After decades of benefitting from two revenue-generating powerplants, the New Richmond Exempted Village School District is experiencing an ongoing decline in that same revenue source.
That revenue decline is evident in the five-year financial forecast presented to the Board of Education by Treasurer/CFO Matthew Prichard during the Nov. 15, 2021 meeting. The revenue decline began in 2001 with electricity deregulation - a change in the way public utilities are assessed, he said. Ahead of the successful 2020 operating levy, the district had already experienced an $8 million revenue decrease due to deregulation, Beckjord closure, and the devaluation of Zimmer.
Beckjord power station was decommissioned in 2014. In 2022 the Zimmer power station is scheduled to close - five years sooner than previously announced by the company, Mr. Prichard noted.
Zimmer's impending closure and ongoing deregulation mean even more revenue declines, ranging between $2.5 - $3.5 million annually. More revenue could be lost if the owners of Zimmer and the Beckjord properties are successful in their efforts to have their property values lowered, he added.
In Fiscal Year 2022 the district is forecast to see a revenue shortfall, meaning the revenue received will not meet expenses requiring the district to spend from its cash balance, Mr. Prichard explained. By the last year of the forecast, FY 2026, the district is expected to have a revenue shortfall where expenditures are projected to be greater than revenue by $7,488,919.
The cash balance is positive at the end of FY 2022 and is projected to worsen by FY 2026.
Over the last few years, the district has taken significant steps toward decreasing expenditures. Since 2019, New Richmond EVSD has reduced operating costs by over $4 million. There are ongoing efforts to reduce expenditures where possible. As a result, the district is a lean operation with a per-pupil cost average that’s on par with the state average. The forecast shows modest inflationary increases in expenditures throughout the forecast.
You can see Mr. Prichard’s report to the Board here: https://youtu.be/rbCTWRQfEIk?t=86