MADISON TOWNSHIP — Madison Local Schools will need to continue reducing expenditures, administrators said Wednesday.
But the district is in a far better place financially than it was a month ago thanks to the narrow passage of a new operating levy.
The Madison Local Schools board of education met in a special session on Wednesday to approve the district’s five year forecast.
The forecast is the first since Madison passed its $7.5 mill operating levy earlier this month. Levy collection will begin in 2024. The levy will generate about $3.36 million a year.
“I had two different forecasts, one for each outcome, and they were drastically different,” Treasurer Bradd Stevens said.
“I was really nervous because the other one really decimated our district. The Madison community pulled through at the right time, so I want to publicly thank them for what they did. I appreciate it.”
Public school treasurers submit two five-year forecasts per year to the Ohio Department of Education and Workforce. These forecasts give a general overview of a district’s projected revenues and expenses, but treasurers often caution that they are a prediction, not a guarantee.
“It’s a snapshot of what is going on right here and right now,” said Stevens, who has worked for the district since 2022.
“It’s based on assumptions and those assumptions change drastically over time. Between now and fiscal year 2028, there’s going to be three biennial budgets, three different negotiated agreements, a presidential election, a triennial update on property valuations. Employees are going to leave and get replaced.”
“This is a tool that we all need to use to be proactive and plan ahead instead of react to situations,” Stevens concluded. “If we can do that, we should avoid the situation we were looking at a month ago when we were biting our nails.
more coverage
Deficit drastically reduced after levy passage
Stevens’ forecast shows Madison in a much more positive financial position than the last one from May.
Stevens’ new projections factored in the increased revenue from the levy as well as the most recent state budget, which increased general operating funds for schools for fiscal years 2024 and 2025.
As a result, projected revenues for fiscal years 2024 and 2025 jumped by almost $3 million and $4.3 million, respectively.
With the new numbers, Stevens predicted the district will have a spending deficit of $132,941 in fiscal year 2024 and be in the black by almost $1 million in fiscal year 2025.
In the May forecast, before the levy passed, the estimated deficit for fiscal years 2024 and 2025 combined was more than $5 million.
“We still are going to have to make some cuts to efficiently operate,” Stevens said. “Not nearly as much as we would have to make if the levy hadn’t passed.”
Stevens told the board he projected slight increases in state funding after 2025 of two percent each year.
“It would be irresponsible based on historical trends to expect large increases from the state,” he said.
Stevens didn’t project a bump in revenue from from real estate taxes, despite rising property values.
He said this is because as property values rise, millage (tax collection) rates for school levies goes down so that the same dollar amount collected remains the same each year.
The projected deficit jumps from $340,260 in fiscal year 2027 to $1.3 million in fiscal year 2028. Stevens explained there is a renewal levy that year and he is not allowed to assume in the forecast that it will pass.
Health insurance costs drive rising expenditures
Stevens reported that wages make up about 51 percent of district expenditures and benefits make up another 34.5 percent.
“There are steps in here, but I did not put base wage increases because we haven’t entered negotiations. My hope would be by the May forecast, I would be able to put base wage increases based on what (Supt. Rob) Peterson and I and the board, how we negotiate with the unions.”
Another 10 percent of the district’s expenditures goes toward purchased services. A variety of expenses are categorized as purchased services, including utilities, internet, curriculum subscriptions and contracted services for students with special needs.
Stevens told the board “the scariest” part of the forecast for him was rising health insurance costs.
“You’ve heard me talk about our expenditures increasing at so much faster a rate than our revenues,” he said. “The biggest number one factor is health insurance.”
The treasurer said health insurance costs currently make up 61 percent of benefits costs and 21 percent of the district’s total expenditures. He anticipates those numbers will continue to rise and that by 2028, health insurance will make up 25 percent of total district expenses.
“(Supt.) Peterson and I have a meeting with a broker on the 5th of December to talk about ways to save,” Stevens said. “I’ve looked at things like consortiums, I’ve looked into going from a self-funded plan to a full-funded plan. I’m looking at everything we can possibly think about to save.”
Peterson concluded the meeting by echoing Stevens’ comments about staying in the black.
“I think it is important that the district commit to not going back into deficit spending and do whatever it takes to keep us out of deficit spending,” Peterson said.
“We’ve got negotiations coming up in the spring, I would anticipate being able to give a raise, however on the flip side of that . . . we’ve got to be very careful about, as we make reductions, having those two offset one another so we continue to have revenues exceed expenditures year over year.”
