During its Nov. 12 meeting, the Olentangy Local School District (OLSD) Board of Education held its second reading of the district’s five-year forecast. The intent of the forecast is to provide a “roadmap” for the district’s asset management, as well as to “model fiscal responsibility and transparency,” Treasurer Emily Hatfield said during the presentation.
“The forecast is prepared based upon historical trends and current factors,” she said. “The information is then extrapolated into estimates for subsequent years. Variables can change multiple times throughout the fiscal year.”
Following Hatfield’s presentation, the five-year forecast was approved unanimously by the board.
According to the five-year forecast’s revenues versus expenditures, a deficit of $2,293,539 is shown for fiscal year 2021. After evening out in 2022, the deficit increases from $9,198,910 to $39,506,261 from 2023-25.
OLSD’s informal policy is to maintain a cash reserve balance to cover two to three months of operating costs, which the five-year forecast shows. For 2021, the forecast shows an unreserved cash balance of $87,905,749, good for 120 days of operating costs. The unreserved cash balance dips down to $17,249,925 or 18 days worth of operating costs in the fiscal year 2025, which signals a likely aiming point for the district’s next levy.
Hatfield pointed out the promise made to the community as part of this past spring’s levy that the district would make those funds last three years before beginning to talk about the next levy cycle. As it currently stands, the district is on track to uphold that promise and then some.
“From our current estimates, we actually meet that through the fiscal year 2024, extending that levy campaign promise an extra year,” Hatfield said. “So we’re very happy with this outcome at this time.”
Of course, the pandemic’s impact remains, perhaps, the most important variable, and “things are changing pretty rapidly, more so than we would normally experience in the economy,” according to Hatfield. Included in the forecast is the district’s expenditures that are not included in the CARES Act funding the district received.
Hatfield said the district is estimating approximately $3.9 million that is needed in regards to COVID-19 costs, including substitute teachers and building staff that will need to be supported through the pandemic.
Also included in the forecast are the expenditures associated with the opening of the district’s 16th elementary school in fiscal year 2022, as well as another elementary and middle school in 2024 that were approved as part of the last district bond package. The new buildings contribute heavily to the widening deficits over the span of the forecast, Hatfield pointed out.
Following the presentation, Hatfield highlighted the risk assessments relating to the forecast. Those risks include the ever-changing economy, uncertainties with real estate taxes, the potential for a new school funding system as part of House Bill 305, and the always-present concerns with staffing costs.
Currently, Hatfield said state funding makes up approximately 5% of the district’s revenue. With new life being breathed into the fair school funding bill with the state, there is added hope for OLSD to start seeing a more appropriate chunk of funding relative to the district’s size.
As for the volatility of property taxes and how they will affect the district, a document in the forecast states, “Olentangy (Local) Schools continues to be a locally funded district. As a locally funded district, Olentangy relies on local tax revenue to sustain operations. (House Bill) 920 governs the collection of local tax dollars. Due to the effect of HB920, an increase or decrease in valuation will affect our unvoted or inside millage. This means that if total valuations increase, revenue from our five inside mills will increase and vice versa if valuations decrease.”
The document also states, “Restricted growth of real estate tax collections and inadequate state funding lead the district to consider when, not if, future levy campaigns will occur.”
To view the forecast in full, visit www.olentangy.k12.oh.us/board-of-education/board-meetings/board-meeting-records.
Reach Dillon Davis at 740-413-0904. Follow him on Twitter @DillonDavis56.