By Dedra Cordle
South-Western City School officials say there is no cause for alarm despite financial projections that indicate the district will see an increase in deficit spending.
According to Treasurer Hugh Garside, the district’s expenditures have already begun to surpass its revenue in the current fiscal year. He told the board of education at its meeting on Oct. 10 that the widening trend is predicted to grow throughout the duration of the five-year financial forecast.
“There is always some cause for concern when a district’s expenditures begin to outpace its revenue,” he said, “but what will help stabilize the district’s finances is that we have a positive cash balance that is predicted throughout fiscal year 2027.”
He said having a positive cash balance is vital to the health of the district’s bottom-line.
“We have a target of three to six months of our actual monthly expenditures,” he said. “And right now, we are anywhere between 5 to 10 months throughout this forecast and that is a great position to be in.”
Still, he said the district does need to monitor the rise in expenditures against its relatively flat revenue source.
“It’s something to keep an eye on and I do believe the actual numbers will be better than what is predicted in this forecast,” he said. “But we always have to be on the look-out for surprises.”
There was no surprise that the biggest expense of the district comes from personnel services, which consist of salaries and wages for its administrators, educators, and support staff. Garside said personnel services account for 80 percent of the district’s expenditures.
The district recently came to terms with its union group and administrators this summer. They will see annual raises from anywhere between 2.8 percent to 3 percent throughout the duration of the three-year agreement. Board approved wage increases for substitute employees were also factored into the forecast. Garside said their wage increases have helped attract and retain staff, but added they still need to drive up the numbers in their substitute bus driver pool.
“It’s our PSA to get the word out that we’re still hiring,” he said.
Two areas that need to be monitored closely, said Garside, are purchased services and supplies and materials. Although the latter category only represents 2.29 percent of total expenditures, it is projected to grow at an annual average rate of 7.53 percent throughout the forecast.
“Purchasing paper was a big kick in the gut,” he said. “We went from paying $25 per case to $50 per case in just one year. As a district, we use a lot of paper so those doubled expenses add up really fast.”
He mentioned that the district does recycle and they try not to waste paper by using both sides of the sheet.
According to the projections in the forecast, the district’s expenditures will be $286.4 million in 2023, $298 million in 2024, $311.7 million in 2025, $325 million in 2026, and $338.9 million in 2027.
The district’s revenue is projected to grow but at a much slower pace. Garside said the district maintains a healthy revenue stream from residential and commercial property taxes and they have made wise investments in allowable stocks. He added that the revenue will likely rise should the state legislators continue to fund schools through the Fair School Funding Plan.
“Roughly 44 percent of our revenue comes from the Fair School Funding Plan,” he said. “We were promised through that model a phase in of one-sixth the amount last year and this year but there is no promise beyond this biennium that we’ll get additional dollars from the state of Ohio.”
The district has received $120 million annually since the FSFP was passed nearly two years ago.
Garside said the district will know where they stand in regard to funding when the legislators put together the biennial budget next year but added that he hopes the state will come through with the dollars that were promised to all schools.
“We’ll see what they do, but I’m hopeful they will fund every district fairly.”
According to the projections in the forecast, the district’s revenue will be $287.5 million in 2023, $281 million in 2024, $283.7 million in 2025, $286.5 million in 2026, and $287 million in 2027.
The district’s cash balance is projected at $245 million in 2023, $227.9 million in 2024, $199 million in 2025, $159.5 million in 2026 and $106.8 million in 2027.
Garside said because of the continued positive cash balance and because they will be in their target range to pay monthly expenses, the district does not see a need for cuts or an operating levy request at this time.
“We’re doing OK,” he said. “We’re staying the course.”