CUYAHOGA FALLS — Plenty of financial challenges are on the horizon for the Cuyahoga Falls City School District, but school officials say one of the most pressing is the need to renew a 7.9-mill operating levy in November.

That tax issue would have to be approved this fall to ensure uninterrupted collection of those property tax dollars, according to district Treasurer Kristy Stoicoiu. The deadline to place the levy renewal request on the November ballot is Aug. 4. Board members agreed last week that the district should plan on preparing the issue for voters to decide.

"This is not any new money," said Stoicoiu. "This is a current levy that is in place. … It is just renewing what is already there. This is our last chance [to renew the tax issue] without any gap in revenue [collection]."

Boards of education typically have to approve two separate actions to put a tax issue on an election ballot. Stoicoiu said they could take those actions at the two board meetings in June. Board President Karen Schofield said she expects the first resolution to put the levy on the ballot will be on the board’s June 3 meeting agenda.

The need to renew the 7.9-mill levy was discussed on May 20 shortly after the Board of Education unanimously approved the district’s five-year forecast.

In addition to the 7.9-mill levy that expires at the end of this year, Stoicoiu told the board there are three other levies on the books that will need to be renewed during the next two years. A 9.97-mill levy will expire in 2021 and a 4.75-mill levy and the 2017 emergency levy will expire in 2022.

If all four levies are renewed on time, the district would be able to keep a positive cash balance throughout the life of the five-year forecast.

According to the forecast, with renewals of the levies, the district’s total cash on hand would be around $10.14 million at the end of Fiscal Year 2021. Year-end balances would then be $10.18 million (2022), around $9.5 million (2023), and just under $7.5 million (2024).

Without the renewals, the district will need to make up $1.92 million in Fiscal Year 2022, around $19 million in Fiscal Year 2023 and nearly $41 million in Fiscal Year 2024.

The district is expected to finish Fiscal Year 2020 with revenues of around $59 million, expenditures at just over $56 million and a cash carryover of about $10 million. That carryover amount is around 18 percent of overall expenditures and will decline over the next four years. Stoicoiu said while the district has improved its cash position, there should be a focus on establishing a healthy carryover.

Schofield praised Stoicoiu for her work on the forecast, noting it was "an excellent document that I think will help guide us in the days ahead, knowing full well that there’s so much uncertainty."

Stoicoiu said if additional significant changes occur with school funding, she will incorporate that information into the forecast.

A closer look at revenues

Real estate taxes and state funding account for about 80% of the district’s total revenues, according to Stoicoiu’s report. The information also stated that revenue is expected to increase at an average annual rate of 1.3% through Fiscal Year 2024. Real estate tax collection is projected to decline by 1 to 2 % in Fiscal Years 2021 and 2022 due to "an increase in delinquencies as a result of the COVID-19 pandemic and effects on [the] economy," the report stated.

Gov. Mike DeWine on May 4 announced $300 million in cuts due to K-12 education in fiscal year 2020. Cuyahoga Falls had $941,267 reduced from its state funding, but Stoicoiu noted that more than half of that amount (approximately $500,000) will be offset by CARES Act funding that the district will receive.

State funding in Fiscal Year 2021 is projected to be 10% lower than Fiscal Year 2019 levels, but Stoicoiu’s report noted that reduction may end up being more. The forecast projects state funding in Fiscal Year 2022 to return to Fiscal Year 2019 levels and stay at those levels throughout the forecast. Projected casino revenues were lowered by 40% for Fiscal Year 2021 due to casinos being closed since March 16 due to COVID-19.

A closer look at expenditures

Salaries and benefits combine to account for 71.1% of district expenditures. Operating expenditures are projected to increase by an average annual amount of 2.46% through Fiscal Year 2024. Total expenditures are increasing by just under 1% in Fiscal Year 2020.

The district’s reduction in force implemented in Fiscal Year 2020 provided a cost savings of more than $1.1 million. The district’s three employee unions extended their contracts for the current fiscal year with no base increase in salaries. All three union contracts are expiring at the end of Fiscal Year 2020. The five-year forecast approved by the board assumes both step increases for each staff position and a 2% increase on base salaries. Those numbers are not guaranteed because the unions have not negotiated new contracts yet.

Thoughts on bond issue for building project

In November 2019, district voters approved a 9.83-mill levy that will help fund operating expenses and include a bond issue to pay for a new 6-12 building. A portion of the 9.83 mills is a 5.33-mill, 36-year bond issue that would generate about $80.6 million. The bond issue would pay for a $113.8 million in new construction. The state would pay $33.2 million of the cost. District Superintendent Dr. Todd Nichols told the board it is still uncertain when the district will receive the state money.

Due to the uncertainty, board member Dave Martin said he’s heard from some district residents who want to see the bond issue canceled.

"I’m not sure that I’m for [canceling the bond] because I know that we need to do something with our facilities," said Martin. "I’m also aware … that this is a little different economy now and there’s a lot more uncertainty. I have no issue with the 7.9-mill levy renewal. What I want to make sure is that all of our spending decisions we can justify and not go down the avenue of wants as opposed to needs so we can continue demonstrating that we’re responsible with the money."

Reporter Phil Keren can be reached at 330-541-9421, pkeren@recordpub.com, or on Twitter at @keren_phil.