Stable financial forecast for Wolf Creek
WATERFORD — The latest five-year forecast for Wolf Creek Local Schools shows the district on solid financial footing.
According to the forecast, which was presented to the board during a meeting Monday, the district will finish each of the five upcoming fiscal years with a positive cash balance, even if an emergency levy set to expire at the end of 2022 is not renewed.
By state law, such renewals cannot be assumed when the forecast is prepared. The levy provides $781,927 a year.
Deficit spending is projected each year of the forecast, with the largest amount anticipated this fiscal year, which ends June 30. Part of that is because of increased personnel costs as the district adapts to learning during the COVID-19 pandemic.
“We hired extra staff to reduce class sizes even more,” Treasurer Rachel Miller said Wednesday.
The additional employees also monitor to make sure students are following health guidelines and perform extra cleaning.
A transfer out of $3 million is listed for this year to account for a plan to allocate money to a permanent improvement fund, Miller said, but that is awaiting board approval.
“We haven’t spent the money. We’re just trying to make plans on what the buildings are needing,” she said.
Planned transfers of $1 million are shown in the remaining years of the forecast.
The largest source of funding for the district is local property tax, with nearly 54 percent of total revenue coming from Public Utility Personal Property tax collections. According to forecast notes provided by Miller, the value decreased by $760,100 for tax year 2019 because of depreciation, with annual decreases of $50,000 projected for subsequent years.
“This tax is more vulnerable to the economy and can have swings in either increases or decreases each year without any notice,” the notes said. “We believe that there is a low risk in a large decrease at this time but must be vigilant (in) knowing what is happening in this area of tax collection for our district.”
The actual tangible personal property revenue for the 2020 fiscal year nearly tripled to more than $7.2 million because a portion of the 2019 money was paid late following the sale of a utility company. “Really in 2020, they paid a year-and-a-half,” Miller said.
The sale also resulted in values increasing, so the figure is expected to be about $5.3 million this fiscal year and gradually decrease to $4.83 million by fiscal 2025.
The district receives 19.2 percent of its funds from the state, a contribution that shrank in fiscal 2020 as shutdowns aimed at slowing the spread of the novel coronavirus resulted in the biggest drop in employment since the Great Recession, Miller’s notes said. To balance the budget, Gov. Mike DeWine ordered a reduction of $300.5 million in foundation funding, with Wolf Creek’s share of the cut totaling $138,990.
Additional cuts are not expected this year “as the economy is rebounding from the steep fall in March and April 2020,” the notes said.
But uncertainty exists starting in fiscal 2022, should the economy worsen or a new state funding formula reduce Ohio’s contribution to the district’s budget. The forecast’s projections are in line with existing estimates, which was described in the notes as a conservative approach.