$20M shortfall predicted

Five-year forecast shows big deficit by 2021

A general fund cash balance of almost $13.5 million is projected by the end of this school year at Lorain City Schools.

Subtracting about $2 million in expected bills to pay leaves the district with a projected carryover of almost $11.5 million to start the 2017-18 school year on July 1, according to a five-year forecast presented to Lorain City School Board May 22.

Even so, the forecast shows a positive ending balance that dwindles until fiscal year 2019, and ends in a $20 million deficit by fiscal year 2021.

“Looking forward we’re in a pretty good financial position,” said Lorain School Board President Tim Williams. “Our job is to be the best stewards of the money we have and hopefully the community will renew the levy when the time comes.”

Treasurer Josh Hill cautioned no one knows what the state funding formula will allocate for Lorain until the end of June when a final state biennium budget passes. So the

forecast assumes zero increases from the state, Hill said.

The district is projected to spend more than $110 million in the general fund this school year, according to the five-year forecast.

By 2020 expenses are expected to rise to more than $120 million, according to the document.

Hill also projected costs of open enrollment, community schools and scholarship programs to increase by $1.5 million a year.

In this school year alone, money transferred to community schools cost the district more than $17.3 million, Hill said.

Lorain Schools Superintendent Dr. Jeff Graham said until two years ago, the district planned for losing 220 students a year. Two years ago total enrollment held steady, and this year enrollment increased by about 100 students, he said.

“Our estimates are conservative,” Graham said. “We expect to retain the students we have. The campaign pitch was, ‘It’s time to come home.’”

While district leaders wait for a state biennium budget to present solid numbers for planning purposes, Graham said, returning to voters to ask for new money is inevitable.

“There’s a natural levy cycle in this district,” Graham said. “Every five or six years we need to go back for new money. Things cost more than they did five years ago.”

Except for income taxes, levies may only collect a fixed amount of money, he said.

“But bringing back students will save us money,” Graham said. “We get so much per student. When those students open enroll or go to charter schools, we pay out more than that student brings in. There’s no downside to us to bring back more students.”

Hill recommends stretching available money.

“More stringent cost controls and projects designed to reduce cost and time have been or are in the process of being implemented by the leadership team,” Hill wrote in a summary for the school board. “Although certainly not fully remedied, the school district is beginning to experience a more favorable financial position, especially if the school district can mitigate the funding flowing to community schools.”

The five-year forecast shows a positive general fund balance through fiscal year 2018-19, he said.

The document predicts a more than $20 million shortfall by school year 2020-21, Hill said.

The district has known a new money levy is needed to cover rising costs, the document indicated.