As residents prepare to vote on Issue 81, the South-Western City School Board of Education discussed their five-year financial future at its Oct. 13 meeting – and it looks a bit bleak.
According to the Schedule of Revenue, Expenditures and Changes in Fund Balances, at the end of Fiscal Year 2009, the district is expected to supercede its cash balance and cause a $9.7 million deficit that year, with a $5.4 million and a $32.4 million deficit in the following fiscal years.
There are many factors that play into this financial hole, with the top ones being slow to no growth projected in real estate values and the phasing out of the Tangible Personal Property Tax.
“In Fiscal Year 2007 we received $21 million, which is 10 percent of our budget,” said Treasurer Hugh Garside.
Garside said the Tangible Personal Property Tax is big revenue for the district, but due to the passage of House Bill 66 in 2005, the funds received will be phased out completely by 2011.
Garside added school districts are trying to put into effect a Personal Tangible Replacement through the state, which could offset the monies lost by HB 66.
On the other side of revenues are expenditures, which include salaries and benefits, supplies and materials (such as bus fuel) and purchased services.
“Salaries and benefits and the two biggest amounts that we spend money on,” Garside said. “It’s 81 percent of our total budget. Compared to other districts, our benchmark is below what the state considers high. When it hits 86 percent or 90 percent, the state says you have to look at your finances, so we’re in a reasonable situation right now.”
According to the five-year forecast, purchased services are expected to increase four percent over the term, with utilities estimated to increase by 10 percent annually. In addition, payments to community schools will continue to increase.
“We will spend $9.5 million this year (for charter schools), which is $2 million more than last year,” he said.
The increase is attributed to additional students who enroll into charter schools and the state’s increase of per pupil amount (which is money spend on each pupil).
This news comes on the heels of the 9.69 mill bond and operating levy that will be on the Nov. 4 ballot. Garside stated if the levy passes, the district could start collecting taxes in Jan 2009, which would help the district maintain operating levels until 2012.
“A levy defeat would have our cash balances protected until 2009, but the only way to do that would be to cut our expenditures,” said Garside.
He also added the district is under a fiscal caution level from the state and, if the levy fails, they will be classified as a fiscal emergency.
“That is not a good path to go through,” he stated.
