By Dedra Cordle
The five-year forecast presented last May at the South-Western City Schools Board of Education meeting offered little surprises in the financial outlook for the district.
According to Treasurer Hugh Garside, there would be a rise in expenditures due to contract renegotiations, a positive cash balance and flat revenue throughout the upcoming fiscal years.
But during the latest financial estimate, presented at the Oct. 23 school board meeting, Garside said there was a slight surprise in the latest forecast.
“There is an improvement in the forecast since the presentation last May,” he said.
While expenditures are still projected to rise, and the cash balance will remain strong, there will be a slight increase in the district’s revenue stream.
Garside largely credited the increase to the recent reappraisals of property values and the state budget that was signed into law on June 30.
“The biggest factor in our revenue is the state budget,” he said.
Sixty percent of the district’s revenue comes from the state and Garside said the budget called for increases of 5.5 percent and 5.8 percent in the fiscal years 2017-18 and 2018-19, respectively.
This was due in large part, said Garside, to the district’s enrollment numbers which increase each school year.
“Our enrollment has grown by an additional 435 students this fiscal year,” he said.
Garside added he sees no slowing of that trend either.
One pitfall of this, he said, is that the state has categorized the district as a “capped district,” which means the funds they receive are capped at a set amount regardless of what the formula the state uses to calculate payments to districts says. For instance, Garside said without the cap in place, the district would see an increase of approximately $11 million each fiscal year. However, the cap stipulates the district cannot receive those additional funds.
“Though we will see an increase, that loss of what we could receive is huge,” he said.
Board president Cathy Johnson called the cap “unfair” and said they need to look into trying to change the formula to make it fair for every district.
According to Garside, the district will receive approximately $134 million from the state for the upcoming fiscal year.
As for the property tax reappraisal, Garside said the district would pull in an additional $1.2 million annually due to the increase. However, he added they may see less as many property owners plan to contest the increase in their values.
The forecast projects the district’s revenue will be $263 million, $269 million and $272 million in fiscal years 2018, 2019 and 2020, respectively.
The expenditures are forecasted to rise. The projections have the district expenditures at $244 million, $259 million and $272 million in fiscal years 2018, 2019 and 2020, respectively.
Garside said 80 percent of the district’s expenditures are due to personnel services, which consist of salaries and wages.
“That’s normal for any district,” he explained.
The district recently entered into new agreements with administrative, classified and certified staff bargaining units. The new contracts provide a 2.25 percent salary increase in each year of their respective contracts.
The forecast also predicts a rise of 2.5 percent in purchased services and a rise of 4.5 percent in supplies and materials.
Garside said fuel makes up one-fifth of the overall supplies and materials budget so if the cost of fuel rises, so does the expenditures.
The overall cash balance will remain positive, said Garside.
The forecast projects the district will have a positive cash balance of $174 million, $182 million and $181 million in fiscal years 2018, 2019, and 2020, respectively.
Garside said because of the stable financial outlook, he does not see an operating levy on the ballot in the future.
“I don’t see it on the horizon.”
He added that the board made a promise to voters in 2009 that there would not be an operating levy on the ballot until at least 2013 and noted it is well beyond that point now.
“I think that’s a testimony to the voters about how we are spending their money,” Garside said.
The state requires school district’s to turn in two financial forecasts each year.