Despite the Rover pipeline payments still under appeal and a delay in the state funding formula, the Bowling Green City Schools district is in a strong financial position.
Treasurer Cathy Schuller gave her five-year financial forecast at the school board’s Nov. 16 meeting.
She said she predicted the district will deficit spend throughout the years of the forecast, partially due to the pipeline revenue being placed in a capital projects fund.
Schuller said the district will use its cash reserves by fiscal year 2026. That balance is expected to be around $17 million at the end of this fiscal year.
That amount from the pipeline is about $1.9 million a year. Rover has appealed its valuation for the second time. The state tax commissioner affirmed the current valuation, but Rover appealed that to the state’s board of tax appeals. The hearing on that appeal is scheduled for May.
“We’re still kicking that can and waiting to see how it will turn out,” Schuller said.
The Fair School Funding Plan was adopted in July, completely overhauling the state funding formula.
Schuller said the state has delayed getting the actual funding model to schools until February, but it could increase state aid.
“We’re still trying to work on numbers from the state with allocations, but we know there are going to be big changes in how we account for revenue and expenditures,” she said.
The new formula will eliminate some open enrollment revenues. In the past, students who left the district in open enrollment took more state money with them that what was received. In the future, the state will pay the money directly to the other school district.
Schuller is expecting more in state restricted and unrestricted aide, including the Student Wellness and Success funds.
For the current school year (fiscal year 2022), she has real estate revenue contributing 57.2% and the income tax providing 11.9% of revenues. Another 3.7% comes from other local sources. The state will contribute 27%.
However, “the burden is starting to shift to more reliance onto the local sources,” Schuller said.
In fiscal year 2021, the state contribution was 29% and the local share was 73%.
Revenue this fiscal year is expected to be $33.754 million, down $630,000 from last year.
Schuller predicted revenues will grow 0.37% by 2026, to $34.376 million and a lot of that comes from the new state funding formula.
Real estate revenues are expected to increase $165,000 to $19.46 million in five years and income tax collections are expected to increase $246,000 to $4.26 million during that same time.
The district’s expenses ended the past school year $45,000 better than she projected in May, Schuller said.
Personnel expenses continue to be the highest expenditure, at 77%.
“Keep in mind, we’re a school district, we’re a service industry, so personnel expenses are going to be the largest part of our budget. That is normal,” Schuller said.
Negotiated agreements with the district’s two unions end June 30, so there could be significant variables for fiscal years 2023-26. She predicted salaries and benefits will increase by $3.5 million in the next five years.
General fund expenditures are predicted at $32.86 million this fiscal year and $37.45 million in 2026.
Schuller predicted average growth in expenditures from 2022-26 at 2.8%.
“It is a forecast. It is based on how we’re operating today,” she said. “This can change.”
Board President Norm Geer asked about the pipeline’s appeal and how much is being paid.
Schuller said that the Wood County auditor is billing the pipeline on the appealed amount.
Rover went into operation in 2019.
“Once we win, then they will have to pay the additional amount that has accumulated over those year,” Geer said.
They also will have to pay interest and penalties, Schuller said.
The district originally was to receive around $3.4 million annually from the pipeline.