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Financial Update: Five-Year Forecast

Unpredictable State Funding, Facilities Maintenance Remain Greatest Challenges

By Beth Collier, CPA

Treasurer, Grandview Heights Schools

 

 

The Grandview Heights Schools board of education recently approved the attached five-year financial forecast for the district. As required by law, all school districts across Ohio must complete this forecast, which includes three years of actual and five years of projected general fund revenues and expenditures. Not only is it an important financial planning tool, it also offers community members an open and honest review of school district finances and operations.

 

Revenues to Grandview Heights Schools come mainly from state and local funds, and over the next few years, we anticipate minimal growth in funding from these important revenue sources.  Over 70% of our revenues come from local property taxes and although property values in the school district have continued to increase in recent years, it is important to note that increases in property values have very little overall effect on tax revenue for our schools. House Bill 920, enacted in 1976, reduces “effective” millage on voted tax levies so that, as property values increase, essentially no increase in revenue is realized by school districts.

 

State funding represents 20% of district revenues, which means it is a significant area of risk to revenue. The risk comes in Fiscal Year (FY) 2018 and beyond if the currently adopted funding formula is changed to reduce funding to our district in a future state budget. In addition, state funding support for the elimination of the tangible personal property (TPP) tax continues to be phased-down and, as a result, Grandview Heights Schools will realize a decrease of approximately $93,000 in TPP replacement funds from FY 2016 to FY 2017.

 

On the expenditure side, we work hard to live within our means and have adopted policies and procedures to keep costs low. Even in doing so, insurance continues to be one of the fastest growing costs. In an effort to manage rising insurance costs, the district implemented a high deductible health savings account (HSA) plan for medical insurance. We continue to evaluate options to manage insurance costs as efficiently as possible.

 

Our schools also face a financial risk as we work to maintain our aging school facilities. Last year, our schools underwent a facilities evaluation.  Our buildings range from 50 to over 100 years old and despite our best efforts, maintaining facilities well beyond their lifespan is becoming more costly every year.  We are currently engaging our community in a Facilities Planning Process to analyze and gather feedback on this issue. We encourage all residents to be a part of this important conversation as we seek to develop a plan to provide excellent schools as efficiently and effectively as possible for our taxpayers.

Thank you for your continued support of our Grandview Heights Schools. I look forward to partnering with our community to ensure we continue to operate with great fiscal responsibility and offer exceptional value.

The five-year forecast is attached.

 

 

Attached Files