Cuyahoga Falls -- There will be a tough financial road ahead for the Woodridge Local School District.
The district is projecting a $2 million-plus deficit in Fiscal Year 2019 and higher ones in the ensuing two years, according to the revised five-year forecast recently approved by the Board of Education.
District Treasurer Thomas Morehouse said the district is required to notify both the Ohio Department of Education and the Auditor of State on how it is planning to get out of the projected deficits.
"There's nothing here that should surprise any of us," said District Superintendent Walter Davis. "We're at the end of our levy cycle."
"It is clear that the deficit that the district faces in the next five years cannot be remedied easily," added Davis in an email to the Falls News-Press on June 1. "Given the costs of operating a district like ours and the fact that we receive so little state support, our strategy going forward will have to include budget reductions and some new money. The Board will meet this summer to discuss options related to the specifics of each."
The Board of Education approved the district's updated five-year forecast at its meeting on May 16 after it heard a presentation from Morehouse.
On the revenue side, the district's property tax collection is expected to remain fairly constant, with some slight fluctuations during the next five years.
Overall revenues are expected to decline, on average, by 1 to 2 percent each year during the forecast, according to Morehouse. Revenues are estimated at $24.51 million in Fiscal Year 2017 and the numbers are expected to decline to approximately $23.86 million in Fiscal Year 2021, according to the forecast.
Meanwhile, overall expenditures are projected to increase by anywhere 3 to 5.3 percent each year from FY 2017 through FY 2021, according to the forecast. The expenditures are anticipated to rise from about $25.99 million in Fiscal Year 2017 to approximately $30.74 million in Fiscal Year 2021.
Although expenditures are expected to outpace revenues by about $1.49 million in FY 2017 and by approximately $3.2 million in FY 2018, the overall cash balance is predicted to be in the black in both FY 2017 ( about $5.4 million) and FY 2018 (about $2.2 million).
An approximate $2.059 million deficit is projected in Fiscal Year 2019, with deficits of about $7.34 million and $14.198 million estimated for FY 2020 and FY 2021, respectively. The district has a 2.18-mill levy that will expire in calendar year 2019 (or FY 2020). If that levy is renewed and collection continues without disruption, the deficit for FY 2021 will be $13.65 million, according to the forecast.
Morehouse discussed the different types of millages that the district has on the books. The district has a residential tax rate of 22.516 mills, an emergency/fixed rate millage of 19.66 mills and a debt service and capital millage of 8.05 mills. In addition to the 2.18 mills of the emergency fixed rate millage that is set to expire in calendar year 2019, Morehouse noted that 3.32 mills in debt service will end in calendar year 2018.
"There's no reason to renew that [3.32 mills in debt service]," said Morehouse. "So constituents will see relief as 3 mills will be coming off of their tax bills."
The district is currently projected to receive a "small increase" in the state's biennial budget which was recently passed by the Ohio House and is currently being reviewed by the Ohio Senate. Morehouse noted the funding from that source won't be finalized until the end of June. A 3 to 4 percent increase in state money is projected for each year of the forecast from FY 2017 through FY 2021. Since the district only receives $700 per student in state funding, the district is projecting $1.63 million from that source for FY 2017. The amount of state funding is projected to increase to about $1.902 million by FY 2021.
Morehouse noted that for any new tax levy passed after 2013, local taxpayers have to pay the entire amount. For levies passed before 2013, local taxpayers only had to pay 87.5 percent of the levy's cost, with the state covering the rest of the amount. A revenue item that will decrease over time is Tangible Personal Property tax money, which Morehouse said is being phased out during the next several years.
Morehouse also noted that more than 80 percent of district revenues come from property taxes and property tax allocation (which includes homestead and rollback taxes, as well as TPP money).
On the expenditure side, Morehouse said the district is planning for a 14.7 percent increase in health insurance costs in FY 2018. The forecast filed in October 2016 projected an eight percent increase in health insurance expenses, so Morehouse noted he had to make adjusted the new forecast to account for the change. He is projecting a 10 percent increase on health insurance costs for each of the three years following Fiscal Year 2018.
The district's classified staff pays 10.5 percent of their health insurance premium, while the certified employees pay 12 percent.
For inflationary reasons, Morehouse said he is planning for a 2 percent increase each year in both purchased services and supplies.
In general, Morehouse said school districts' personnel costs typically encompass 80 to 85 percent of general fund expenses. Woodridge's personnel costs consist of 76 percent of general fund expenditures [55 percent on personnel services and 21 percent on benefits], according to Morehouse.
"Being in the 70s [percentagewise on personnel costs] I think to me says we're clearly not overstaffed," added Davis. "We're right where we need to be in terms of personnel."