Voters in the Orange City School District may see a new levy on the ballot in 2021, according to Treasurer Todd Puster. The five-year forecast predicts falling cash reserves, leading district officials to consider a levy.
“Our expenditures will continue to exceed revenues for the foreseeable future,” Mr. Puster said last week. “Based on current expenditure and revenue patterns, our cash reserves will erode over time.”
The Orange Board of Education has a longstanding policy to maintain its reserves at 25 percent or more of its current level of expenditures. The reserves are forecasted to fall below their 25 percent level in fiscal year 2023. For calculation purposes, Mr. Puster estimated that the levy could be 5 mills and cost homeowners $175 per $100,000 of property value annually, bringing the district $5.6 million per year in revenue.
Mr. Puster said during the Oct. 21 BOE meeting that if approved in 2021, a 5-mill levy would be sustainable for at least five years. The most recent levy, which was 5 mills and approved in 2011, will have lasted 10 years before the district would return to the ballot for another levy.
“We want to keep the programs and services that we offer, but we’ll have to take a serious look at a ballot issue possibly in 2021,” Mr. Puster said.
In 2016, the district’s expenditures began to exceed its revenues, and that is still the case. The district’s estimated deficit for fiscal year 2020 is $1.25 million and will be $5.49 million by fiscal year 2024 without a new levy, Mr. Puster explained. Fiscal year 2020 runs from July 1, 2019 to June 30, 2020.
He also said that the three-year average revenue decreased by 2.84 percent due to changes in the federal tax law and the elimination of the tangible property tax in fiscal year 2018, which taxed furniture, fixtures, machinery, equipment and related items used by businesses.
“Our local tax base comprises [more than] 90 percent of our revenue,” according to Mr. Puster.
For fiscal year 2020, total revenues are forecasted at $51.38 million and 79 percent of district revenues are from real estate taxes. Property tax subsidy payments comprise 9 percent and unrestricted state funds and other revenue are 4 percent each. The public utility personal property tax, which charges utilities for items like transmission lines and transformers needed to provide their services, is 3 percent of the district’s revenue. About 1 percent of school revenue comes from restricted state funds.
In addition, the three-year average expenditures increased by 1.54 percent and reflect adjustments for inflation, Mr. Puster said. Total expenditures for fiscal year 2020 are predicted at $52.63 million with salaries and benefits comprising more than 80 percent of all expenditures.
He said that purchased services and utilities take up 11 percent of expenditures while instructional supplies, materials and fuel take up 3 percent. Capital outlay and advances and transfers are each 2 percent of the expenditures and property tax collection fees and other expenditures make up the last 1 percent.
Compared to the tax rate in 15 nearby eastern Cuyahoga County school districts, Mr. Puster said that Orange has the second lowest tax rate at 40.34 mills behind Beachwood’s 37.08 mills.
“It’s something we should be proud of,” Mr. Puster said. “Voter approval of an additional 5 mill tax levy will still allow us to compare favorably in Cuyahoga County.”