Groveport Madison feeling a financial pinch

By Rick Palsgrove
Southeast Editor

State budget cuts and the ongoing coronavirus are having an impact on Groveport Madison Schools’ finances.

“Due to the impact of COVID-19 on our economy, the state announced current year reductions to state aid just last week,” said Groveport Madison Treasurer Felicia Drummey. “The reduction to state aid has propelled the district toward an operating deficit.”

According to its most recent five year forecast, the district was in a strong financial position in January 2020.

“However, the March 2020 pandemic has negatively impacted our overall financial picture with a 2.7 percent or $1.1 million reduction in state aid imposed upon us with less than two months to close the fiscal year,” said Drummey. “We are also expecting further reductions in state aid beginning July 1. The state has not yet announced those reductions, but experts predict it could be reduced by upwards of 10 percent.”

Drummey said the district is forecasting a 4 percent reduction to state and has modeled the 10 percent reduction to conduct internal “what if analysis.”

“Clearly, we are entering a cycle of financial pressure brought on by the impact of COVID-19 on our local economy,” said Drummey. “Some federal relief under the CARES Act is also expected that may offset the reduction of state aid. New information emerges daily so the district administration and board of education are poised to meet regularly over the next several months to model the impact of new information and identify action steps that might be necessary to lower the projected operating deficits.”

Revenues
According to the five year forecast, the district’s general fund revenue for fiscal year 2020 is $84.6 million, which is 0.58 percent lower than was projected last November.

The district receives 53 percent of its revenue from state funding. Real estate property taxes make up 37 percent of the revenue with the remaining 10 percent coming from other local sources.

Expenses
According to the forecast, the district’s expenditures for fiscal year 2020 are $83.8 million, which is slightly above last November’s projection.

District employee wages and benefits account for 64 percent of the district’s expenditures. Purchased services make up 30 percent of expenses while materials are 4 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. A significant percentage of purchased services expenses comes 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.

What’s ahead
Drummey said district officials must be mindful and watch each future state budget carefully.

“There are many risks and uncertainties that will need to be considered in future planning as there are two new state biennium budgets that could affect us positively or negatively for fiscal years 2022-24, especially with the COVID-19 pandemic reducing the district’s state foundation payments in fiscal year 2020 and projected decreases in 2021.”

Drummey added the district will receive $1.9 million in CARES Act funding for help due to COVID-19.

“However, we have not received how these funds will be dispersed or if they will be included with the district’s five year fore cast. We will monitor this and all other funding that is affecting our financial forecast from the pandemic.”

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