Lakota anticipates spending deficits in next 4 of 5 years

Lakota Five-Year Forecast (in millions)

Expenses — Revenue

2013: $146.2 — $147.6

2014: $144.9 — $143.1

2015: $149.4 — $143.5

2016: $154 — $144.4

2017: $158.7 — $145.2

Source: Lakota Local Schools

Five-Year Forecast Highlights:

Source: Lakota Local Schools

Spending deficits are projected in Lakota’s near future, and school officials have said further budget reductions will have to come.

Jenni Logan, Lakota treasurer, shared the district’s five-year financial forecast Monday with school board members. School districts are required by law to adopt an updated five-year forecast each May and October.

Logan said the forecast shows a balanced budget in 2013, and spending deficits each year 2014-17. But Logan said those projected deficits are mostly due to state cuts, phased-out revenue streams and an even more unpredictable future.

“We’re not running out of cash; we’re just forecasting as spending more than we’re bringing in,” Logan said. “The predictability of future state spending is quite a challenge. We can talk to our legislators, we can talk to everyone who we think is in the know, and make our best guess.”

Logan said a number of revenue sources — making up the total state funding received by the district — have been slashed or are being phased out. The elimination of the tangible personal property tax has lead to a phase-out of the revenue — first said to extend until 2018 — now accelerated and likely ending next year.

Lakota’s share of TPP tax has been slashed from $16.6 million in 2007; to $9 million in 2011; down to $3.1 million next year.

“Some districts are keeping it in the forecast, but we aren’t counting on it,” Logan said.

Logan said the district will receive about $41.4 million in foundation funds this year. Her five-year forecast projects 1 percent decreases each year.

Logan said an enrollment study is being conducted internally to determine the impact of falling student rates on general fund revenue. State foundation funds are based in part on enrollment levels and per-pupil costs.

In the past two years, Logan said enrollment has dropped by 700 students.

As a piece to the enrollment study, Logan said the data will be used to update appropriate student-teacher ratios to ensure staffing levels are being maximized in the elementary and secondary levels.

Outlined in the five-year forecast, Logan said the district received $1.9 million less in tax settlements from the state this past August.

A $1.3 million decrease was due to the Board of Tax Appeals in Columbus settling a backlog of cases from 2008-10 in the Lakota district. Additionally, Duke Energy had two tax settlements completed, amounting to $600,000.

“It was a big whammy this time; a very condensed period of time to take care of all of those things that were just settled,” Logan said.

Offsetting the almost $2 million settlement loss, Logan said the district is fortunate to be receiving $2.7 million in 2013 from Liberty Twp. in collections from four Residential Incentive Districts. The amount is reduced to $250,000 for years 2014-17.

“The timing on that couldn’t have been better,” Logan said.

In salaries and wages, Logan said the district will see a drop in expenses due to retirement incentive payments ending in 2013. She said for the past three years, Lakota has spent $2.8 million annually on retirement payments.

Adding to the costs, Logan said in 2014, two union contracts are set to expire, along with a three-year salary freeze.

During the past three years, Logan said the district has saved about $2 million each year through the union contracts. She is estimating 2.39 percent salary increases for years 2015-17, based on an average of the past five years’ Consumer Price Index.

Logan said the five-year forecast includes 9.5 percent increases each year in the district’s share of insurance premiums.

To offset increasing insurance costs, Logan said all Lakota employees — except the Lakota Support Staff Association under current contract — pay 15 percent of premium pickups. LSSA workers will increase to 15 percent in 2014.

“It’s one of the costs that worries me because insurance is not cheap,” Logan said. “When there’s sharing in costs, there’s ownership.”

The school board will hold a special meeting at 5:30 p.m. Oct. 29 at Lakota Central Office to adopt the most recent forecast.