COLUMBIANA - As Treasurer Lori Posey cautioned last year, the city school district is anticipated to operate on deficit spending over the next five years and could be in the red by as much as $2 million in 2017.
A five-year financial forecast indicated the district will realize a $158,000 deficit next year and the loss will only continue to grow over the years.
By 2016, the district is expected to spend $1.14 million more than it will make. Despite the deficit spending the district's overall fund balance should remain in the black until 2016, when a $570,000 deficit is projected in the overall balance.
The total fund is expected to dip to $2.1 million in the negative by 2017, according to the forecast.
Posey noted that although the forecast is only a projection at this time, the district needs to focus on curbing spending in a way that wont have a "substantial" impact on the level of education already offered.
She also noted the board will likely seek another bond issue in May of next year. The district has been able to avoid seeking additional tax revenue since 2002, she said.
A bond issue that would have generated $4 million for the refurbishment of South Side Middle School was rejected by voters this year after being met with some criticism. Voters complained the district didn't properly advertise the issue prior to the May election and members of the board argued they arent permitted to use district money to advertise a tax.
Bond issue money cannot be spent on operational purposes. The board had also considered putting a $1 million operating tax levy before voters this year but later opted to take it off the table after changes to the preliminary five-year forecast last year reflected a $48,196 surplus and a little more than $2 million cash balance for this year.
The additional money was from the sale of the Firestone Farms housing development, higher than expected income tax received and revenue from an oil and gas lease.
The surplus will be short-lived, however, as the money will only pad the budget for this fiscal year.
Looking forward to the anticipated shortfalls, the district in June offered a retirement and resignation incentive to its staff in order to avoid future layoffs. Only one person took advantage of the offer.
Superintendent Don Mook said then he wasnt sure how many layoffs could be expected in the future.
Layoffs were not mentioned in the five-year forecast, and Posey said the district has saved money through teaching retirements over the last two years.
So far, nine teachers have retired from the district since 2011, and four positions have not been replaced.
The district also realized a $154,000 savings through paying three teachers from grant funds beginning last year, according to the report.
Certified and classified employees will receive no wage increase in 2013, but a 1 percent increase and step increases are planned for 2014 and beyond. The increases have not been negotiated however, as both union contracts expire in June of 2013, Posey said.
Salaries and wages account for roughly $4 million of the district's expenditures each year. Retirement and insurance benefits account for roughly $1.5 to $2 million.
Posey explained in the report the district is saving money on the benefits through the consortium it joined in 2009. Since then, the insurance costs have increased and decreased over the years, with the highest increase at 16 percent and the lowest at 4 percent.
"As the expenses of running a growing and successful district increase, our revenue remains relatively flat. We will continue to closely monitor our cash balance as items change in the forecast and drive our need for cuts or additional dollars," she said in the report.