Thursday, April 22, 2010

Five Year Forecast

At our regular board meeting next Tuesday, we will be discussing the revised 5 year forecast prepared by our treasurer, Cheryl Swisher. 

Have you taken a look at the October 2009 version (be sure to also read the notes that accompany the spreadsheet) that was approved by the former board?

When you look at that spreadsheet for the first time (I'm referring to October's forecast in that link above), there is a lot of information.  The bottom line you can look at to get a quick idea of where our district stands, financially, is line 6.010 which shows if we are over or under, and also line 7.020 which shows our projected cash balance carryover amount as of June 30th - the end of our fiscal year.

In the October report, line 6.010 shows the district begins deficit spending in 2011, which continues across the line.  The cash balance - that carryover money - makes up the difference in the deficit spending until 2013, when the cash balance is below the amount required by the state.  In effect:  Fiscal Caution is reached.

A school district is required to have on hand a certain percentage of its budget in order to be considered financially stable by the state of Ohio.  We go below that required amount in 2013. 

Fiscal Caution is thus looming on our horizon.  In less than three years.

Now, many factors feed into these forecasts.  State funding, or lack thereof, potential increases or decreases in tax collections, etc. as well as projected expenses all play a part in the 5 year forecast.  A projected loss of property tax has proven not to be so dire recently - instead of a 20% projected loss, we have experienced around a 3% loss instead.  Good news there!

Any of these numbers may change for the better - or worse.  If the overall economy in our region continues to stagnate or get worse, our district will be worse off.  If the general economy around here improves and these double-digit unemployment numbers are reduced, then our district will also improve financially. 

Unfortunately, there is no way to know for certain which way it will go, and that is why we need to be fiscally conservative if we want to be able to weather the economic storm we're in today. 

If we are cautious, and do all in our power to minimize our deficit spending, that carryover money will see us through.  But if we refuse to spend wisely, we'll blow through that $8 million in record time - is that what we want?

Once that carryover money is gone, guess what:  someone will be suggesting that another LEVY be placed on the ballot!! 

I tell my kids this same thing:  you must learn to live within your means, or you'll go bankrupt.  Do not spend more than you earn! 

What a simple concept, yet how hard to DO.  It takes intestinal fortitude - and it's not "fun" to constantly be pinching pennies to keep financially afloat. 

But it is vital that we do just that.  I refuse to go to the voters to ask for more money if this district can't figure out how to spend wisely what we already receive.

Every district has financial issues right now because of the economy at large.  Swanton is better off than most, because of that carryover money.  Instead of blowing through that $8 million like it's water, let's do the right thing - the hard thing - and limit our spending, so that this district can weather the storm and come out safely on the other side.

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