CUYAHOGA FALLS — The Board of Education continues its work to address a projected deficit identified in its five-year financial forecast and is required to submit a plan by the end of the month to the Ohio Department of Education.
Meanwhile, the board on Wednesday night voted 3-2 in favor of adopting a revised five-year forecast that lists the projected gap at $2.4 million at the end of fiscal year 2020-21. The October five-year forecast had projected a $4.1 million deficit on June 30, 2021.
Also, the board is discussing whether to implement any spending cuts proposed in a performance audit of district operations released last month by the state auditor.
The following are some questions and answers regarding the district’s financial planning process:
Q: What is a five-year forecast?
A: The five-year forecast serves as a tool to assess the financial health of a school district. School districts are required to submit five-year forecasts twice annually to the Ohio Department of Education. Each five-year forecast contains two components: historical and projected financial data; and notes to explain any significant changes or assumptions the district used to develop the reported financial projections.
Q: What is a performance audit?
A: Performance audits provide elected officials and government employees with an objective, third-party analysis of their operations to help them improve performance, reduce costs, and make informed, data-driven decisions. The state auditor conducts performance audits of Ohio’s schools, local governments and state agencies.
Q: What is the district’s short-term financial situation, as shown by the updated five-year forecast?
A: According to the five-year forecast approved by the board Jan. 23, district expenditures of around $59 million will exceed projected revenue of around $58 million this year, which will begin reducing the district’s total fund balance by just over $1 million, leaving about $5.5 million on hand at year’s end. Expenses are expected to outpace revenue by $2.2 million next year, then increase again to $8.4 million in the 2021 fiscal year. Without increased revenue or spending cuts, the district would see an overall deficit of around $2.4 million by June 30, 2021.
Q: Why did the forecast deficit drop from $4.1 million in October to $2.4 million in the revised five-year forecast?
A: According to district Treasurer Barbara Donohue, her office’s analysis of cash flow from the beginning of the fiscal year in July 2018 showed a projected $639,000 in annual savings, the cumulative effect of which over this year and the next two years improved the district’s bottom line.
Q: What did the Cuyahoga Falls City School District’s performance audit recommend?
A: The audit recommended potential cost-cutting measures to save a total of $5.5 million per year. Auditors reported the district could save nearly $2.6 million a year by eliminating the equivalent of 31.5 full-time staff positions, including 20 general education teachers, as well as some art, music and physical education teachers in the elementary schools. Other options to reach the $5.5 million include cutting an additional 16 general education positions for a savings of more than $1.3 million, cutting the district’s subsidy of extracurricular activities, and pay freezes. It did not consider revenue generating options such as levies.
Q: How would implementing the $5.5 million in cuts recommended by the performance audit affect the district’s bottom line?
A: Based on the October five-year forecast, $5.5 million in cuts would lift the district out of deficit through the end of the 2023 fiscal year. Figures were not available based on the updated forecast.
Q: How is the district addressing the shortfall projected in the five-year forecast?
A: The school district is required to submit a plan to address the projected $2.4 million deficit by Jan. 31 to the Ohio Department of Education. A special meeting is set for 5:30 p.m. Jan. 30 to approve the plan, which is being developed by the school administration. Superintendent Todd Nichols said he would provide board members with a draft of that plan by Jan. 25.
Q: What have board members said about the performance audit?
A: The board reviewed many of the performance audit recommendations at a Jan. 16 meeting and briefly discussed the audit again Wednesday. Board member Anthony Gomez said he felt the board did not adequately address the issues and called for more discussion. Board member Dave Martin suggested the performance audit be discussed again in February. Board President Karen Schofield noted she felt the short-term issue is to address the projected $2.4 million deficit through the report the district sends to ODE by Jan. 31 — and then the recommended cuts in the performance audit. Board member Patrice White noted that considering the 2021 deficit was reduced from $4.1 million to $2.4 million, it is important for the board to have the correct figures before deciding on potential cuts listed in the performance audit.
Reporter Phil Keren contributed to this story. Eric Marotta can be reached at 330-541-9433, or firstname.lastname@example.org.