A school district’s Five-Year Forecast is filed with the state twice a year – in April and October (the October filing is moving to November next year). The forecast is a planning tool to help districts understand financial trends. However, just like a home budget, a school district’s forecast is just that – a projection that will change over time. Nonetheless, the forecast is very helpful in giving us an idea of the financial health of our district.
The Milford school district’s primary funding sources are real estate taxes (56%); state funding (33%); other local income (such as TIFs – 10%); and interest (1%). Revenue is projected to remain mostly flat as we cannot predict how a new Governor will change the state funding formula; and we receive very little increase from property tax changes, due to HB920 which prevents any inflationary growth in levy collections.
Main expense areas are salaries and benefits (71%); purchased services (21%); supplies (3%); capital outlay (1%); and other miscellaneous expenses (4%). While 71% for salaries and benefits may seem high, remember we are a service-based business – the majority of our expenses are for teachers who deliver educational services to our students. All expense categories are projected to grow based on historical trends.
Milford’s revenues have exceeded expenditures for a number of years now; this is projected to continue this year, growing our carryover balance to a healthy $40.4 million. However, since revenue is flat and expenses are growing, this will change in FY2020, when we are projected to spend just about what we bring in. After that, expenses will begin to eat into our carryover balance.
By the end of this forecast (FY2023), we are still expected to have almost $26 million in the bank. Of course, there will be changes along the way, but we can rest assured that we are in sound financial shape right now.