The Mason City Schools Board of Education recently approved the high-performing school district’s five year financial forecast. View Treasurer Ronda Johnson’s presentation to the School Board.
Ohio’s elimination of the Tangible Personal Property tax reimbursement significantly reduces the district’s funding - a $1.7 million loss each year until the reimbursements are completely eliminated in 2020.
"Our district continues to participate in advocacy efforts to alter the phase-out of these payments in a way that is beneficial to the long-term financial stability of public school districts," explained Ronda Johnson, Mason City Schools Treasurer. “We are headed into another biennium budget year and it is very important that our community’s needs are considered as the Governor and the Legislature consider the funding formula, and the TPP reimbursements."
District Relying on Cash Reserves, Cost Reductions
Every biennium budget cycle brings a great deal of uncertainty to public school funding.
Mason’s Five Year Forecast projects deficit spending beginning in FY17. Current cash balance will cover the deficits. Mason has cash balance available due to cost reductions that have been made since 2010. However, those cash reserves will be depleted within the next five years and the district will need additional local revenue and/or additional expenditure reductions.
“We’ve used the current funding model in our assumptions. As we continue to see an increase in property values - but no increase in the number of students - the current state funding model will assume we are “richer” (per pupil valuation) in comparison to other districts which will further reduce how much funding per pupil we receive."
Fortunately, the district began making cost reductions in 2005; the last time voters approved a tax increase. These cost reductions helped the district prepare for reduced revenue. Today, the district is relying on its cash reserves. By June 2019, the district projects it will have approximately $25 million remaining – enough to operate schools for just over two months.
Since 2010, the district eliminated over 155 positions, closed an elementary school, consolidated bus stops, instituted a pay-to-participate fee, refinanced debt at lower interest rates, and all employees agreed to two years of wage freezes. In 2013-14, Mason moved to semesters at MHS and eliminated middle school teaming which saves nearly $1.5 million annually.
“We care about the partnership we have with our families and community to support our students’ educational needs in an efficient manner. We prioritize the classroom when allocating resources, and have worked diligently to stay off the ballot while maintaining academic excellence and a broad array of programming,” said Dr. Gail Kist-Kline, Superintendent. “But, we cannot stay off the ballot forever.”
Schools Will Need More Revenue in Future
Ohio's school funding system provides funds for a "basic education" to schools that have a low tax base. Because Mason has a higher tax base, and because our community expects that its students receive more than a basic education, only about 34 percent of Mason City Schools operating budget is funded by the state. The remainder comes from locally raised revenues. Under Ohio law, levies are the only tool school districts can use to generate ongoing revenue to fund education.
“With significant reduction in our TPP reimbursements, we have to rely heavily on our cash reserves. Within the next two years we will need new local operating revenue if we are to maintain our current high-quality programs and educational opportunities for students,” said Johnson.
The Mason City School District has not passed an operating levy since 2005.