Urbana City Schools will face operational deficits in the coming years, due to reduced funding and higher costs, according to its financial forecast.
The Urbana school board approved the five-year financial forecast at its Tuesday board meeting. The forecast must be approved twice a year by Ohio law.
The forecast, prepared by Treasurer Mandy Hildebrand, predicts the district will end the current school year with $23,652,175 and next school year with $23,500,115 in revenues. Revenue is estimated to decline to $23,303,622 in the 2020-21 school year.
Reduced state funding and a phase-out of the Tangible Personal Property tax are predicted to be two reasons for reduced revenues, Hildebrand wrote in her forecast assumptions document.
Expenses are estimated to end the current school year at $23,611,340 and next school year at $23,376,947. Expenses are estimated to increase to $25,626,450 in the 2020-21 school year.
Expenses are estimated to grow due to increasing staff salaries and insurance costs, along with expected increases in utility costs and materials replacements. The forecast predicts increases in all staff salaries, including step and base increases. Insurance costs are predicted to increase 6 percent for the 2017 calendar year; 5 percent increases are estimated from the 2017-18 school year to the 2020-21 school year.
The forecast predicts the district will end the current school year with a $40,835 surplus and next school year with a $123,168 surplus. Deficits are estimated to begin in the 2018-19 school year, but will be covered by cash reserves, assuming existing levies are renewed. The shortfall is estimated to grow to $2,322,828 in the 2020-21 school year, though cash reserves and levy dollars leave the district with a $4,432,074 positive fund balance.