Prepared Notes for Board Meeting
Marc A. Schare
The five year forecast, depending on who you ask, is either a perfunctory document that we are required to produce each year that signifies exactly nothing, or a roadmap to the districtís financial future that we can follow if we like where it takes us, or change course if we donít.
Wherever you fall on that spectrum, †we should at least acknowledge where the forecast says the current course takes us.
This forecast tells us that assuming Novemberís levy is successful, it would take around 9 additional mills in 2012† to balance the resulting 24.2 million dollar deficit in FY14 with a zero balance or around 12.8 mills to balance 2014 with the recommended 30 day cash balance. As this would be sufficient to balance through 2014, an additional levy in 2013 would be likely under these assumptions. A two year levy cycle would be much higher and a three year levy cycle would appear to be out of the question.
The forecast also tells us that at a time when revenues are jeopardized due to the phase out of tangibles, we are increasing expenditures at over 5% annually.
Certainly, those that believe that the forecast is unimportant have history, at least recent history on their side, however, if we look at the specific downside risk and the upside potential for places where forecast assumptions in this forecast might be incorrect, you might just as well conclude that the forecast presented tonight is perhaps even more optimistic than it should be. ††
For example, I agree with
the treasurer that we have significant downside risk at the state level. First,
does anyone really believe that the state will keep their promise to reimburse tangible
personal property tax in the next biennium and, if so, how is that going to
occur? Jennifer Economus says that the total cost to
the state of continuing the reimbursement †is 500 million dollars for the biennium
that the state simply does not have and is unlikely to get, and if they did get
it, would they give it to rich suburban school districts? Second, we are more
dependent on guarantee amounts than ever. If the state minimizes or
discontinues the guarantee due to lack of funds,
The forecast is not
without possible upside. First, if the state recovers, eventually, the new
funding formula might bring additional revenue and we might be off the state
guarantee in 4 or 5 years. †There is talk
(and a bill) of removing the mandate for all day kindergarten although the bill
is silent on whether it restores our ability to charge tuition. If that should
happen, we would have to make a decision whether to continue the K+ program. Another
upside is the likelihood is that
On balance, I believe we have far more risk to the downside than upside potential which makes the forecast frightening enough for this Halloween season. The policy question before us is whether we want to move to mitigate these risks and if so, how do we do this and when do we start?