WARREN TWP. - The Warren Local school district's latest five-year financial forecast predicts deficit spending for the next five years, leaving the district $7.1 million in the red even if an emergency levy is renewed in two years.
The passage of a proposed 3.75-mill bond issue to build a new high school and 5-mill permanent improvement levy on Nov. 6 would ease the burden even further, but the district would still be $2.5 million in the hole at the end of fiscal 2017 if current assumptions bear out.
The five-year forecast was presented to the Warren Local Board of Education during Monday's regular meeting, held at Warren Elementary School. The board also voted 4-1 to again delay action on a proposal to eliminate the pay-to-participate fee for sports.
Treasurer Melcie Wells reminded board members and those attending the meeting that although a five-year forecast must be submitted to the Ohio Department of Education every October, followed with an update in May, the document is constantly in flux.
"It's a working document that we look at all the time," she said.
The personnel services line item, which includes salaries, actually decreases slightly over the life of the forecast, from $9.75 million to $9.72 million, but benefits rise by more than $1.3 million due in large part to conservatively estimated insurance rate increases. Meanwhile, the district's property tax allocation from the state drops from a little more than $1.74 million in fiscal year 2012 to an estimated $740,696 by fiscal year 2017 because of the state's accelerated phaseout of tangible personal property tax reimbursements.
"We've really been hit hard by that phaseout ... to the tune of about $430,000 a year until that reimbursement is gone," Wells said.
A trend the last few years of taking in more than was spent allowed Warren to start the current fiscal year with a positive cash balance of $5.6 million. But expenditures are predicted to outpace revenues by about $1.36 million this year, a number that grows with each year of the forecast.
"When you're negative spending, that eats into your cash balance quickly," Wells said.
The forecast's end-of-the-year balances cannot, by law, include money from new or renewed levies. But if voters do agree to continue an emergency levy set to expire in 2015, it will keep an additional $1.75 million a year flowing into the coffers.
The bond issue on the upcoming ballot would raise the $10.75 million local share of a construction project with the state to build a new high school, while the permanent improvement levy would generate nearly $1.15 million a year for repairs and items that would last longer than five years, but not salaries and benefits.
That would keep the district in the black for an additional year and reduce the cash balance deficit at the end of fiscal 2017 to about $2.5 million.
Wells said there could be other positives beyond the reduction in capital costs, but she did not have enough information to accurately estimate them. For example, some believe enrollment would increase because of resumed busing and a new high school, she said.
It's not uncommon for forecasts to show deficits in later years. School officials generally use the forecast to adjust their budgets in an effort to avoid those situations.
The forecast is based on current funding estimates, and with a new state-funding model expected to be introduced next year, those are likely to change.
Prior to the forecast presentation, Warren High School Principal Dan Leffingwell told the board the $100-per-student-per-activity participation fee has not appeared to affect the number of students playing sports. In fact, participation is expected to increase this year, even as district enrollment continues a downward trend.
Based on that and the uncertainty regarding state funding, Superintendent Tom Gibbs recommended the board delay action on a proposal brought up at September's meeting to eliminate the pay-to-participate fee if the bond issue and levy pass.
"If I were a board member, I might just have that one die for lack of a motion," he said.
Board President Bob Allen said he didn't mind waiting but wanted to discuss the matter further. He asked Gibbs and Leffingwell to look into whether students from lower-income parts of the district were playing less since the fee was instituted.
The fee generated $61,000 for the district last year. Gibbs said numerous classroom teacher positions have been cut in recent years, and some elementary classes have more than 30 students, so if that much money was available he would prefer to hire a teacher.
"It is my responsibility to make recommendations to the board that are most closely related to the education of students," he said.
Allen and board member John Nichols compared the amount the fee generates to the district's overall $18.9 million general fund budget.
"So the percentage is very, very small," Nichols said.
"We're talking about one teacher," board member Debbie West said.
Allen said he is concerned there might be some students whose families are too proud to take on assistance from the athletic boosters to pay the fees and allowing those students to play sports again could make a positive impact, possibly even convincing some to remain in school.