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School budget level while hurdles rise
(by Tony Lange - May 16, 2012)
School budget level while hurdles rise
By TONY LANGE
The Solon School District's latest five-year forecast did not change much from six months ago, according to district Treasurer Timothy Pickana.
"Our revenues and expenses are very comparable to the projections that were made in October of 2011," he said. "So that's always great news, because you're hoping revenues aren't falling short and expenses running high."
Cash balances are projected to be positive each year of the forecast, which runs from fiscal 2012 to 2016. June 30 balances are estimated at $16.6 million in 2012, $19.2 million in 2013, $20.3 million in 2014, $18 million in 2015 and $12.3 million in 2016.
The predicted $2.3 million loss in 2015 and $5.7 million loss in 2016 are attributed to Ohio House Bill 920, which was enacted by Ohio lawmakers in 1976, Mr. Pickana said.
Like other public schools, Solon receives the majority of its funding from general property taxes, which account for roughly 70 percent, or about $48 million, of its annual funding, according to the five-year forecast.
That revenue source remains stagnant each year in the five-year forecast, because HB 920 prevents schools from collecting more money when inflation drives up the value of property, Mr. Pickana said. But HB 920 does not prevent inflation from driving up school costs, as is the case for all schools across Ohio, he said.
"So what ends up happening in the state of Ohio is, unless there's a drastic increase in state funding or unless there is a new levy placed on the ballot passed by the voters, your revenues remain stagnant," he said. "And if you think about what happens over a five-year period with expenses, it just goes up with inflation. Everything just becomes more expensive from decade to decade. Gas, materials, supply, paper, books and, of course, if you have salary increases or insurance increases, so across the state of Ohio, this would be the standard theme."
Solon's five-year forecast represents a $9.1 million expenditure increase from fiscal 2012 to fiscal 2016.
Employee retirement and insurance benefits expenses are project to rise $4 million, personal services expenses $3.8 million, purchased services $1 million and supplies and materials $200,000 during the course of the forecast.
While the Solon School District has continued to earn excellent academic ratings for more than a decade, it only receives about 4 percent of its total operating revenues from state-formula funding, Mr. Pickana said.
"Solon CSD 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," he said in his forecast. "The district's ability to retain its current revenue stream via the state's tangible personal property tax payments will also play a significant role in the district's ability to maintain its current level of education."
As the current law stands, Solon received $10.7 million in tangible personal property taxes in fiscal 2011, but it's phasing out by $1.2 million a year until fiscal 2013, when it will hold steady at $8.3 million.
The end of Ohio's biennium budget period, which expires June 30, 2013, will be critical for Solon schools, Mr. Pickana said.
"The biggest risk is always on the revenue side, because it's not up to you or me in how much revenue we bring in," he said. "If the state decides to change our taxing structure, to change our percentage in personal property revenues and reduce those, that's something that we can't control. You create a forecast based on what is known as the current law stands. But in less than two years, we're at risk of that changing."
Support from all district employees in agreeing to salary freezes and insurance hikes, and the Solon community, which passed a 6.9-mill operating levy by 61.8 percent in 2010, have allowed the district's finances to get back on track after the May 2011 forecast projected negative cash balances starting in fiscal 2014, Mr. Pickana said.
When their support will be needed again has not been discussed, he said.
"This forecast does not project another levy," he said. "But again, this forecast is based on assumptions at this point in time. So, if the state decided that they're going to come in and make major reductions a year from now, if they're going to go ahead and take away a million dollars a year from us, then that changes our financial picture."
During the last decade, thousands of school operating levies have inked the ballots in Ohio. Less than half have passed.
Winners like Solon keep up with inflation. The losers cut programs for students.
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