SCS in urgent need of new operating revenues

Vote ‘yes’ for school levy

By Michael T. Watkins - Guest columnist

As we close in on the November General Election, and with the increased media coverage surrounding the Presidential election, I wanted to take an opportunity to share information about the emergency levy Sidney City Schools has placed on the November ballot. My goal in writing this piece is not to get too far into the weeds of school finance, but rather to provide some insight into the district’s financial need for this levy. However, I am more than willing to share the complexities of school finance with anyone wanting to learn.

I believe the best way to convey our district’s financial need for this emergency levy is to begin with some history. When I assumed the role of treasurer for Sidney City Schools in 2007, the district’s finances were declining quickly — to the point that expenses exceeded income by more than $1,400,000 per year. With this rapid decline, the district’s once comfortable cash carry-over balance (which can be compared to a savings or investment account), was on track to be gone before the end of 2010. In order to change the financial trajectory, the district placed a 9.9 mill emergency levy on the ballot in November 2009.

The district successfully passed the 2009 emergency levy that generated $4,550,000 in new revenue. With the passage of this levy, coupled with actions to reduce spending, the district’s finances stabilized for the near future — at that time. The following year the district attempted to renew an existing 4.73 mill emergency operating levy originally passed in 1995 renewed each of the subsequent five years until 2010. This decision was made in order to further stabilize the district’s financial future.

Unfortunately, the levy overwhelmingly failed in November of 2010 by 1,108 votes. This seemed to indicate that voters believed the district needed to do more to reduce expenditures before they would support another school levy. As a result, the school board decided not to place the issue on the ballot again. The impact of this levy defeat was the loss of these 4.73 mills and the reduction of the 9.9 mill levy to that of 5.17 mills.

Another financial setback during this period between 2009 and 2010 was a failed attempt to renew an expiring 2.5 mill Permanent Improvement levy. The loss of this levy funding negatively affected the district’s financial health. The general fund was forced to assume expenses like the repair and upkeep of buildings/grounds; purchases of long-life assets such as buses and maintenance trucks; and other expenses not connected to the general operations of the district. When combined, this lost levy with the loss of the 1995 emergency levy, reduced the new 9.9 levy by another 2.5 mills. Consequently, this made its value 2.67 mills. Bottom line: the district had some real work ahead to fund it operations.

Let’s move ahead to 2011. Sidney City Schools had to made cost reductions to compensate for the revenue lost due to the expired 4.73 mill emergency operating levy and 2.5 mill Permanent Improvement levy. And, in the midst of this challenge loomed the formidable task of contract negotiations between the Board and the district’s two unions: Sidney Education Association representing certified staff, and Ohio Association of Public School Employees representing custodians and bus drivers. Then to further compound our district’s plight during this time, the Board had to search for a new superintendent.

Despite these hurdles, cost-cutting plans proceeded, negotiations opened, and in April of 2011, a new superintendent was hired. Aware of the district’s bleak financial state, district leadership and union leadership worked closely together to forge a plan to fend off financial ruin. This collaboration resulted in the reduction from 496 employees in 2006 to 384 employees by 2012; a cut in all employee salaries by 2.75%; a freeze to any type of salary increases for the following four years; and a reduction in the district’s share of the health insurance premium from 91% to 80%. Once fully implemented, the positive impact of this plan for reductions reflected in the district’s Five-Year forecast, which showed that a new operating levy could wait. Additionally, changes in the school funding formula between 2011 and 2016 were favorable for Sidney City Schools’ demographics. Because of these events, the district was able to rebuild and sustain its savings account to support daily operations … until recently.

So, what has changed? Over the past nine years between Fiscal Years 2009 and 2017, district revenues increased 14.54% while district expenditures only increased 4.42%. By contrast, the four years between Fiscal Years 2017 and 2020, district revenues increased 1.25% while district expenditures increased 12.47%. In the midst of this change, is COVID-19 pandemic, which has taken the district’s declining financial condition to another level of deterioration no one could have anticipated.

Due to the state’s stay-at-home order and the closure of businesses for most of the last quarter of Fiscal Year 2020, the State of Ohio’s income tax revenue was significantly impacted. This trickled down to school districts. In an effort to balance the state’s budget due to the shortfall in tax collections, the legislature reduced the amount of state funding to be received by schools in May and June of 2020. For Sidney, this meant a state funding reduction of nearly $650,000 in the last two months of the fiscal year. Unfortunately, it did not stop there. The district’s state funding will be reduced again by another $650,000 this school year.

Whether it is slowing revenues, accelerating expenses, or both, one fact remains: Sidney City Schools has been a sound steward of the taxpayers’ money for more than ten years. Financial circumstances have significantly changed. The district has made staff reductions in Fiscal Year 2020 in conjunction with the district reconfigurations and has implemented another round of significant reductions in the current year, Fiscal Year 2021. These additional reductions alone are not enough to change our financial direction. Our district, Sidney City Schools, is in urgent need of new operating revenues. These new revenues in conjunction with expense reductions will bring financial stability to the district and provide enough time for additional adjustments that will allow for a more solid financial state.

In November, the district will be seeking voter support to approve a new issue. As you consider how you will vote this November, please, if you have questions or concerns about the district’s finances, reach out to me along with the superintendent. We will answer your questions, address your concerns, and work to provide clarification you need prior to casting your vote.
Vote ‘yes’ for school levy

By Michael T. Watkins

Guest columnist

The writer is the treasurer of Sidney City Schools.

The writer is the treasurer of Sidney City Schools.