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Treasurer forecasts district deficit without additional revenue

Schools' 2020 balance would be in the negative without funding from levy

By ELLIN WALSH Reporter Published: May 28, 2017 12:00 AM
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TALLMADGE -- The treasurer for the Tallmadge City School District has presented a five-year forecast that projects a deficit at the end of the 2020 Fiscal Year without additional revenue. Jeff Hostetler told members of the Board of Education May 18 that without additional revenue from the state that a local increase in tax, in the form of an operating levy, would be necessary in the not to distant future. The last new operating money for the school district was a levy approved in November 2009.

The School Board unanimously approved the forecast, which anticipates revenues and expenditures for the next five years. Creating the forecast is mandated by the state.

Hostetler estimates the district's balance at the end of the 2017 Fiscal Year will be $4,965,803 -- $920,904 less than its $5,886,707 balance at the end of the 2016 Fiscal Year. Going forward, he projected the district's balance as follows: $3,230,418 in Fiscal Year 2018, $699,757 in Fiscal Year 2019 and -$2,340,553 in Fiscal Year 2020.

"Our expenditures have exceeded our revenue and once that happens it's only a matter of time -- unless you get an influx of new state revenue -- until the inevitable comes and a potential levy would be needed," Hostetler stated.

Hostetler said the school district has two major sources of revenue: real estate taxes and funding from the state. The treasurer has factored in a 1/2 percent increase in the school district's property valuation during each year of the five-year forecast. The school district's property valuation at press time was $382,968,700.

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Revenue from the state, meanwhile, represents about one-third of the school district's general operating revenue. While the state's proposed biennium budget includes a basic aid increase of $137,000 to the Tallmadge City School District in Fiscal Year 2018 and $18,000 in Fiscal Year 2019, Hostetler said the state's phaseout of the reimbursement for the tangible personal property tax-- around $400,000 in 2018 and $240,000 the following year -- will result in a net loss for the district in each of the two years.

Hostetler described TPP taxes as local dollars that were paid directly to schools. In 2005, through House Bill 66, the Ohio General Assembly authorized the phaseout of the TPP over a five-year period; to offset the loss, the state established a process for reimbursing districts for lost revenue, with such payments ending in Fiscal Year 2019. According to Hostetler, the district has lost "roughly $2.5 million" since the 2009 elimination of the personal tangible property tax, which represents about 10 percent of its budget.

The reimbursement, which totaled $2,120,673 in Fiscal Year 2010, has been "reduced steadily" over the years, Hostetler reported, and will be completely gone by FY 2019.

"Until the state starts making education a priority and funding it accordingly, there isn't much that's going to change," according to Hostetler. The treasurer said he believes district officials have done everything they can to control costs "but we're just not seeing enough revenue on the state funding side to keep up with increasing costs." Over the past 15 years, as the costs of running the school district have risen, Hostetler said the state has reduced the amount of funding it gives to Tallmadge by $1 million.


Email: ewalsh@recordpub.com

Phone: 330-541-9419

Twitter: @ EllinWalsh_RPC

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