[ back ]
School budget sees downer in fifth year
(by Sue Hoffman - June 02, 2010)
School budget sees downer in fifth year
By SUE HOFFMAN
The Solon School District's five-year forecast, approved by the school board last week, reflects the impact of lower real-estate values and the phase-out of tangible personal property taxes, school officials said.
"Solon City School District is in a delicate position continuing to provide an excellent education and at the same time battling current state economic issues, minimal state funding and devastating tangible personal property tax law changes," district Treasurer Tim Pickana wrote in the forecast, which was submitted to the Ohio Department of Education.
The projected June 30 cash balance is $9.4 million in 2010, $6.8 million in 2011, $4.8 million in 2012, $164,000 in 2013 and negative $11.9 million in 2014.
In previous years, a 6.9-mill operating levy solved the problem of looming deficits for several years, according to School Superintendent Joseph V. Regano. The levy that was approved by Solon voters on May 4 "solves the problem but doesn't provide the same level of resources because we lost growth," he said.
For decades, the district benefited from increasing valuation, Mr. Pickana said. "We were accustomed to a 9 or 10 percent increase every three years on the inside millage."
He said the inside millage refers to the district's 5.2 mills which can rise every three years when the county auditor performs a triennial update or reappraisal. The district's other millage, which includes 71.9 mills in the general fund, 2.7 mills in bond retirement and 2.4 mills in permanent improvement, is not permitted to rise with inflation due to restrictions by Ohio House Bill 920, he said.
Four years ago, the district collected $800,000 more from a 6.9-mill levy than it does today, Mr. Pickana said. The district has committed to reducing its budget by $800,000 a year, totaling $4 million over the next five-year period, he said. The district has saved $3.3 million in spending reductions since 2005, he said.
Mr. Pickana said the district has achieved academic excellence while receiving only 5 percent of its revenues from the state.
"Due to changes in state tax law in recent years, Solon City School District is facing a tough obstacle over the next decade," he wrote in the forecast. "Due to new state legislation, tangible personal property tax revenue began to phase out in calendar 2006 and will be completely phased out by fiscal year 2011. A 'hold-harmless' clause has been implemented by state legislation. Current law requires the State of Ohio to fund the lost tax revenues back to the district for a fixed period of time."
In fiscal-year 2014, the State of Ohio will begin phasing out the "hold-harmless" revenues, he said. "This will be a devastating impact on Solon City Schools." He said 2004 tangible personal property tax revenues accounted for approximately 17 percent, or $11 million, of the district's operating revenues.
Mr. Pickana said the district "is not immune to rough economic times the state and nation are currently experiencing. Due to the struggling real-estate market, the district is realizing stagnant growth in tax revenues." The increases projected in real-estate taxes, he said, "are perhaps the lowest projections in the history of Solon City Schools. In order for projections to increase, a significant turn in the housing market is needed."
Revenues are projected at $63.5 million in fiscal-year 2010, $66.6 million in 2011, $70.2 million in 2012, $70.6 million in 2013 and $66.4 million in 2014.
Collections from the new levy begin in January 2011, Mr. Pickana said. "Approximately 50 percent, or $4 million, of the new revenues are projected to be received beginning in fiscal 2011, and the remaining 50 percent beginning in fiscal year 2012."
Expenditures are projected at $64.9 million in fiscal-year 2010, $69.1 million in 2011, $72.1 million in 2012, $75.1 million in 2013 and $78.4 million in 2014.
Negotiated increases on base salaries are projected at 3.6 percent for fiscal-year 2011 and zero percent for fiscal-years 2012 through 2014, Mr. Pickana said.
"Fiscal-year 2010 reflects $1.2 million in staffing reductions as a result of the district making attempts to balance its budget," he said. Fiscal-year 2010 also includes a one-time reduction of approximately $778,000 in federal stimulus money, which is not expected to be available in 2011, he said.
School districts must submit five-year forecasts in May and October.
[ back ]
