Levy question of the week

What is the carryover balance and why is it needed?

Staff report

Editor’s note: In preparation for the Aug. 2 special election on which the Sidney City Schools has placed a permanent improvement levy, the Sidney Daily News will publish a weekly question dealing with the levy and what it means to the district. The questions and answers have been provided by the PI levy committee.

SIDNEY — What exactly is the school district carry over balance that people are referring to?

Every school district is required to submit to ODE an annual 5-year financial forecast, which shows how healthy or unhealthy a school district’s financial well being is. This forecast (estimate) shows the cash balance, or carry over balance at the end of each fiscal year. The forecast is more precise the first two years of the financial picture because the state biennium that provides resources to school districts is redone every two years.

Thus, years 3-5 in such a forecast are much more difficult to gauge. Even though the school district, through good, sound management and being fiscally responsible, has a healthy cash balance of $19,000,000 — just a few years ago when Sidney City Schools had serious financial concerns, its carry over balance was under $2,000,000 with a Permanent Improvement (PI) fund.

The 5-year financial forecast shows deficit spending in FY 2018 and reducing our carry over balance by FY 2020 to $7,000,000.

Unexpected expenses continue to carve away at this carry over balance since the district let the former PI levy expire in 2009. Most school districts have a separate PI fund for such expenditures as school bus purchases, roof repairs, window replacement, computer purchases- anything with a shelf life of an estimated 5 years and cannot be used for salaries or benefits.

Examples in the past several years of such unexpected PI expenses (paid for out of general or operating budget) include $416,000 to upgrade the school district network infrastructure, $104,000 for replacements of two roof sections at Sidney High School, and $20,000 to replace damaged cabinets and install carpet from the flood at Emerson. Replacing school buses costs the district upwards of $100,000.

A separate PI fund to pay for such expenditures is needed to prevent this carry over balance from further erosion.

Through good, sound fiscal management, the district never wants to return to the days of just a few years ago when the financial picture was gloom and doom — with teacher layoffs, curriculum cutbacks, salary reductions, and pay to play.

What is the carryover balance and why is it needed?

Staff report