OTTAWA — Despite controlling spending, an area school district is still facing financial woes, which is prompting an appeal to taxpayers.
David Conley from Rockmill Financial Consulting, LLC., alerted the Ottawa-Glandorf School Board to a funding deficit and yearly decline despite the board doing well at controlling spending. To halt the revenue decline the board voted unanimously to add a 1-percent income tax levy to the May ballot, which is anticipated to produce $2.5 million annually for the district.
Conley provided a 10-year history of the district’s general fund balance to illustrate the gradual decline in revenue. At the end of the 2007 school year, the district had a remaining balance of $4 million. The 2013 year ended with $4.2 million remaining. However, the ending balance for 2017 was $3.5 million. If all revenue were to cease, the district will only be able to function for 91 days.
Conley said he recommends school districts keep a buffer, or comfort zone, of $2 million in their general fund so if something happens which causes unforeseen expenses the school district is prepared and isn’t taken by surprise by those expenses.
“You’ll notice a pretty gradual decline of your comfort zone,” Conley said, emphasizing the chart.
Conley said one of the causes for the funding deficit and decline is the increasing median home value in the district. The home value has increased by 11.9 percent between 2010, when the value was estimated at $144,300, and 2015-2016, when the value was estimated at $161,500, he said.
This directly affects how much funding school districts receive from the state, Conley said. The state takes the property value of a district, divides it by the number of school-age children in the district and determines the proper funding. Wealthier districts get less funding and need more taxes to balance the operational costs for the district.
If the levy passes, it will be the first time since 1992 the Ottawa-Glandorf board has implemented a monetary tax increase, Conley said.
Reach Bryan Reynolds at 567-242-0362.
