locations to be educated.”
Another expense for the district is the $121,057 per year it spends leasing modular classrooms, according to the five year forecast.