Following a second reading during Tuesday’s Olentangy Local School District Board of Education meeting, the district’s five-year forecast was approved. The forecast reflects the addition of the levy that was passed by voters in the primary election, which included a 7.4-mill operating levy and a .5-mill improvement levy.
Factored into the forecast is the opening of a new elementary school in 2022, as well as a second elementary and middle school in 2024.
To better help the community to understand what the district’s unreserved cash balance totals represent, the district equates the totals to the number of days that the cash on hand can sustain the district’s operation. Projections in the first reading of the forecast, which was held May 14, showed 129 days worth of cash on hand for 2020, 118 in 2021, 113 in 2022, 96 in 2023, and 59 in 2024.
According to OLSD Treasurer Emily Hatfield, the district’s “informal policy” is to have at least two months of cash on hand at all times. During the October forecast reading, prior to the passing of the levy, the district was facing a negative unreserved cash balance of $60,311,434. That meant the district having nearly 70 days of a negative cash balance to operate the district.
Adjustments to state funding projections forced the district to slightly alter its forecast from the May 14 first reading to the approval of the forecast on Tuesday. In particular, the discrepancy in state funding showed for fiscal years 2022, 2023, and 2024.
“With the fiscal year 2022, originally, we had predicted and had the assumption we would be returning to the fiscal year 2019’s funding level,” Hatfield said. “But Mrs. (Julie) Feasel had more information for us from the statehouse on what she was hearing, letting us know that’s not what the state was discussing at this point, that they were looking at probably having a couple of years of maintaining flat funding.”
As a result, Hatfield lowered the expected funding for 2022 from $13,476,789 to $11,125,576, mirroring what is shown for fiscal years 2020 and 2021. For the years 2023 and 2024, Hatfield increased the funding projection to fall more in line with what the district received in 2019.
However, she cautioned that it is difficult to predict what the funding might look like for 2021.
“We really don’t have a good sense from the state as to what their expectations will be for the fiscal year 2021 … It’s really just, quite honestly, unknown, and that’s why we kept 2021 flat,” Hatfield said.
Asked how much state funding she has taken out of the projections from the October forecast to May, Hatfield estimated around $3 to 4 million for each fiscal year. While she acknowledged the change in state funding would be a “hit,” Hatfield said the fact the district has always been a locally-funded district will allow them to get through it.
“Up until this point, only 6% of our revenue came from the State of Ohio,” Hatfield said. “The rest was from locally-based taxes … We can use our reserved balances to help us maintain and get through it, so I’m very glad that we keep an eye on (the reserve balance) and are diligent with the balance.”
In adjusting the expected state funding, the number of days the district would be able to operate on its reserve slightly dropped over the final three years of the forecast. Fiscal year 2022 was lowered from 113 to 110 days, from 96 to 91 days in 2023, and from 59 to 53 days in 2024. Still, the district expects to remain within its preferred comfort zone of having two months of funding on hand.
As for the dollar figures over the span of the five years, OLSD’s unreserved cash balance is projected to be $86,384,483 in 2020, $85,565,821 in 2021, $85,452,830 in 2022, $75,109,740 in 2023, and $47,221,200 for 2024.
Among the potential risks to the forecast, Hatfield discussed the volatility of the economy as a result of the pandemic, the possibility for delinquent property taxes, the unknown nature of state funding, and also the unsureness of the next school, what it will look like, and what that means for staffing.
Reach Dillon Davis at 740-413-0904. Follow him on Twitter @DillonDavis56.