The Archbold Area School District will need additional revenue by 2015, school board members were told.
Christine Ziegler, district treasurer, told the school board during its Monday, Oct. 22 meeting that the school started deficit spending during Fiscal Year 2012 (June 30, 2011 to July 1, 2012).
When the district started FY 2012, there was a cash balance of more than $5 million. But, the district spent $390,694 more than it took in, which reduced the cash balance to under $4.7 million.
A five-year financial forecast, prepared by Ziegler, shows the district whittling down the cash balance to about $3.5 million at the end of FY 2013, $2.2 million at the end of FY 2014, and $693,987 at the end of FY 2015.
Without additional revenue from some source– additional taxes, or support from the state– Ziegler’s projection shows the district in the red by over $1 million at the end of FY 2016.
“I don’t see this going away,” Ziegler said.
School officials are quick to say the projections are estimates, and the farther into the future they project, the less accurate their predictions become.
For example, the State of Ohio will start a new biannual budget in 2014-15. The budget could change school funding formulas used in Columbus.
Ideally, Ziegler said the district should have $2 million in cash on hand; which, for Archbold, is enough to cover two months of operations.
In reviewing the revenue side of her projections, Ziegler noted the district’s total property tax valuation– the total value of taxable properties in the district– declined 11% in tax years 2010 payable 2011, and 2011 payable 2012.
She did not expect valuation to increase until 2013 payable 2014, although she noted she has been seeing “sold” signs on area homes.
She also noted that state support for the district has decreased as much as 10% annually since FY 2009. Federal stimulus money boosted state support in fiscal years 2010 through 2012.
She did not include any casino revenue into her budget, even though the state plans to disburse casino revenue in January 2013.
School treasurers fear rather than receiving a check for casino funds, casino money will be a component of state resources incorporated into the regular funding formula.
In her analysis of personnel services, which is money that goes to pay the school district staff, Ziegler said she did a more sophisticated analysis, taking into account future retirements and not replacing some who retire.
She also planned for minimal increases in salaries beyond the expiration of contracts.
She predicted that between FY 2013 and FY 2015, cost of personnel would increase about 3.6%, from roughly $6.97 million to about $7.22 million.
She said the school administration is looking for every opportunity to cut back expenses ranging from health insurance to supplies, but the school will need additional revenue in 2014.
Bob Aeschliman, board member, said a vote on a potential levy could be held in 2014, with collection to begin in 2015.
The last time voters in the school district cast ballots on a levy was in May 2011, when they approved the renewal of an “emergency” levy that raises $1.1 million per year for five years.
An emergency levy raises a set amount of dollars every year, and the millage charged to taxpayers is adjusted to bring in that amount of money. In a regular levy, the millage is constant, and the amount of money it brings in fluctuates with tax valuations.
The levy originally passed in November 2006. At that time, the millage was 4.91 mills.
Due to falling property valuations, when the levy was renewed in May 2011, the millage had to increase to 5.39 mills to bring in the same $1.1 million.
Jon Lugbill, board president, said, “We have our work cut out for us, don’t we?”