Prepared Text for Board Meeting – December 11, 2006

Marc A. Schare

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I wanted to make a couple of observations about the five year forecast that we are considering this evening.

 

First, I wanted to compare this forecast to the one we approved at the beginning of the year. That forecast showed overall annual expenditures to be 122.6 million dollars in the 2009-2010 school year. The forecast we approve this evening shows overall expenditures in that same year to now be 116 million dollars, a difference of over 6 million dollars. To be sure, 1/3 of that is cost shifting due to the bond levy, but we are still saving 4 million dollars a year, every year, over the life of the forecast over the plan we approved in January and I think that Superintendent Conrath and her leadership team deserves a lot of credit for that. Along with some changes in the revenue forecast, we’ve gone from a 43.2 million dollar projected deficit in 2009-2010 to a deficit of only 5.4 million dollars, a swing of around 38 million dollars. The January plan would have required levys every other year in perpetuity starting in 2006. This new forecast shows a positive fund balance of 6.2 million dollars in the 2008-2009 school year so (assuming benign action by the state) the first year that we absolutely must run an operating levy is 2008. We may choose to run a levy earlier, but it will out of choice and careful long term planning, not out of dire economic necessity.

 

Second, I wanted to call the community’s attention to the contingency fund that we have implemented in this new forecast. The contingency was recommended by our treasurer’s advisory committee and is a shift in policy. Rather than budgeting for the worst possible case in some budget categories and then announcing “found money” when the worst case does not materialize, we will now budget for average amounts in areas such as natural gas. If we need more, the contingency fund is available, but we know the worst case is not going to happen each year through the life of the forecast and so the use of the contingency will save considerable taxpayer dollars going forward. The board has unfinished business, however, with respect to the contingency. We need to write new board policy that indicates when the contingency fund will be accessed, what level of board approval will be required to access it and how it can be replenished if necessary. The TAC was adamant that this be done before any appropriations involving the contingency. The administration and the community should be aware that while the general fund contingency represents money sitting in the bank, it will only be used if we absolutely have to and under specific conditions.


 

Third, this forecast has now been appropriately vetted through the Treasurer’s Advisory Committee and the board finance committee. I have some continuing concerns with some line items, however, the community can be confident that many pairs of eyes have reviewed these numbers in significant detail and all numbers have been scrutinized and justified. That said, we have more work to do. The cost of medical insurance continues to skyrocket and those skyrocketing costs are reflected in this forecast. Jonathan projects annualized increases of close to 12% if nothing changes. As we look to the next funding request from Worthington taxpayers, be it in 2007 or 2008, it is my opinion that taxpayers will not continue to fund these health care increases in perpetuity.  An equitable solution must be found that meets the needs of our employees and does not represent undue hardship for our taxpayers.

 

Fourth, the Treasurer’s Advisory Committee called for the creation of a companion document to the forecast that discusses the strategy and rationale behind some of the numbers. I agree. Such a document would be instrumental when we again the public for money and it would be helpful for our own long term planning as well. I would, for example, well in advance of levy time, like the opportunity to go to the community with several proposals that would add quality to our program and ask if these proposals should be included in the plan. Over the last week, I’ve been treated to four separate no-additional-cost proposals for how to best use vacant space in the middle schools. All four proposals displayed an invigorating amount of innovation and original thinking and any of them would unquestionably add value to the district and the entire community. Imagine what our staff could do if the community, given a choice and sufficient time, decided to put a small amount of capital behind Worthington Educational entrepreneurship.

 

Finally, I want to again thank Jonathan and his staff for all of his hard work. During the forecasting process, Jonathan routinely answers questions from all five of us, from other members of the Treasurer’s advisory and interested community members. We are the only district I know of that makes available the long form version of the forecast and we invite the additional scrutiny that comes from this. I won’t speak for the board, but it is my sense that we have made, just in the last year, remarkable strides in transparency, and I think that this forecast and the process through which it is vetted, demonstrates that.