By Dedra Cordle
South-Western City School officials say the financial outlook of the district remains stable, but there will be things that need to be monitored down the road.
According to Treasurer Hugh Garside, the district’s expenditures will likely begin to surpass its revenue at the end of fiscal year 2022. He told the board of education, at its meeting on May 10, that it is a trend that is projected to increase steadily throughout the duration of the five-year forecast.
He said that while it is always a cause for concern when a district’s expenditures outpace its revenue, what will help the district is that it is projected to maintain positive cash balances through fiscal year 2025.
“We’ve always talked about how our cash balances needed to be on target for three to six months of active operating expenditures and we’re well within those targets in this forecast,” said Garside.
However, he added that while the district will have those positive cash balances, the expenditures outpacing the revenue is something that the district is going to have to watch out for in the future.
To quell any panic that may have been rising with the board or the listening public, Garside mentioned that when he makes the projections for the five-year forecast, which is a hypothetical representation of a district’s financial future based on historical trends and known facts, he does so in a conservative manner as a way to mitigate unwanted surprises.
“I do expect the revenue to come in a little bit higher, and I do expect our expenditures to be a little bit lower, so that will improve our overall financial situation,” he said.
The biggest expense of the district comes from personnel services, which consist of salaries and wages for its administrators, educators, and support staff. The forecast has accounted for negotiated base salary increases of 2.5 percent for its union groups, and the health insurance funding levels will increase by 1.5 percent to keep up with health and prescription costs. In future years, trend increases of roughly 10 percent are factored into the health insurance premiums from fiscal year 2021-22 through 2024-25.
The district will also be spending more to purchase additional computers and textbooks, along with any technological upgrades that are needed. It is estimated the district will spend between $1.8 and $2.7 million annually to implement its technology replacement cycle.
While the district spent 21 percent less in fuel expenses during the COVID-19 pandemic, Garside expects those numbers will rise again in the future. Fuel makes up roughly one-fifth of the overall supplies and materials budget. Every 30 cent increase in the price per gallon of fuel represents roughly $130,000 in increased cost annually.
According to forecast projections, the district’s expenditures will be $292 million in 2022, $306.7 million in 2023, $322 million in 2024 and $337 million in 2025.
The district’s revenue is projected to grow but at a slower pace. Garside said roughly 56 percent of its overall revenue is provided by the state. He believes the district is likely to see an increase in dollars when the state’s biennial budget is approved later this year but is most interested in the Fair School Funding Plan that is making its way through the state legislature.
Should the funding plan – which would change the way state aid is calculated and distributed to public schools – be approved, the district could receive upward of $32 million more in state aid due to its demographics and size. The district currently receives roughly $125 million in state aid.
Garside said he will have a more solid picture of the district’s future revenue regarding the state’s plans while preparing the five-year forecast in October.
The Franklin County Auditor recently completed its triennial update for property values. According to the auditor’s website, there was a median value increase of 20 percent for residential properties and 15 percent for commercial and industrial properties. Garside said the triennial update increased overall property values for those who live within the district’s boundaries by 18.6 percent. He added that they will likely see some delinquent collections due to the COVID-19 pandemic.
According to the forecast’s projections, the district’s revenue will be $280.2 million in 2022, $280.57 million in 2023, $280.74 million in 2024, and $280.72 million in 2025.
As for the cash balance, the forecast projections show the district will have $237.9 million in 2022, $211 million in 2023, $169 million in 2024, and $112 million in 2025.