Treasurer's Notes (updated 5 4 13) Minutes on Line
Huron City Schools Announces All Minutes are Now On line
Michael Weis, Treasurer, Huron City Schools, announced today that all the board minutes, since 1932, are now available on line through the District Web Site.
The minutes can be accessed by going to the District Web Site www.huron-city.k12.oh.us and choosing the District tab; then the Board of Education Tab. And, finally select the Board Meeting Dates/Agendas and Minutes tab.
Then simply scroll down until you reach the Board Minutes. The most recent two years are there in meeting date order.
Below those two years is a link called www.scview.com. Clicking on that will access the complete set of board minutes dating back to the 1930’s. At that point you will need to enter a user name and password. Both those are: public. These instructions are also on the web site.
From there you may choose a specific date, a range of dates or the type of meeting. Types include Regular, Special, Attachments, Work Session, Organizational or Tax Budget Hearing.
However, the best feature is the OCR Search engine. The OCR allows you to search all minutes for a given word or phrase. For example, you want to know if the school has ever hired anyone named Smith. You would enter Smith and the engine will locate all Board minutes where the name Smith appears. It will then list those minutes for you.
Discussion of State Budget and Impact on Huron City Schools
The basic funding formula for State Aid has been significantly changed. It is now based on a district wealth formula that will provide every student in Ohio equal funding. The base is a valuation of $250,000 per student. If your district valuation is less than the $250,000 the state will make up the difference so every student in Ohio has a valuation of $250,000 per pupil. Huron has a valuation of about $230,000 per pupil. So in our case we will receive about $600,000 to bring us to the state level of $250,000 valuation per pupil. Our current aid is just under $2 million. The good news is we will be on a guarantee which will be discussed below. Some elements of the new plan are:
We will be guaranteed our State Aid from 2011 which is just under $2 million. This does not include transportation aid. This guarantee is good for two years, FY 14 and FY 15. This is important because it will give us time to prepare to adjust for a phase out. The Governor stated that in the long term the guarantee is not sustainable.
Tangible Personal Property Reimbursement (TPP)
Like the guarantee we will continue to receive the payment both in FY 2014 and 2015. This payment replaces the monies we lost when the state eliminated personal property taxes. The amount is $1,000,000 which is actually $800,000 less than the actual tax we were collecting. Again, the continuation of payment is critical as it provides stability and an opportunity to plan for a probable phase out. The State Budget Director has stated that this phase out, one is already in place, needs to be accelerated.
This allocation is based on a series of calculations involving property valuation and district median income. It goes to 80% of the least wealthy Districts. It does not appear that our district will qualify,
We do not qualify for any of these monies.
Special Education Aid
We will receive some monies in this category. It is unclear whether it is in the Guarantee money above or will be a separate item.
A pool will be created to provide additional funds for high cost special needs students. Last year we collected about $20,000. Under this change we should gain about $40,000.
The State is changing the funding methodology for Gifted Education. We will now receive $50 for each student, gifted or not, enrolled in the District. That will be somewhere around $80,000.Our current out of pocket gifted costs are $124,000 and with the loss of units will likely increase to $160,000. This means an increased out of pocket cost for gifted.
There is no change in the reimbursement formula so we would continue to receive about $230,000.
There were two changes to the voucher laws. There will be a new K-3 Reading Voucher available to parents of failing schools. This clearly will not impact us.
The other is an income based voucher. This will begin next year and is available to any Kindergarten parent who exceeds the 200% Federal Poverty Guideline. We have nine children who qualify. It expands to first grade next year. The good news is these monies are separately appropriated and will not reduce the school’s aid.
There is no change. The Open Enrollment amount will be $5,704 and be paid by the District from which the student is leaving to the receiving district.
Post Secondary Enrollment Option (PSEO) Changes
This program will be eliminated. It is being replaced by a new program that appears will be less costly. Currently we spend about $90,000 on this program and I would expect this will drop to $70,000.
Straight A Fund
This is a fund that will provide grants to Districts for innovations in curriculum, cost savings, etc. We certainly can benefit from this. The Chrome project may qualify, for example.
Days to Hours
We no longer will be required to be in session for a given number of days. It will be based on hours. How this change might be used opens a number of possible scenarios.
These are not included in the guarantee or any other funding source above. This should bring in roughly $60,000.
In addition to the budget two other major financial issues that will impact us:
While Washington D.C. and their cat fight seem far away it does have a potential impact on us. The sequestration or budget increase reductions will impact Federal grants. Last year we received $669,000 in Federal grants. Preliminary indications are we would lose ten per cent or $67,000. Since these monies are used to fund salaries, benefits and other costs, primarily in the Special Needs area, we will need to use General Fund dollars to continue the funded programs. Most are required under Federal law so the ability to simple cut the services or funds is virtually impossible.
