Wednesday, December 27, 2006

The Next Levy - Part 2

Here is another financial forecast created by the Treasurer for the Ohio Department of Education. It contains numbers through FY11, and the picture doesn't get any better. For FY11, Mr. Wilson has projected revenue of $146 million against expenses of $184 million, for a shortfall of $38 million. And this is after a $28 million deficit in FY10.

The way school levies work, approximately the same amount of money is collected each year, even when expenses are expected to rise over the life of the levy. In the first years, more revenue is collected than spent, building up a surplus account. In the latter years, expenses grow to exceed the revenue, but the surplus account is tapped to cover the shortfall (go here for a better explanation).

So this forecast says we'll start the draw-down of the surplus account in FY08, and completely drain it during FY09. The accumulated deficit by the end of FY11 is projected to be over $75 million and increasing at a rate of $37+ million per year. In other words, with no new revenue, the accumulated deficit at the end of FY12 would be in excess of $110 million, and around $150 million by the end of FY13.

It seems that the School Board will need to put a levy on the ballot that becomes effective in FY09 and raises $150 million in the following five years. That sounds like $30 million per year, or an average of at least $1,500 per year for each residential and business parcel in the District - on top of your current property taxes!

Or the Board could put a levy on the ballot effective in FY08 that generates the $150 million over 6 years at a rate of $25 million per year ($1,250 per year per parcel, but starting a year sooner).

Of course, these calculations assume that the State of Ohio continues to freeze our funding at current levels and that there is no net increase in business property tax revenue.

A better scenario is that the State continues to kick in its third even as we grow, and that the municipalities keep residential growth to a minimum while bringing in lots of new businesses that pay their full share of school funding (through property taxes or alternate arrangements). Maybe that would contribute a third to the new funding needs as well.

Gee, that would make the burden on us homeowners something more like $400-500 additional per year.

That makes me feel better....

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