CUYAHOGA FALLS -- Financial projections for the city school district do not paint a pretty picture.
Cuyahoga Falls City Schools Treasurer Justin Klingshirn (as of June 1), along with interim treasurer Kathryn Brugger, presented the five-year forecast to the Board of Education on May 17. He said the district was projected to end fiscal year 2016-17 with expenditures outpacing revenues by $722,918. The district's fiscal year coincides with its school year.
If no new tax levies are approved, the district projects an unreserved fund balance on June 30 this year of slightly under $2.8 million; about $952,000 in 2018; and an approximate $1.9 million deficit in 2019; an approximate $5.6 million deficit in 2020; and an approximate $10.4 million deficit in 2021.
District Superintendent Dr. Todd Nichols told the Falls News-Press on June 1 that the five-year forecast approved by the Board on May 17 "is not inclusive of" of a plan he presented on May 3 to reduce expenses by nearly $2 million in the 2017-18 school year. For nearly $1.4 million of that amount, Nichols is proposing the reduction in force of 24 teaching positions. The Board is scheduled to vote on those RIF recommendations at their next meeting June 7.
"As required, an updated [five-year] forecast will be submitted in October," Nichols added.
"Cuyahoga Falls City Schools started the year off with a beginning balance of $3,613,480 and anticipates to end the fiscal year with an ending fund balance of $2,890,562," Klingshirn and Brugger said in their report to the Board. "This is because expenditures are anticipated to be greater than the revenue the district receives. Likewise, Cuyahoga Falls CSD anticipates to have expenditures greater than revenues throughout the forecasted period."
The five-year forecast projects expenditures will continue to exceed revenue, by about $1.8 million in 2018, $2.9 million in 2019, $3.7 million in 2020 and $7.6 million in 2021.
"Prior to tax year 2006, property values typically increased by an average of 6 percent during reappraisal and update years," said Klingshirn and Brugger in their report. "In tax year 2011, real estate values were devalued by an average of 6.4 percent for Cuyahoga Falls and 5.4 percent for Silver Lake. The property values were devalued again in tax year 2014 by 2.67 percent. House Bill 920 was designed to keep tax revenues stable when property taxes increased through a reduction factor. However, when property values decrease, so will current expense inside and outside millage."
Klingshirn and Brugger noted tangible personal property taxes continue to fluctuate because of the collection of delinquent TPP taxes. House Bill 66, adopted in July 2005, provided for the phase-out of the TPP from "general business, telephone and communications companies and railroads," he said. "The only TPP tax remaining is the Public Utilities Personal Property."
The tresaurer's office officials said they used a 5 percent increase for state funding calculations for FY 2017-18 and FY 2018-19, based on Legislative Service Commission projections. For FY 2019-20 and FY 2020-21 a 2.5 percent increase is forecasted.
Other sources of revenue include tuition, transportation, interest on investments, payments in lieu of taxes and Medicaid reimbursements, said the report, adding the district also receives tuition from other school districts whose students attend Cuyahoga Falls schools, as well as from open enrollment income.
The report noted the district receives $6,000 for each student coming to Falls from another district through open enrollment.
In talking about personnel services expenditures, which represent salaries and wages for all levels of staff as well as substitutes and board members, Brugger and Klingshirn said a negotiated pay increase of 2 percent was approved for Fiscal Years 2015-16 and 2016-17. Beyond that point, base increases remain frozen at FY16-17 levels, they said.
As a result of devaluation, the report noted, the district experienced an increase in the number of property challenges and, in turn, real estate tax refunds that reached an "extraordinary" level in Fiscal Years 13-14 and 14-15. He said he expects this to remain constant after FY16-17.
"The district entered into a Tax Increment Financing agreement with the City of Cuyahoga Falls in April 2010," the report said. "The TIF was approved by the State of Ohio after the property owners had paid their 2016 taxes. The district was required to return $409,248 (half or $204,624 is reported in this section because the funds were received in FY16) for the taxes paid by the property owners involved in the TIF."