Bowling Green City School District is planning for the possible loss of $5 million over the next several years, from the coronavirus pandemic and possible property transfers.
As a follow-up to the Bowling Green Board of Education workshop on May 14, the school treasurer’s office has filed the district’s final, board approved five-year forecast with the Ohio Department of Education.
The forecast is a planning and management tool required of all school districts in Ohio to be prepared by Treasurer Cathy Schuller’s office, reviewed and approved by the board, and filed with the Ohio Department of Education (ODE) twice a year; once in May and again in November. The May 2020 forecast was approved by the Board on May 19.
The forecast reflects the estimated impact of the COVID-19 related economic downturn that includes reduced state funding, school district income tax, and real property tax revenues. It also reflects the possibility of increased expenses in conjunction with the recovery from the COVID-19 shutdown of the schools.
While not currently forecasted, it is reasonable to anticipate increased operating costs associated with providing for the safety and well-being of students, staff, and administrators once schools reopen.
The forecast picks up where the last forecast filed in November 2019 ended, with a slightly better year-end financial result than expected. However, the May 2020 forecast differs significantly in the outlook for school years 2021 and thereafter.
Fiscal year 2021 is projected to be $3 million worse by June 30, 2021 (the school district’s financial year end) than projected in the previous 2019 forecast. While this loss of income does not impose an immediate financial hardship on the district, it does raise concerns that this loss, if prolonged over a period, could deplete the district’s operating cash at a more rapid pace than originally thought.
The district is also facing another situation that has a financial ramification on the district’s operating cash. Over the past two months, petitions have been filed with the district and Board of Elections to allow numerous residents of the Bowling Green City School District to vote on moving their properties to several other neighboring school districts.
As of today, multiple petitions will appear on the Aug. 4 ballot, and one will appear on the Nov. 3 ballot.
Should these petitions pass, the Bowling Green School district will lose revenues in excess of $2 million a year in property and income taxes.
The current five-year forecast does not reflect the possible loss of these revenues, but should the ballot requests in August pass, the next forecast in November will be revised to show the loss of funding to the district. While the legal requirements associated with the property transfers are unclear as to the timing of the shift in taxes from Bowling Green to the other districts, assumptions will be made for the purposes of financial planning that they will become effective January 2021.
When taken together, both COVID-19 and the property transfers present a possible financial loss of $5 million or more in revenue to the district over the next several years.
Although these uncontrollable circumstances surrounding the district are challenging and likely costly, this does not mean the district is currently in a financial crisis. With the warning signs of potentially significant financial challenges existing, careful planning and actions are required to ensure they in fact do not cause a financial crisis for the district.
This planning is already underway and entails identifying areas of spending reductions that can be implemented quickly if such reductions are necessary. At this time, no reductions in spending are being made, however, spending will not exceed the current budget until more information related to the COVID-19 economic recovery and the property transfers are known.
The Office of the Treasurer will be providing updates on these matters to the board and community in early August after the latest data on tax revenues and property transfers are known.
