JERRY CITY — While revenues at Elmwood Local Schools take a $2 million dive in the next four years, expenses do not increase at the same rate.
Still, the district will use up its cash reserve covering the difference.
District Treasurer LuAnn Vanek presented the five-year forecast at the school board’s May meeting.
Coronavirus has impacted the district with reductions in state aid, she said in her report.
Earlier this month, the governor announced a $221,392, or 3.19%, reduction for the remainder of the fiscal year, which ends June 30.
Vanek has projected a 10% reduction for fiscal year 2021, when revenues also become less than expenditures. At that time, the district will begin to spend a portion of its cash reserves, she said.
Revenues for the current fiscal year are $17.50 million but drop to $15.23 million next year and stay flat through the life of the forecast, which ends June 30, 2024.
Expenses are $16.56 million this year and grow to $17.87 million in fiscal year 2024.
The district will need to dip into its $5.75 million cash balance to balance the budget starting next year. In fiscal year 2024, the fund will be used up and the district will be operating in the red at the amount of $1.08 million, according to Vanek’s forecast.
Elmwood will receive $80,764.35 in Coronavirus Aid, Relief and Economic Security federal money which will help to offset some of the costs associated with the COVID-19 pandemic.
As a result of the pandemic, Vanek decreased property tax collections for fiscal year 2021 by 3% to reflect delinquent taxes. Small increases are projected through fiscal year 2024.
Property tax collection is estimated to drop from $2.77 million this year to $2.71 million next year but is projected to climb back up to $2.78 million in four years.
Rover pipeline monies appear under tangible personal property tax.
Tax revenue from the value of the first Rover Pipeline totaled $1.15 million in calendar year 2019. The value of the second pipeline was added to collections in 2020. The estimated receipt from both pipelines is $5 million. However, Rover has appealed the assessed value requesting it to be reduced to 54% of the original value, according to Vanek.
Therefore, Vanek’s forecast expects only 54% of the estimated revenue being received. Public utility values depreciate 2% per year which is reflected in the forecast, which shows $3.01 million this year and $2.78 million in fiscal year 2024.
The district’s income tax makes up 14% of total revenue.
According to Vanek, collections increased by 4.85% this year, but with the impact of COVID-19, she has projected a 10% decrease next year and minimal increases in the following three years.
Vanek has projected of $2 million this year, $1.80 million next year and $1.95 million in fiscal year 2024.
With the projected cut in state aid next year and then the uncertainty of the next biennium budget, Vanek kept state aid flat at $6.16 million for each of the next four years.
She added that this line item may reflect a downward slide as the state takes into consideration pipeline money when determining its aid package.
As for expenses, negotiated agreements with the unions continue through fiscal years 2021 and 2022.
Salaries will cost the district $8.37 million this year and $9.72 million in fiscal year 2024.
Vanek has estimated an annual increase of 7% for retirements and benefits, from $3.37 million this year to $4.45 million in fiscal year 2024.
She also has projected the district will save $55,000 per year beginning this year in electricity after retrofitting all lighting with LED bulbs, but that is being offset by the hiring of deputies to provide daily security at a cost of $42,000.
As a result, she is projecting a 2.5% annual increase in purchased services, from $2.15 million this year to $2.32 million in fiscal year 2024.
Vanek cautioned that the forecast is based on assumptions.
“Actual circumstances will almost certainly differ from the assumptions required to be used in preparation of this projection. As a result, the actual future financial situation of the school district may be materially different from that stated in this projection,” she said.