Five-year forecast approved

For the past four years, the Milford School District has lived within its means, spending less than it takes in and increasing the cash balance every year.  At the end of this year (FY2012), we are projected to have a balance of $13.8 million.

However, things begin to change rapidly from here on out.

School districts are required to file a revised five year forecast annually by May 31.  At the May meeting, the school board approved a forecast that projects through Fiscal Year 2016 (school year 2015-16).

The forecast provides a realistic but conservative look at what the district is likely to receive in revenues and spend on operations, given what we know today.  What we do know for sure is our revenues started dropping this year, and will continue to drop for at least another two years.  If today’s projections are correct, we will lose a little over $4 million in revenue between FY2011 and FY2014, which is almost 7.5% of FY2014’s total revenue.  This is the first time, at least in recent history, that school districts have seen drastic funding decreases like this.

The current forecast looks at “almost final” numbers for this year, and includes 3.2% savings, which consists of the 2% reductions the board asked for at the beginning of the year, plus savings we received from employee benefits (the increases were not as high as projected, due to diligent work by the HR & finance departments), decreases in Purchased Services due to transportation savings (the Operations Department was able to reduce routes versus projections by ongoing work with Petermann to tweak how we deliver children to school), and transferring money budgeted from the General Fund for maintenance to the new Permanent Improvement Fund, which is a set-aside specifically for maintenance projects for the new buildings (per law).

The forecast also adjusts revenues to account for changes from the state, Tangible Personal Property reimbursement, Open Enrollment fees, and others.

With the reductions in expenses plus some increases in this year’s revenues, we will be able to add almost $1 million to the cash balance at close of books in June.

The state has not yet announced what the ongoing school funding formula will be, but for this forecast, Treasurer Debbie Caudle has used this year’s receipts as a best-guest basis for revenues over the next four years.

We have kept expense increases to a minimum, but we will need several more personnel positions over the next few years to account for student growth and required special needs support.  We are also projecting expenditures for maintenance to keep our buildings running properly and for new curriculum that is needed to meet new standards.  Technology improvements, one of the primary community priorities per the recent community survey, are also included.

For FY2013, a 1% raise and step increases are included for teachers and certified staff.  However, no administrative increases are included.  For FY2014, no district personnel will receive raises or steps – this has already been negotiated with the unions.  For the next two years, we are assuming steps but no raises.

These are our best guesses as to what revenue we will see from current funding sources, as well as how our expenses will increase over the next four years.  As they have been for the past five years, the administration is still committed to reducing expenses through efficiencies and new approaches; however, we believe we have met our limit in terms of cutting significant amounts each year without affecting education.  While we may still be able to reduce expenses through proper management and new ideas, savings will be in the thousands, not the millions.

Yet, we will soon start to eat in to our cash balance.  Starting next year, the forecast shows we begin deficit spending (i.e., spending more than we are taking in).  While we have reserves to cover the next two years, by FY2015, with no new revenue, we will see a negative cash balance of $1.7 million.

The forecast must be balanced, and it must be filed with the state by May 31.  Therefore, the board approved the forecast with a projected levy of 4.5 mills, which generates just under $4 million a year.  This amount is slightly less than what we project to lose in funding.

At this point, a levy has not been approved and has only been discussed briefly.  However, to place a levy on the ballot in November, the board will have to vote by the end of July.  This means we will need to pass a resolution in June before the final vote in July.  Discussions will continue, and community input is greatly needed.  What do you think?  Please share here or via email.

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