Affordable Care Act
This act is extremely complicated and has the potential to increase medical benefit costs. The District elected to implement early, 2011, and so there will be no sudden jump in insurance rates. However, the Act significantly limits contributions from employees toward insurance. While unlikely to impact teacher’s contributions it has a significant financial impact on non-teaching employee shares. Since we are shortly in negotiation with this group on a new contract it is difficult to put any dollar figure to the potential cost the District will need to absorb. However, there is a mandatory charge in the act that applies to all persons enrolled in our plan of $63 per person. This includes the principal enrollee and all dependents. This will increase our insurance costs by $25,000 per year. These monies are remitted to the Federal government in order to help defer costs of the new health exchanges.
Some Financial Bits and Pieces December 2012
Five Year Forecast
We have entered the phase where we must use our reserve balance . School funding in Ohio operates on a cyclical basis. During phase one reserves are built up annually by running surpluses. Almost like putting money into a savings account for future use. In phase two we begin to use the savings account to make up for operating deficits.
Our forecast shows a substantial deficit for this year and future years. It shows that we will lose our reserves as early as 2015. This means a new levy unless we act to reduce the deficit. We are hurt by the reduction of Tangible Personal Property Tax reimbursements. This was a local tax that the state chose to eliminate and put in the Commercial Activity tax in its place. The state agreed at that time to reimburse us for this loss of locally approved tax revenues. They have now changed their minds and have taken away about $1,000,000 in annual revenue. Obviously this will have a negative impact on us both currently and in the future. The Board is currently reviewing options to enable us to avoid the future deficits. It is too early to discuss those options but the number one priority is to avoid impacting academics and deferring s new tax. The full five year forecast is located on this web site, including assumptions, under the Treasurer’s tab in the area called District.
FY 2012 Financial Report
The GAAP Fiscal Year 2012 is now available and posted on line. Our annual audit is in process and we expect the results by December 31, 2012. The GAAP statement is on this web site under the Treasurer’s Tab.
The District has just undergone its property revaluation. Property values, as a whole have fallen about 5%. The impact on us will be a loss of revenue of about $45,000. The negative for a homeowner Is that you may seea decline in value but your taxes will increase. This is due to how taxes are calculated in Ohio. House Bill 920, which froze tax revenues to the value of the home at the time it was passed. In effect creating a dollar amount of revenue. The auditor then uses an effective rate to compute that dollar amount. As value increases effective rate declines. Unfortunately, when it increases the reverse happens.
We will be the beneficiary of casino taxes starting in January. It is expected to be about $40,000.
We again met all state “grade card” standards and are rated Excellent. More importantly our third grade reading scores were though the roof. This actually has a financial implication. We are required to meet a Third Grade Reading guarantee. If we do not we need to furnish additional help and aide to those students not meeting the standards. This, obviously, has a cost to it. Our current structure, while costly, which stresses intervention with students beginning at age three is obviously working.
Some Financial Bits and Pieces July 2012
Five Year Forecast
We are now entering the phase where we begin to use our reserve balance . School funding in Ohio operates on a cyclical basis. During phase one reserves are built up annually by running surpluses. Almost like putting money into a savings account for future use. In phase two we begin to use the savings account to make up for operating deficits.
Our forecast is hurt by the reduction of Tangible Personal Property Tax reimbursements. This was a local tax that the state chose to eliminate and put in the Commercial Activity tax in its place. The state agreed at that time to reimburse us for this loss of locally approved tax revenues. They have now changed their minds and have taken away about $600,000 a year in revenue from us. Without that we would have had a surplus in FY 12 rather than a deficit. Overall, we expect to be able to continue operations without the issue of new taxes until at least 2015. The full five year forecast is located on this web site, including assumptions, under the Treasurer’s tab in the area called District.
FY 2012 Financial Report
The cash basis Fiscal Year 2012 is now available and posted on line. We showed a $700,000 deficit. However, $200,000 of that was an accounting entry that will be reversed in July. Property taxes fell below budget for the second year in a row. Also, we were down in Tangible Personal Property tax reimbursement. See the discussion above. However, Other income was substantially better than expected. This was due to better than expected Open Enrollment numbers. Expenses were just below budget. Overall, we bettered budget by almost $500,000.
Property valuations are at $337.4 million, which is about $600,000 less than last year. This is the first time we have ever had a decrease in valuation. We are still almost $3 million better than the 2010 tax year. And, we are still better than when the housing crisis occurred.
