LHSD Incurs Operating Deficit in FY2013
Office of the Treasurer
Submitted by: Paul Shaw, CPA CGMA RSBFO
After operating in the black for seventeen (17) straight years and weathering years of the recent global economic crisis, Logan-Hocking Local School District finished its most recent fiscal year with an operating deficit of $783,000. Treasurer Paul Shaw reported to the Logan-Hocking Local Board of Education that General Fund uses exceeded revenues by $783,206 in the fiscal year ended June 30, 2013 (FY 2013). Revenues declined by nearly $500,000 and remained relatively flat for the FIFTH year in a row. Despite great efforts to control, expenditures grew marginally due to pre-recession negotiated agreements with employees’ unions (that have now been or are in the process of being re-negotiated).
General Fund operating revenues for the fiscal year totaled $33.1 million. The State of Ohio provided 67% ($22.1 million) of General Fund revenues. This includes payments through the school foundation program and payments of rollback and homestead taxes for local taxpayers. Local taxpayers provided $9.0 million in real estate and personal property taxes to the General Fund (27% of total). Federal funds provided $.4 million (1%). Other sources provided the balance of $1.6 million (5%) including tuition from non-resident students ($917,000), investment income ($190,000), preschool / before care / after care tuition ($263,000), and other sources.
General Fund operating expenditures for the fiscal year totaled $33.9 million. As a service industry, salary and benefits accounted for the majority of expenditures ($28.9 million, or 85% of the total). Purchased services, including utilities expense, community school tuition, and other contracted services totaled $3.7 million (11%). Materials and supplies, including fuel cost and bus parts, totaled $.9 million (3%). Other expenditures totaled $.4 million, including county auditor & treasurer fees, payments to Muskingum Valley Educational Service Center, and to other miscellaneous items.
Shaw noted that he had previously forecasted a deficit of $620,280 for the year. The actual deficit was $162,926 greater than forecasted. Shaw attributed $142,000 of this difference due to timing issues – advances made at the end of the fiscal year which will be repaid to the General Fund at the beginning of the next fiscal year.
Shaw pointed out that the annual reliance on local taxpayers for funding day to day operations of the School District has been reduced from 39% (FY1993) to 32% (FY 2013). State and Federal sources are providing the balance. With no increase in state and federal funds on the horizon, the School District will be forced to operate within its current level of funding – which it has been since fiscal year 2009 according to Treasurer Shaw!
Shaw commended the School Board, administration, employees, employee unions, parents and community for working together to weather the current economic storm. “These continue to be some of the most challenging financial times we have ever faced. The road ahead will continue to challenge us. We must continue to work together to provide the most effective, efficient, and economic school system we can for our communities.”
The School District has operated in the black for the last 17 out of 20 years, yet Shaw’s most recent financial forecast reflects anticipated deficits for upcoming Fiscal Years 2014 through 2017. Carryover reserves will be used to weather the enduring economic storm to the extent possible. The School District’s last local operating tax levy was approved by voters in November 1981 – over thirty-two years ago – almost unheard of in the State of Ohio!
Revenue Versus Expenses
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