Yellow Springs Schools— Expenses outpace revenues
- Published: October 24, 2019
Yellow Springs Schools will be able to continue to balance its budget through fiscal year 2023, but the following year’s solvency is uncertain, Interim Treasurer Tammy Emrick has concluded in compiling the district’s latest five-year forecast.
Emrick presented her projections to the school board earlier this month, with a preliminary report at a work session on Saturday, Oct. 5, and then formally during the board’s regular monthly meeting on Thursday, Oct. 10. The board accepted the report Thursday with no discussion.
The five-year forecast has traditionally been prepared in October each year and updated again in May for submission to the county auditor. Emrick noted that the deadline changed recently from the end of October to the end of November, but that she “always like[s] to be a little ahead of time.” The forecast will eventually be posted on the district website for public viewing.
Emrick, who came to the district in late May, and former Treasurer Dawn Bennett before her, had previously told the board that the district would be entering into deficit spending with fiscal year 2019.
In the latest forecast, Emrick projects that a high cash balance of nearly $5.5 million in fiscal year 2018 will continue to drop by increasing amounts each year to less than $2 million in 2023 and then go precipitously low in 2024 possibly eliminating the cash balance entirely.
While Emrick sounded the financial alert, she didn’t express critical alarm, noting that the forecast gives the district the opportunity to act.
“This is a road map,” the treasurer said. “The farther you get out, the more you can impact it and the more you can make changes.”
A graph prepared by Emrick and presented to the board showed a line for revenues and another for expenditures that cross in 2019 and grow further apart each subsequent year. While the revenue line remains relatively flat for the next five years, at between about $9.5 million and less than $10 million, the expenditure line rises from less than $10 million this year to about $11.25 million in 2024.
Revenue projections
Summarizing her “revenue assumptions” for the next several years, Emrick said she anticipates that property tax revenues will grow slightly, while income tax revenue will likely slow. In addition, she projected that the number of open enrollment students will decrease, and other revenue streams will “remain relatively flat.” State funding, which accounts for more than 15% of current revenue, is calculated at staying flat, she said.
Digging deeper into funding sources, Emrick noted that the district currently collects about 64% of its revenue from five separate levies:
•A 10-year emergency levy of $1.06 million, which expires Dec. 31, 2024;
•An eight-year emergency levy of $915,000, which also expires Dec. 31, 2024;
•A recently renewed, five-year, 1.2-mill permanent improvement levy, which generates about $143,000 each year, and expires Dec. 31, 2022;
•A $4.5-million bond levy that expires Dec. 31, 2026; and
•A continuing 1% traditional income tax.
She noted that income tax revenue has continually risen over the past five years, from $1,331,947, in fiscal year 2015, to $1,711,828, in fiscal year 2019. She is projecting a 1.3% increase, to $1,733,860, for 2020, and a 4.1% increase each year after.
Expenditures
Emrick also summarized her “major expenditure assumptions” for the near future, noting that salaries and benefits make up the bulk of the district’s expenses. She said that up to 80% of expenditures going to salaries and benefits is considered healthy for most school districts. Yellow Springs is “in the 75% range,” according to Emrick.
“We’re a service organization; our asset is our staff,” she said.
She also noted that fiscal year 2020 reflects a 2% base salary increase, as recently negotiated by both the teachers and staff unions, but 2021 through 2024 only show a 1% base salary increase for all employees. The current fiscal year also shows the addition of a half-time staff position and the elimination of the full-time development director position.
Benefit costs “continue to be a challenge,” Emrick said, reporting that employee health insurance premiums are projected to increase by 17% this fiscal year and next. Her forecast then lists a 7% increase for subsequent years.
“Seventeen percent each year is not sustainable,” board member Sylvia Ellison said during the board’s work session.
Additional district expenditures include purchased services (15%), supplies and materials (2%) and capital outlay (1%). While Emrick expects the purchased services costs to go down some this year and next, before starting to rise again, she anticipates that each expenditure area will otherwise increase exponentially each year.
At the school board’s work session on Oct. 5, President Steve Conn, who was absent from the regular meeting the following Thursday, expressed his appreciation for Emrick’s work and the opportunity the annual forecast provides in getting a handle on the district’s budget.
“I understand this is the best projection we can do,” he said.
On Thursday, the board accepted the report with thanks, but no further comment.
Interim treasurer
A certified public accountant and a licensed Ohio school district treasurer, Emrick joined Yellow Springs Schools as fiscal consultant effective May 23 and as interim treasurer effective June 1, after the board decided earlier in May not to renew former Treasurer Dawn Bennett’s contract.
Bennett had been with the district nine years. While the board made no public comment regarding its decision, and no financial irregularities have been uncovered, a review of Bennett’s personnel file showed growing conflict with the board about the scope of the treasurer’s responsibilities.
The change came during the same time period that the board hired new Superintendent Terri Holden. The superintendent and treasurer both report directly to the school board.
Emrick, who lives in Miamisburg, earned a bachelor’s degree in accounting from Miami University in 1985.
According to her LinkedIn profile, she remains treasurer of Fairborn Digital Academy, a position she’s held since August 2017.
Additional recently held positions have included fiscal officer at Wright Memorial Public Library in Oakwood, the interim payroll officer for Vandalia-Butler City School District and interim treasurer and chief financial officer for Bethel Local School District in Tipp City, Ohio, and Gahanna Jefferson Schools in Gahanna, Ohio.
She also served as treasurer and CFO with Fairborn City Schools (2003–2010) and then with Miamisburg City Schools (2010–2015) before opening and operating her own CPA office for six years.
She belongs to the Ohio Association of School Business Officials and the Ohio Society of Certified Public Accountants.
After the Yellow Springs board meeting Oct. 10, she went out of town for a week and wasn’t available for follow-up questions about the financial forecast.
At the time of her hiring, board President Conn wrote in an email that the board felt “lucky” to have secured Emrick to serve the local district.
Her contract, signed May 23, lists her compensation as of June 1 at $75 an hour for her services on an as-needed basis. In addition, on days that her presence is needed in the district offices, she is to receive mileage reimbursement at the IRS rate for her round-trip commute.
The contract waives insurance benefits, paid sick leave, paid vacation time, paid holidays and severance pay.
Other school district business this month will be covered in a future News issue.
Contact: csimmons@ysnews.com
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