Excess Lottery Profits
Lottery profits go to education. Unfortunately, the state offsets the amount of lottery profits from the state’s education payments. The net result is we see $0 gain in funding due to the lottery. Recently lottery profits have exceeded budget. In the past we would receive a distribution of those excess profits. However, these monies are now being credited to the general education budget which is then reduced by the excess profits. Again, net zero to us in funding gain.
Compared to previous summers we are doing very little. We have upgraded high school bathrooms with new ceilings and are adding electric baseboard heating. We are building and installing a new computer lab at the High School and Woodlands. The High School is going wireless. We are buying a van to transport students to schools in Columbus and elsewhere. We will also use it for some supplemental athletic transport. Painting is going on at a number of locations as part of our normal room painting rotation.
We have just purchased and have received new math textbooks for the coming year.
Some Financial Bits and Pieces May 2012
State Funding Formula
There will be no state funding formula for FY 13 (School Year 2012-2013). This is actually good news for us as the funding has been frozen at FY 09 levels. We had anticipated a $200,000 decrease but with this action that will not occur. The problem is forecasting what our monies will be in the future.
FY 12 Fiscal Year
We are presently running ahead of budget for the current fiscal year. Revenues are much better than budget because of the better than expected State Aid and Open Enrollment. We will end the year, however, with a “loss” of $600,000.
Five Year Forecast
Our Five Year Forecast has been submitted to the Ohio Department of Education. It is required twice annually. It shows possible financial issues as early as 2015. However, when we do this forecast we use the worst possible scenarios. If it plays out as expected we could need new millage as early as 2014 but 2015 is the more likely scenario.
Real Property Tax Receipts
These were flat for the third consecutive year. We expect a very small growth, less than one-half of one per cent in future years. This is our largest revenue source so this is not a favorable development for future budgets.
Medical Insurance Rates
These jumped by 9% this year. That is a 20% increase in two years. The only good news is that we budget an expected growth of 10% so we are right on target.
The mild winter resulted in our lowest heating bills in the history of the District. Unfortunately, diesel fuel prices have obviously soared which has helped offset the heating savings.
There is a major bill in the Ohio Legislature that will reform teacher and support staff pensions. While it does not appear to have a financial impact on us we could see an accelerated group of retirements to “beat” the reforms.
Traditional Funding Model
There has been a great deal of testimony in the Ohio Legislature to change or alter the “traditional” state funding model. Unfortunately, there is much talk but very short on detail.
Some Financial Bits and Pieces January 2012
The District is working with a number of schools and other local government agencies to see what services can be shared. To date the following is happening:
Bus Service. We are meeting with Sandusky City and Perkins to see if we could consolidate bus service. We already share special needs bus service with other districts.
Huron Library. We will begin providing maintenance services to the library. We are studying how we might consolidate technology services with the library and the City of Huron.
City of Huron. In addition to the discussions on technology services we hope to shortly begin providing small vehicle maintenance services at our Bus Garage.
Birth rates in Erie County are the lowest in history. This will ripple through the school system as we can anticipate fewer students. We presently expect to do teaching staff reductions, using attrition, to balance teaching staff to enrollment.
State Funding Formula
At the present time there is no formula in place. Money is being allocated to schools based heavily on a wealth factor. A formula was to be in place July 1, 2012 but it appears it will be postponed until July 1, 2013. We expect our allocation to be slightly above the current year. Currently, we expect to receive $2.3 million for this fiscal year. The good news is that is $250,000 better than we expected at the start of the year.
Personal Property Tax
This tax was eliminated, by the legislature, three years ago but we continue to have small amounts dribbling in. It is $1,800 so far this year.
FY 12 Fiscal Year
We are presently running slightly ahead of budget for the current fiscal year. Revenues are better than budget because of the expected State Aid. March will be critical for revenue as we receive our Real Property tax payment that month. It is our largest revenue distribution and will dictate where revenue ends. Expenses are better than expected for the year to date. This was primarily due to a premium “holiday” on health insurance in December. The holiday meant that we did not need to make a premium payment that month. The savings was $220,000.
Some Financial Bits and Pieces November 2011
Rather than a single article here are some financial bits and pieces:
New Funding Formula
Normally the State funds school districts in two year cycles called the biennium. For this biennium , however, a major change occurred. Number one was that 2011-2012 was not based on a formula but rather a straight allocation based on District wealth. We are considered a wealthy district so saw a drop in funding of 7%. For next year, 2012-2013, the State is developing a new formula for distributing monies to school district. It is to be in place by July 1, 2012. To date we have not been given any “hints” as to what this will look like. So we currently are unsure as to what state funding will look like for the next school year.
