Voters could see a new levy to support the Chagrin Falls Exempted Village School District on the ballot in August or November to offset deficit spending.
With a strong economy and the afterglow of the newly renovated Intermediate School, this could be the best time to reach out to residents, some officials agreed.
Treasurer Ashley Brudno explained during the board of education’s Finance and Budget Committee meeting Monday that the district is in deficit spending now and is projected to continue on this path through the next five years, possibly falling into a negative balance by 2024 if nothing is done.
By 2024, the district is estimated to have a balance of about negative $1.3 million with the current spending and sources of revenue, Ms. Brudno said.
“We’re not the federal government, we can’t just keep spending money that we don’t have,” she said, adding that the district’s cash balance policy states that they should strive to keep about two months worth of operating expenditures in their budget.
Ms. Brudno explained that the district gets more than 75 percent of its revenue from property taxes with most of the rest coming from the state.
“Without property taxes, we can’t really make a difference in our spending deficit or our cash balance,” she said. “We can tighten our belts so much, but it doesn’t necessarily make a large change in our spending.”
Board member Kathryn Garvey explained that the district pursues as many grants as possible, “it’s just that they’re never going to pay for everything.”
Ms. Brudno emphasized that it is important for the district to put the levy on the ballot in 2020, noting that board members would have to ask for a higher amount the longer they wait.
By passing a 9.9-mill levy this year, the ending general fund balance is estimated to be more than $15 million in 2024. Ms. Brudno said this could potentially stretch far enough that the board would not have to ask for another levy until 2025.
But if the board waited until 2021 to get a 9.9-mill levy passed, the district would have less than $11 million between the general and permanent improvement funds by 2024. This would mean the board would have to ask for another levy sooner than anticipated, she added.
She explained that the district needs a little more than $2 million a year in revenue from the levy for the permanent improvement fund to support projects the schools want to do, including replacing the tennis courts recently taken out and bus garage improvements.
Ms. Brudno said that while asking for 9.9 mills is a lot, it is important to note that in 2020, the district has about 4 mills worth of bond debt falling off.
Board member Greg Kanzinger explained that residents would basically be voting for 5.9 mills worth of additional taxes by approving the potential 9.9-mill levy due to the bond debt retirement.
“We’re taking bond debt that’s falling off and replacing it with [permanent improvement] money,” Mrs. Garvey added. Of the 9.9 mills, 4 mills would be “facility money that is not going to cause a new tax, but it’s allowing us to maintain our facility.”
Committee member John O’Brien said he believed the community would be more likely to support the levy now rather than a year down the road with the completion of the Intermediate School’s $29 million renovation and record high stock markets leaving spirits high.
“Nobody ever likes to pay increased taxes,” he said, adding, however, that “there is a feeling of wellbeing and wealth in the country and I think in this community as well. We still have the afterglow of Philomethian (school) – I think the community really feels good about it, and our last report card was fabulous.
“I think the good will in the community and the feeling of wellbeing in the community – financial wellbeing – is probably as good as we could hope for when we go out for a levy,” he added. “I would encourage the board to consider earlier rather than later because I think a lot of things are going in our favor.”
Ms. Brudno informed the committee that putting the levy on either the August or November ballot would not change the bottom line of revenue as long as it is passed in 2020.
One mill for the Chagrin Falls schools is about $550,000 in revenue per year, Ms. Brudno said, so a 9.9-mill levy could bring in approximately $5.5 million per year if passed in 2020. She said this would cost taxpayers an estimated $346.50 a year per $100,000 home valuation.