The Oregon City Schools District will probably put a levy on the ballot within the next year and a half to counter a shrinking budget.
In an update to the five year financial forecast for the district, Treasurer Jane Fruth’s analysis was not very rosy.
“When you talk about a five year forecast, everyone wants to focus on what the cash balances are. But it’s really all about trends and it’s for planning purposes,” Fruth said at a recent board meeting. “In the last fiscal year, the trends have not changed. In the last fiscal year, we began spending more than we were taking in. Just barely. I think by a couple hundred thousand dollars. But that trend is continuing. The expenditures are outpacing the revenue. And that, of course, is not sustainable.”
The district has cash balances through Fiscal Year 2016, she added. “We’re at the point where we have to be careful.”
Some adjustments made to the five year forecast include increased revenue for special transportation and preschool, a refund from Worker’s Compensation, savings in health insurance premiums, and fewer funds for Career Tech.
“We’re really on the floor for Career Tech. At the beginning of the year, it was showing they were going to be able to afford $1,000 for Career Tech. And now we’re down to $280,” said Fruth.
Open enrollment monies are also down from original estimates. And reimbursements for the tangible personal property taxes that the district previously lost are at the 2013 level, she said.
“We slowly start to reduce the personal tangible property taxes in Fiscal Year 2016,” she said. “I’ve been told that the [state] budget director, Tim Keen, believes very strongly in pulling that money back from districts, getting it back into the state budget. So effective in Fiscal year 2016, I have begun reducing the amount we would have received directly from the state, which is about $700,000.”
An unexpected adjustment, which will have a large impact on the budget, said Fruth, is a reduction in health insurance premiums.
“It is one of our larger expenses,” Fruth said of health insurance.
The five year forecast had predicted a 9 percent increase in health insurance costs by renewing the district’s contract with Aetna. But the district’s broker was able to find another carrier, Anthem Blue Cross & Blue Shield, with the same coverage but at a 3.5 percent reduced cost.
“This actually creates a $630,000 swing in the insurance line of my forecast because I had a 9 percent increase projected, and we have a 3.5 percent reduction. It was a nice little boost we could capture,” she said.
With expenditures exceeding revenue, the district is leaning on its cash reserves to get by.
“We’re living off our cash reserves, which is obviously not sustainable,” said Fruth.
“The real problem for Oregon schools is we do not know what the state is going to do with `hold harmless’ monies. That is $4.8 million a year that we’re getting as a side payment. Back in Fiscal Year 2010, we were receiving $6.5 million. The reductions we had to take out of the forecast out of the [state’s] biennial budget forced us to take a portion of that away each year, which brought it down to $4.8 million. It’s just hard to predict what’s going to happen with that. It’s hard on our community. It’s just hanging over our heads. I just think that explains why we have to be so careful with our money. I would love the Legislature to just keep it there. That would be the best news we could get. But that’s not what the people in Columbus are projecting. They really believe [Governor John] Kasich and Keen definitely want that to go away. They want that money in the general fund. So we have to be cautious,” she said.
A drop in property valuations continues to erode the revenue stream, she said.
“Our valuations have gone down. It would be nice to have some increases in valuations. It’s just where we’re at. We’re just flat,” she said.
The drop in true cash, she added, is also due to an increase in expenses.
“As of now, we’re spending 6 percent more than last year. Of course, most of that is due to the reconfiguration. We had to make some adjustments to serve our kids.”
Jeff Ziviski, vice president of the board, said after the meeting that a decision will have to be made as to whether a levy will to placed on the ballot this year or next year.
“The last time we had a levy that passed was in 2008. The normal cycle for a levy for school districts is four or five years, and we’re outside of that.”
The only other option, he added, is to reduce spending, but there was little left in the budget to cut.
“We won’t place a levy on the ballot until we’ve exhausted all internal savings and reductions,” he said.