By Linda Dillman
The five-year financial forecast for Canal Winchester Schools paints a positive picture, along with the hope that voters will renew an emergency levy that expires at the end of next year.
“This levy is vital to the financial stability of the district,” said Superintendent Jim Sotlar during an Oct. 15 Canal Winchester Board of Education meeting.
According to district CFO Nick Roberts, from 2014-18, there was significant growth in state funding projections. Currently, state funding accounts for 43 percent of district revenue, with more than 50 percent coming from personal and property tax.
“Revenue growth has been strong the past five years, averaging 4.92 percent per year” said Roberts. “This growth has been fueled by significant state funding increases. State funding is anticipated to continue to grow through the end of the projection assuming a continuation of the current formula.”
In 2023, state funding is projected to account for nearly 50 percent of all revenue. Income tax revenue climbs from a little over 10 percent this year to 12.5 percent five years from now.
“Income tax collections supply approximately 10.5 percent of the district’s overall operational revenue. Income tax growth has been strong over the last five-year period and has exceeded state and national trends following the 2008 great recession,” said Roberts. “While income tax growth was slightly less robust in fiscal year 2016, growth rebounded in fiscal year 2017 and fiscal year 2018 resulting in an overall annual growth rate of over 5.7 percent since 2014.The forecast assumes future income tax growth to remain strong at more than a three percent annual growth rate.”
Real estate revenue for 2018 accounted for 31.9 percent of district revenue.
“After two straight negative reappraisal cycles in Franklin County, real estate property values resumed growth in the 2017 valuation update,” said Roberts. “Real estate property values are expected to maintain steady growth—due to both inflationary adjustments and new construction through the forecasted period.”
In 2019, real estate tax revenue is projected to bring in $14.1 million. If the levy is renewed, revenue grows to $15.1 million in 2023.
New construction not only brings additional revenue, it also translates to growth in student numbers. Roberts said there was an unusual surge in new student enrollment.
He said the typical trend was in the 80 student range, but this year, the number nearly doubled with 154 new students.
“Not sure if it was homes being sold,” Roberts said. “We’ll have to see if it will be a trend. We will have to keep an eye on that.”
Addressing growth not only puts a strain on space, it also dictates the need for staff. Employee salaries and benefits are the biggest piece of the expenditure pie, accounting for three-quarters of the district’s cost in educating children.
In 2018, the district spent $29.9 million for salaries and benefits. In 2023, the amount is projected to cost the district $40.2 million.
“We have done a nice job in controlling benefits (cost),” said Roberts. “A lot of that is the unknown in health insurance. We’re funding exactly what our claims are.”
Despite enrollment growth from 2013 to 2015, the district reduced staff during the period. Roberts said the staffing reductions helped the district remain financially stable during an economically challenging period. From 2016 through 2018, some staff positions were restored.
“Since emerging from the financial crisis in stable financial condition, the district has cautiously added staff targeted to improve student performance,” said Roberts. “In fiscal year 2019, the district added six additional teaching staff as well as eight additional para-professional positions. The good news is that nearly all of the increased cost of these new positions was covered by staff turnover. Fiscal year 2020 through fiscal year 2023 assumes the addition of three professional teaching staff and five non-certified positions per year. The district recently negotiated a three-year agreement with staff covering fiscal years 2019-21.”
The agreement calls for 2.5 percent base wage increases each year of the agreement.
Sotlar expects to present a resolution of necessity to the board in November to place the levy back on the ballot in 2019.
“This levy is a renewal,” said Sotlar. “We’re not asking for new money.”