Medical Insurance Holiday
Our insurance consortium, we participate with 12 other school districts, in a self insurance pool, experienced an excellent year. This resulted in a reserve that exceeds actuarial needs. For that reason we will have a premium holiday in November. This will save us more than $100,000. This will be a big help in moving Five Year Forecast out another year before new monies are needed.
Our insurance consortium is undertaking a major wellness program. It involves a variety of programs to keep employees healthy. The long term result is lower cost for health care and less absenteeism. There will be no cost to the District.
Five Year Forecast
Our Five Year Forecast has been prepared, approved by the Board of Education and submitted to the State. The net result is that we show a positive carry forward through 2015. New monies will be needed after that. However, with some adjustments we could extend that the positive carry forwards through 2016. For example, if we added 10 open enrollment students and reduced our open enrollment losses (about 50 students annually) we would gain $116,000 toward the surplus. Couple that with the insurance holiday discussed above and we would be over $200,000 in positive contribution. We are also looking at other options, none of which should impact academic programs. The entire Five Year Forecast and Assumptions are located on this web site. Go to the District Tab, then down to the Treasurer tab and you will find the forecast.
House Bill 136
This bill offers vouchers to all students. These may be used to attend private, charter or parochial schools. Currently, these vouchers are available if you are a school or school district that is failing. This requirement would be removed. As a non-failing, EXCELLENT actually, District this would have a possible major impact us. It could be as high as $1.5 million in lost funds.
The District was proud to receive an Auditor of State Award for its financial reporting. Our goal has always been maximum transparency. The Treasurer tab (under District)on the Web Site has numerous financial statements, graphs and other information. We update this data on no less than a monthly basis.
Collaboration of Services
The District has a number of services and costs we share with other districts. Medical insurance, as discussed above is just one service. We share computer services, special needs costs, transportation, health services, etc. with other districts and also other government bodies. We have been meeting regularly with other districts and government bodies to see how we can expand shared services. We have also responded to a survey from the Governor’s Office on collaborative service ideas. We see this as a possible major cost sharing for us.
Budget for 2011-12 School Year September 2011
It has been alleged that federal government has a spending problem not a revenue problem. For Huron City Schools it is the opposite we have a revenue problem not a spending problem. Last year our total revenues were $15.4 million dollars. This year we are forecasting revenues of $14.3 million.
The question is then “what happened”? It is almost completely a reduction in State Support. The State Foundation, regular aid, has declined by $330.000. While we expected some decline this is fundamentally the result of a new allocation formula from the State. Instead of, as was done in the past, using per pupil or other allocation method monies were allocated using a District wealth theory. The wealthier you are the greater loss you were given. The range was from 2% to 7%. Unfortunately, Huron is considered a rich district so our monies were reallocated to poor school districts. We were a seven percent district.
The big hit, however, came in Tangible Personal Property (TPP) Reimbursement. Tangible Personal Property tax was a local tax, approved locally and almost 100% going to local use. The vast majority came directly to us. It was primarily a business tax. A few years ago the legislature decided to do away with this tax and replace it with a Commercial Activity Tax-CAT for short. These monies were used to reimburse local schools for their loss of TPP revenues. While it was scheduled to be phased out beginning in 2015, over 17 years, the governor elected to speed up the phase out over four years starting in 2012. He told us he was doing this in May. Our year starts July 1. So we now have local tax money is now on its way to help fund Columbus’ inability to manage state monies. Without this theft of local funds we would not have needed new money until at least 2018 or 2019.
The remainder of our revenues remained relatively stable with minor increases or decreases.
On the expense side we had a 2.75% increase in wages. This is a little misleading since because of the leap year we will have an extra pay day in the fiscal year. We will recover it next year.
The major jump, however, hit us in fringe benefits. We jumped nine per cent. This was in large part due to an 11% plus medical insurance premium increase largely due to the requirement to meet the new Affordable Health Care rules. The dollar amount was an increase of $338,000.
Although similar percentage jumps occurred in debt service the dollar amounts were only $23,000. This was due to a decision to finish our Smart Board project so all classrooms are now equipped. We elected to lease purchase the 36 boards and support materials that were added.
Total expenses were up 4.1% which is disappointing since it is greater than the inflation rate of 3.6%. We try to hold expenses to inflationary growth. If you factor the extra pay period out we are right at that inflation rate.
The final good news is that while we expect our expenses to exceed revenues by $1.2 million we have a $7.7 million reserve to absorb the loss. This means we will not need to make any major changes to our various programs such as gifted, Seniors to Sophomores, summer intervention, academic intervention staff, Post Secondary Option, etc. All these activities are very important in maintaining our excellent rating and the highest academic performance index in the county and area.