The New Richmond Exempted Village School District continues to see strong results in its cash balance which increased by $800,000 to $22,721,308 in fiscal year 2015, but faces an uncertain future according to the district’s 5-year forecast submitted to the state.
“As we move forward, there are some known concerns as well as a great deal of uncertainty regarding other matters,” NREVSD interim treasurer Mike Mowery said in the summary of his 5-year district financial forecast approved by the Board of Education at its October meeting.
“This is because two of our primary funding sources, State per pupil funding and the Public Utility Tangible Personal Property (PUTPP) reimbursement are unknown beyond the two year State biennium budget. Further, our negotiated contracts with our unions end on June 30, 2017 making it difficult to assess personnel costs,” explained Mowery.
The October 2015 five-year forecast is available for download at http://www.nrschools.org/Downloads/nr_forecast_Oct_2015.pdf.
NREVSD had a cash balance of $22,721,308 at the end of its fiscal year 2015 on June 30. The balance is forecast to grow to $22,973,322 next June 30 at the end of fiscal year 2016 and then begin falling to $20,501,110 in FY2017, $17,321,548 in FY2018, $13,095,578 in FY2019 and $7,780,026 in FY2020.
“What is not an assumption, but a hard reality, is the closing of the Beckjord Electric Plant as a generating facility,” said Mowery,” said Mowery. “The current fiscal year should see a reduction of approximately $700,000 in revenues, and by FY16/17 we will see an annual loss of $1.5 to $1.6 million.”
Ohio's biennium budget for FY15/16 and FY16/17 included reinstatement of the phase out of the PUTPP reimbursements from which New Richmond currently receive $7.1 million per year. PUTPP payments are reimbursements to school districts with electrical generating facilities that lost tax revenue when the state deregulated electric production.
“While there is a movement to have the full $7.1 million paid to us, as currently enacted we will see a reduction of $700,000 in FY17,” said Mowery.
Mowery used a 10% reduction factor for future years should the state continue the PUTPP phase out. New Richmond would see the reimbursement fall $600,000 the next fiscal year and similar assumed 10% reductions would bring the annual reimbursement down to $4.7 million per year by FY19/20.
“This is the most significant assumption in the forecast,” noted Mowery. “If the reimbursement were to stay at the $7.1 million we would have an additional $6.5 million added to our June 30, 2020 cash balance.”
Revenue from Open Enrollment is helping offset the loss of revenue from the closing of Beckjord. But that revenue isn’t guaranteed in the future. New Richmond receives $5800 in state aid from the home district of each student who open enrolls. A total of 334 students open enrolled at New Richmond this year including 221 from West Clermont, 40 from Felicity and 30 from Bethel.
“We have seen significant increases in revenue from Open Enrollment and we are anticipating an increase of $140,000 this year to a total of $1.9 million per year,” said Mowery. “These revenues are wholly contingent upon students continuing to enroll with the district and therefore outside of our control.”
The 5-year forecast includes no additional staff hires for the next four years beyond FY15/16. The salary schedules include no increases in the base salary amounts beyond labor agreements that expire after FY16/17, but do include future step increases.
Mowery projected health insurance costs to increase by a conservative 2% this fiscal year.
“We know the maximum we could see for 2016/17 will be 7%,” said Mowery. “Beyond that we could experience a higher increase but we could also see lower increases or even a decrease in rates.”
Building and departmental budgets are projected to remain essentially unchanged for the next four years except for variances for textbook and technology allocations.
“This is important as just a 1% inflationary factor would reduce our projected June 30, 2020 cash balance by $700,000,” noted Mowery.
New Richmond has also experienced an increase of $140,000 from the Clermont Country Education Service Center which provides contracted services including special education.
“The Five Year Forecast should be recognized as just a snapshot in time and is constantly evolving and the Board and Administration should continually update the forecast as major developments occur,” said Mowery.