Every May and October, Ohio boards of education must approve a revised Five-Year Forecast. Since Treasurer Debbie Caudle is leaving the district May 1, the Milford board approved the May 2018 forecast this month.
The forecast shows our finances should be strong and stable at least through FY 2022 (June 2022). This, of course, is predicated on the funding formula and other state support staying the same as now; since we will have a new Governor next year, this could change.
Right now, the district is no longer under the funding “cap,” which prevented us from receiving more funding based on number of students. This is adding appr. $500,000/year in receipts from the state.
New home sales have also increased, which has led to an increase in property tax collections of about $100,000/year. On existing homes, however, districts are not permitted to increase collection on voted millage when property values increase. This is due to the Ohio school funding system, where a 1976 law, House Bill (HB) 920, prevents the majority of property tax collections from increasing with property valuation growth. This means that although property values rise with inflation, the amount the school district collects from property taxes stays basically the same.
Due to proper fiscal management and receipt increases from the state, Milford has been able to spend less than we are taking in for a number of years. However, inflation will continue to affect the district’s expenses, just like any other business or household. Since receipts cannot grow with inflation, the district will begin to spend more than we are taking in.
Based on current projections, in 2022, we will reach a point where we will have to evaluate if an operating levy is needed. At that point, we will have about 3 months of operating money in the bank – which is the amount the state recommends as a base.
Of course, as mentioned, the forecast will change with any modifications to the funding formula or other changes made by the state.
You can view an overview of the current Five-Year Forecast here.