ST. PARIS – Though moderate increases in revenue are predicted, Graham Local Schools began deficit spending this year, though the shortfalls will be covered by cash reserves.
Graham’s five-year financial forecast was approved Monday by the school board. The forecast is required by Ohio law to be produced in May and October each year.
The forecast predicts increasing revenue from property and agricultural land values, but those increases will not keep up with increasing expenses.
According to the forecast, revenues are estimated to grow from $17,300,042 in the current school year to $17,632,747 next school year. Revenues are estimated to increase to $18,553,949 in the 2019-20 school year.
Revenues are predicted to increase due to increases in property tax collections, partially from personal properties and partially from increased agricultural land valuations, Treasurer Judy Geers said in her five-year financial forecast assumptions document. The current school funding formula in the biennial budget increased aid for transportation for Graham schools, and for agricultural valuations. The formula included funding for economically disadvantaged students, which bumped up the district’s revenue.
Expenses are estimated to increase from $17,442,455 in the current school year to $18,098,359 for next school year. Expenses are estimated to grow to $19,950,779 in the 2019-20 school year.
The largest portion of expenses comes from staff costs, and those are largely driving the increases on the expense line, Geers said in her forecast assumptions document. The forecast includes adding back staff members who were cut, increasing health care costs, an increase of 1 percent plus steps per year for salaries, and replacing textbooks, adding classroom supplies, electronic media and electronic subscription services.
The district will end the current school year with a $142,413 shortfall for the current school year, and end next school year with a $465,612 shortfall. The district’s cash reserves are estimated to cover both of those shortfalls. The forecast predicts a $1,396,830 shortfall in the 2019-20 school year, though the forecast predicts there will be cash reserves to cover it.
Geers told the school board Monday deficit spending is coming from the addition of teachers and staff that the school board felt were needed in the district, as well as increased spending for new textbooks and other classroom needs. The district added in the current school year two middle school English teachers; combined two part-time athletic director positions into one; increased from part time to full time the dean of students at the middle school; added a part-time English and social studies teacher at the high school; added two intervention specialists; added a guidance counselor, kindergarten teacher, first grade teacher, a part-time literacy coach at the elementary school; increased the hours and days for the transportation secretary; added a part-time secretary for the curriculum director; and added summer help for maintaining the district’s grounds.
Board member Steve Prince said the school board spent many meetings discussing district needs. The district went through large staffing cuts a few years ago, and the cash surplus comes from those cutbacks.
“I don’t view deficit spending in the short term – we’ve done a lot of planning to figure out where spending was needed – for us to not add things back and watch the general fund continue to grow doesn’t make sense, when we have a lot of things that are needed,” he said. “We’re not a bank here. We’re here to educate students. The things we have added are productive things to help us do a better job at educating kids. I am totally comfortable with where we are financially at this point.”
A five-year forecast is difficult to create with certainty, since it will change from day to day, Geers said. Also, the state only provides two years of funding in its biennial budget, but requires the districts to plan finances for five years, making the last three years of a forecast uncertain.
“I’ve made forecasts that were very bleak, but honestly, to have money in the bank after the fifth year is nice to see,” she said.