During the April 25 meeting of the Olentangy Schools Board of Education, Treasurer Ryan Jenkins issued the first reading of the district’s latest five-year financial forecast.
The five-year forecast, which is updated biannually in November and again in the spring, is intended to provide a roadmap of sorts for the district’s asset management and projected spending. Jenkins began the presentation by showing a statement of the district’s revenues, expenses and fund balances. In the fiscal year 2023, the Olentangy Local School District (OLSD) is expected to have a revenue surplus of $22,517,614 before dropping to $2,553,147 in 2024. A revenue deficit of $18,843,924 is projected in 2025, and the deficit grows to $39,177,328 in 2026 and $60,509,115 in 2027.
Factoring in levy and renewal funds, the district projects to have year-ending positive balances of $179,323,213, $181,876,360, $163,032,436, $123,855,107, and $63,345,992 over the five years, although Jenkins said the revenue deficit still needs to be addressed by the district moving forward.
“This particular graph shows that by the time we reach the end of the five-year cycle, it’s hard to believe but we’ll be a $406 million district when it comes to our annual expenses,” Jenkins told the board. “Certainly, our revenue at that time, we know that we will have a budget deficit even though we will end with what would still be a reasonable cash balance. But the trend you can see is certainly something that will have to be discussed strategically. You couldn’t continue to have that sort of revenue deficit and continue to operate like you want to.”
Olentangy Schools has maintained an informal policy of having a cash reserve balance to cover two to three months of district operating costs at all times. Once the balance is projected to dip below the two to three-month costs, the district then begins considering the next operating levy going to the ballot.
According to the forecast, the district is projected to have 215 days worth of cash on hand in 2023 when it’s projected to spend an average of $834,815 daily to operate the district. That number is projected to fall to around 63 days of cash on hand by the end of the five-year cycle as the district’s average daily spending rises to approximately $1,111,990.
Of course, how OLSD ultimately fairs in the ongoing fight for fair state funding will have a heavy impact on the district’s financial outlook in the years to come. That outcome remains very much undecided, however, and Jenkins said the district has to move forward with what it knows at this moment.
“State formula funding is … the most variability, and it could really play an important part in our five-year forecast,” Jenkins said. “Right now, we have what is going on with House Bill 33. I have not reflected the change with the amendment that was put in by the House Finance Committee, which would have implemented an amendment that came out of the Primary and Secondary Education Subcommittee to take it to the 2022 cost set.
“So right now, we do have the 2018 cost set. What that means is we’re going to see marked declines in the state share. Essentially, the cost set being locked in means that the formula allows for our local capacity to grow. When our capacity grows, that means the state says we’re better able to fund ourselves, which means the state share drops.”
Jenkins went on to say that by keeping costs stagnant at the 2018 levels, “that is going to continue to drive more and more costs to the local share.” However, the amendment to move the cost set could change the forecast depending on its outcome in the Senate.
“That is the key variable, so I’m very, very pleased that an amendment was put in late last week to move those cost sets to 2022,” he said. “I just haven’t had the chance to analyze it, so it won’t be in this (forecast) submission. It just came on too late, plus all that still has to go through the Senate, and the Senate may very well have a say about what they think that looks like.”
Jenkins added that “if the state funding turns our way,” the district can resubmit the five-year forecast as a supplemental submission in June and would intend to do so if necessary.
To view Jenkins’ presentation in its entirety, including the live stream from the meeting, visit www.olentangy.k12.oh.us/board-of-education/board-meetings.
Reach Dillon Davis at 740-413-0904. Follow him on Twitter @DillonDavis56.