Officials ponder budget figures

Five-year forecast grim, but treasurer stresses it’s a worst-case scenario

Lorain City Schools could run a budget deficit for this school year and dissolve the district’s cash reserve by the end of the 2020-21 school year, according to the district’s five-year forecast.

However, the spreadsheets represent a worst-case scenario for Lorain Schools, so the actual results could be much better, said district Treasurer Joshua Hill.

Since the start of November, the school finances have come up for discussion among members of the Lorain City School Board of Education and with the Lorain Academic Distress Commission. Both groups reviewed the numbers and the reasons behind them with Hill, who also is chief strategy and innovation officer for Lorain Schools.

In May and October each year, Ohio school districts publish five-year financial forecasts that predict the ups and downs

of school revenues and expenses.

Lorain’s most recent fiveyear forecast shows some budgetary numbers in the red in coming years.

The figures are “eye opening,” said Tony Richardson, chairman of the Lorain Academic Distress Commission.

School District CEO David Hardy Jr. said the school officials knew the budget would trend that way and know they will need more money as expenses go up over time.

The financial forecast is a lot of deep financial information, Hardy said.

Possible levies?

School finance deals with a number of factors: The latest five-year forecast includes 21 pages of

explanations and assumptions about money coming in and going out to pay for education.

The forecast does not include the assumption that Lorain voters will approve any “new money” levies after October 2018.

However, the forecast does assume voters will renew the seven-year emergency levy that raises about $3.1 million a year for the district.

Voters first said yes to that levy in 2012, and the last collection year for it is 2019.

The forecast also assumes voters will renew five-year current expense levies at 7.18 mills, 6.77 mills and the 9.9 mills.

Money not in hand

Based on a conservative forecasting principle, Hill said he does not like to count on new revenue sources until the school district receives the money.

For example, Lorain could see increases in state funding or in local property taxes due to the revaluation of properties by the Lorain County Auditor’s Office, he said.

That means the district revenues should increase, but Hill said he does not want to plan for those yet.

As of the October forecast, Lorain Schools could be in deficit spending at the end of the current school year.

Total revenues are projected are about $117.84 million, while expenses are projected about $121.34 million, leaving a negative balance of about $3.5 million, according to the forecast.

But with conservative forecasting and cost controls, the school district can all but guarantee to come in better than that, Hill said.

For example, last year, the forecast projected the district would finish with

a cash balance of about $16.53 million, he said.

The actual end-of-schoolyear cash balance was more than $20.9 million, Hill said.

The district would have enough money to cover budget deficits at the end of the current school year and the 2019-2020 school year.

At the end of the 202021 school year, the forecast shows the district with a negative cash balance, with Lorain Schools’ bottom line at negative $1.79 million.

“Again, this is kind of worst-case scenario,” Hill said.

When Lorain students leave the school district for charter schools, the state per-pupil funding follows them.

The Lorain forecast stated in the 2017-18 school year, funding transferring to charter schools from Lorain City Schools totaled over $17.2 million, and is projected to grow.