Akron Public Schools amended its five-year budget forecast to account for money that will be raised thanks to the passage of a 7.9-mill levy on Nov. 6, but the district still projects some red ink through fiscal year 2017.
“We must substantially reduce expenditures,” Treasurer Jack Pierson wrote in the updated five-year budget, accepted by the board on Monday. “Issue 61 passed, giving us approximately $19 million more revenue each year. Now we must make the expenditure reductions needed to keep the district solvent.”
Those cuts, which could include additional teacher and staff reductions, have yet to be determined.
“Those are things that we’ll have to work out with our internal budget committee,” Superintendant David James said.
The updated budget details the reduction of 40 teachers through attrition over the next four years.
The budget also forecasts an immediate spending deficit of $16 million for 2013. If additional cuts are not made, the district’s end-of-year cash balance would shrink to $6,677,745, or about 2 percent of the district’s budget.
“That’s nothing,” Pierson said.
With yearly deficits totaling nearly $60 million in the next five years, the district projects a $52,689,569 deficit by the end of 2017.
Still, it’s a healthier projection than the $175 million deficit the district had originally planned to face.
District losses are forecast to swell each year, climbing from $2.8 million in 2014 to $24.5 million in 2017.
Pierson cited a hike in employee retirement and insurance benefits, mainly from rising health insurance costs, as well as lost revenue from students who leave Akron Public Schools to attend private and charter schools.
In Ohio’s school-funding formula, each district’s funding is based on the number of enrolled students. But even that formula is expected to change.
“It is unknown at this time if the governor will have a new formula in place for [fiscal year 2014] and beyond,” the budget cautions.
Pierson expects 150 students to enroll in charter schools through the state’s Educational Choice program and another 200 students to enroll in charter schools, accounting for $40 million to $50 million in lost revenue in each of the next four years.
He said that the state pays less to the district for the students who stay and more to the charter schools when students leave.
“We lose more revenue from the state,” Pierson said. “We’re paying out more than we’re getting in.”
Pierson also accounted for the possibility of declining local revenue. Though the recent levy passed, Summit County residential property values dropped by 10 percent and commercial property values dropped by 16 percent in the auditor’s 2011 reappraisal. The declining property values led to a $2,464,014 loss in revenue for the district from 2010 to 2011. The county is scheduled to perform its property reappraisal in 2014, though Pierson predicts that property values will not rebound.
In its final vote before entering an executive session, the board unanimously passed a resolution “requesting that Congress acts soon” to avoid the pending fiscal cliff. Board President Jason Haas said that inaction would result in the cancellation of federal funds and a 7.8 percent cut to Ohio’s education system.
“It is, frankly, a little frightening,” Haas said.
Haas, who joined the board in thanking the public for passing the Nov. 6 levy, said that those cuts could lead to layoffs, larger class sizes and decreased class offerings.
Doug Livingston can be reached at email@example.com or 330-996-3302.