SIDNEY — The financial well-being and five-year-forecast of the Sidney City Schools was discussed Monday night during the Board of Education meeting. And while the district has a healthy carryover balance today, Treasurer Mike Watkins has forecast that before the five-year period is over, the picture will be very different.
The carryover balance for the district, said Watkins, “will deteriorate as we go through the five-year balance. By 2021, we will have a $7 million carryover. Our expenses will exceed our revenues.”
The general fund and tangible property tax will remain flat through the forecast, said Watkins. The five-year forecast is for fiscal years 2017, 2018, 2019, 2020 and 2021.
Property tax revenues, he said, are expected to remain stable for the first three years of the forecast. No significant new construction is occurring or expected to occur which would dramatically increase tax collections over the forecast.
“The one lingering item is the expiration of the emergency levy at the end of calendar year 2018, said Watkins. “In order that there will be no gap in collections, the levy will need to be renewed sometime during calendar year 2019. The renewal of the levy is critical as expenditures begin to outpace revenues beginning in the current fiscal year.”
General property tax (real estate) is estimated at $12,253,737 f0r 2017; $12,253,738 for 2018; $12,276,862 for 2019; $10,447,838 for 2020; and $8,576,551 for 2021. The decreased amount in 2020 and 2021 deals with the emergency levy which expires at the end of 2018.
The state foundation money, — unrestricted state grants-in-aid — said Watkins, has a 2 to 3 percent increase figured in each year of the forecast. The state is in its last year of the biennial budget and “it’s a guess of what the legislators will do” for 2018-19 and 2020-21, said Watkins.
The restricted state grants-in-aid deals with Career Tech funding, approximately $17,000 each year, and Economic Disadvantaged funding, approximately $600,000 each year, said Watkins.
The property tax allocation includes homestead and rollback revenue and the hold harmless payouts received due to House Bill 66. The hold harmless payments for fixed rate levies has been eliminated.
All other revenue, estimated at $800,000, includes special education tuition excess costs and open enrollment payments.
Forecasted revenues and other financing sources totals for the next five year are forecasted at $35,527,954 in FY 2017; $35,924,807 in 208; $36,223,469 in 2019; $34,825,614 in 2020; and $33,097,396 in 2021.
Expenditures in the forecast, said Watkins, includes personal services (salaries), retirement/insurance benefits and purchased services.
The district, said Watkins, is in the midst of a four-year contract with staff members. the first three years for the forecast — 2017, 2018 and 2019 — include the increases approved by the board for the contracts with the classified and certified staff members.
Personal services for the five years includes $18,155,168 in 2017; $19,441,772 in 2018; $20,747,501 in 2019; $21,998,865 in 2020; and $23,296,305 in 2021.
“We saw a 5 percent increase in our health insurance this year,” said Watkins. For fiscal year 2018, he increased the amount by 7 percent. Insurance increases of 9 percent per year are included in the forecast for fiscal year 2019 through 2021.
Employee retirement and insurance benefits for 207 are forecast to be $6,479,039; $6,927,693 in 2018; $7,486,068 in 2019; $8,079,464 in 2020; and $8,715,035 in 2021.
Purchased services, said Watkins, continues to be the area of concern for expenditures for the district. Purchased services include students open enrolling to other districts, John Peterson/Autism scholarship and the Community school deductions. Expenditures for reserve security officers, security and other professional services is also included in purchased services.
The forecast for purchased services is $7,873,261 in 2017; $7,977,220 in 2018; $8,089,633 in 2019; $8,205,629 in 2020; and $8,320,338 in 2021.
The forecast for supplies and materials, which includes new textbooks, is $816,996 in 2017; $887,749 in 2018; $881,096 in 2019; $901,554 in 2020; and $922,644 in 2021.
Capital outlay, said Watkins will be focused on keeping the district’s technology needs up to date. All other capital outlays to be paid from the general fund will be on an as-needed basis.
Watkins said if the permanent improvement levy passes in November, then some of the current general fund expenditures will be reallocated to the PI fund.
The forecast for the capital outlay fund is $605,557 in 2017; $635,835 in 2018; $667,627 in 2019; $701,008 in 2020; and $736,059 in 2021.
Total expenditures are forecast at $34,382,136 for 2017; $36,295,372 for 2018; $38,329,586 for 2019; $40,367,123 for 2020; and $42,474,046 in 2021.
Other financing uses are forecast at $1,200,000 for 2017; and $460,000 for each remaining year of the five-year forecast.
Total expenditures and other financing uses are $35,582,136 in 2017; $36,755,372 in 2018; $38,789,586 in 2019; $40,827,123 in 2020; and $42,934,046 in 2021.
The board, said Watkins, opted to pay off the remaining debt for the board of education building, which was $690,000. The former PI levy, which expired in 2008, had paid for the lease on the BOE building. The $690,000 will be coming out of the general fund.
“It was getting too expensive to refinance that amount of money,” said Watkins.
He said the district will be operating in deficits in 2018, 2019, 2020 and 2021.
“We’ll either need additional revenue, cut expenses or do a combination of both,” said Watkins. “I’m not in a panic mode but we will be having conversations about this. If we can get the PI levy to pass, we’ll get $2.5 million back into the general fund.”
Forecasted carryover balances for the five-year period are $19,435,855 in 2017; $18,605,290 in 2018; $16,039,173 in 2019; $12,432,361 in 2020; and $7,384,263 in 2021.
“For a district our size, a $4 12 to 5 million carryover is acceptable,” said Watkins. “That gives us three to four months of operating expenses. We must be aware of the trends going on (with expenditures and revenues).”
After listening to Watkins’s presentation, the board approved the five-year forecast.
Reach the writer at 937-538-4822; follow her on Twitter @MelSpeicherSDN. Follow the SDN on Facebook, www.facebook.com/SidneyDailyNews.