CUYAHOGA FALLS — No health insurance premium increase for 2020, plus a fixed computer glitch, has made the financial picture of the Cuyahoga Falls City Schools less bleak, if still tight.
“There’s lots of good news” with the district’s latest five-year forecast, interim treasurer Kathryn Brugger told the board of education in presenting the forecast in May.
One source of good news was the discovery of a computer error and the way the funds from the five-year emergency levy passed in November 2017, which raises about $3.6 million for the district’s operating budget.
“When we picked up the forecast this spring, we noticed some contradictions with how the software calculates and how the numbers were entered into it in the fall,” Brugger said later. “The software is basically designed to look at what last year’s number was and add whatever is entered in for the current year.”
Using a hypothetical example, she said that if the district had spent $10 for an item each year between 2018 and 2023, the total expenditures should have listed only $10 per year. Instead, the software was adding $10 for each year; in 2019, the line item would have said $20, instead of $10. By 2023, it would have shown the district had spent $60 on the one item instead of $10.
How much this has benefited the district “is hard to say” because of “all of the other moving parts in the forecast,” Superintendent Todd Nichols said in a later interview.
“The capital outlay line item is not the only line item impacted,” Nichols said. “While the differences are in the district’s favor, it would be inaccurate and wrong to suggest that the district had any extra money. It is important to recognize the forecast for what it is, it is truly a forecast that represents a best estimation at that point in time. As we have demonstrated and reiterated, the nature of school finance is extremely fluid. For example, we are still awaiting the next biennium budget from Columbus.”
Also, the district is counting on renewal levies, Brugger said.
“The district has three renewal levies in the five-year forecast period that will need to be renewed. Even with the inclusion of the renewal levies, the district has a shortfall at the end of the five-year forecast.”
The first is a 7.9 mill that will need to be renewed in 2020, Brugger said. Then the district will need to renew a 9.97 mill levy in 2021 and a 4.75 mill levy in 2022. In addition, she said, the November 2017 emergency levy will have to be renewed.
Meanwhile, another boon to the budget was a zero percent increase in health insurance premiums for 2020, Brugger said. Generally, she budgets for an 8.5 percent increase in the projections.
“The consortium in general had a very good year,” Brugger said, referring to the Summit Regional Health Care Consortium.
Nichols said the difference is $572,517 to the district’s favor.
According to the forecast, the total revenue collected in 2018 is about $55.1 million.
Projected revenues for the next four years — not counting levies that must be renewed — are $57.5 million in 2019; $56.4 in 2020; $54 million in 2021; $48 million in 2022; and nearly $50 million in 2023. School districts are not allowed to factor in money generated from levies that are up for renewal in the years in question.
The greatest source of revenue in 2018 are real estate taxes, which generate nearly 52 percent of the district’s funds. State funding is the next highest, which contributes a little more than 30 percent to the district’s budget.
In the recent May forecast, the ending cash balances for June 30 in 2018 is $6.6 million. Projected ending cash balances are $8.5 million in 2019; $7.2 million in 2020; and around $2.6 million in 2021. The district is facing a $10 million deficit in 2022, which grows to $29.5 million deficit in 2023, though the forecast does not calculate levies up for renewal.
The previous forecast had been less bountiful, as a deficit would have started in 2021 at $6.8 million. The projected deficit for 2022 and 2023 would have been nearly $24 million and $49.2 million respectively.
“With current revenue and expenditure trends, the district is currently projecting that it will start spending more than it is bringing in beginning in fiscal year 2021,” Brugger said.
Two challenges facing the district are a declining enrollment and maintaining the recommended cash balance, Brugger said.
“The district lost 146 students in the 2018-19 school year,” Brugger said. “Which equates to funding loss of around $346,156 when factoring in the $10 increase in the Opportunity Grant for fiscal year 2019. The Opportunity Grant funding is assumed to stay at $6,020 for the duration of the forecast until the new budget has been finalized.”
As for the district’s cash balance, Brugger said the Cuyahoga Falls schools had the third lowest cash balance in Summit County. The Ohio Department of Education recommends a cash balance of about 25 percent of the district’s budget, she added.
“This district has worked to hard to get on the right path,” Brugger said. “But we need to work on the cash carryover.”
Board member Kathy Moffet said she hoped the forecasts “will help explain things [the public] may not understand about how schools are funded.”
The school board seemed pleased overall with the presentation.
“We are not out of the woods yet, but we are on the right path,” said Board Member Anthony Gomez.
The five-year forecast is required twice a year by the Ohio Department of Education. Districts project five years out what their revenues and expenditures will be.
Traditionally, reports are due in May and in October; however, starting this fall, reports will be due before the end of November so schools can factor in any passed levies, rather than having to possibly resubmit their reports. School districts are not permitted to go into deficit spending. A district could be placed in fiscal caution if a deficit is predicted three years out, Brugger said.
Reporter April Helms can be reached at 330-541-9423, firstname.lastname@example.org, or @AprilKHelms_RPC