The Ohio Auditor of State’s Office released their audit of the Boardman local School District last week, reporting no major findings.
The audit reviewed the school district’s use of it’s $49 million in expenditures for the fiscal year that ended June 30, 2011.
The lengthy audit released by the Auditor of State covered some 65 pages. Following are statements from the audit report.
Key financial highlights for fiscal year 2011 are as follows:
•In total, net assets decreased $1.275 million which represents a 5.3 percent decrease from fiscal year 2010.
•General revenues accounted for $41.807 million in revenue or 87.5 percent of all revenues. Program specific revenues in the form of charges for services and sales, grants and contributions accounted for $6 million or 12.5 percent of total revenues of $47.806 million.
•The District had $49.082 million in expenses related to governmental activities; only $6 million of these expenses was offset by program specific charges for services, grants or contributions. General revenues supporting governmental activities (primarily taxes and unrestricted grants and entitlements) of $41.807 million were not adequate to provide for these programs, as evidenced by the decrease in net assets of $1,275 million,
•The District’s major fund is the general. The general fund had $40.3 million in revenues and $42.8 million in expenditures and other financing uses. The general fund’s fund balance decreased $2,536 million from a restated balance of $5.365 million to a balance of $2.829 million.
Primary Sources of Revenue
The primary sources of revenue for governmental activities are derived from property taxes and grants and entitlements. These two revenue sources represent 86.7 percent of total governmental revenue. Property taxes support 55.7 percent of total expenses while grants and entitlements supported 28.7 percent of total expenses. Between these two revenue items, 84.4 percent of total expenses were funded.
The dependence upon general tax revenues for governmental activities is apparent. Over 55 percent of all District expenses are supported through property taxes alone. For all governmental activities, general revenue and prior year cash balances support all expenses as shown in the above table. The community, as a whole, is by far the primary support for Boardman Local School District students.
During fiscal year 2011, the District’s general fund balance decreased on a modified accrual basis by $2.536 million; total revenues within the general fund increased 1.8 percent and expenditures also increased by 2.9 percent. The primary reason for the overall decrease in fund balance is that increasing expenditures are still exceeding revenues. The District has built a surplus by balancing its budget and by spending less than total revenues over the past few years. Various major expenditure savings policies have been applied to the District’s budget with great success---
The District has utilized various phases of energy conservation permanent improvements that decrease utility expenditures and yet maintain the buildings. In addition, the District utilizes a negotiated Retire/Rehire Program for the professional staff yielding extensive savings in payroll. The use of these expenditure policies has extended the operating lives of the District’s existing levies and also these policies have counteracted the recent environment of eroding tax revenues for the District. As a result, the control of expenditures has preserved the accumulation of prior year-end positive fund balances.
At the end of fiscal year 2011, the District had $25.044 million invested in land, land improvements, buildings and improvements, furniture, fixtures and equipment and vehicles.
Current Financial Related Activities
The District has carefully managed its general fund budgets in order to optimize the dollars available for educating the students it serves, and to minimize the levy millage amounts needed periodically from the community’s citizens.
In Mahoning County, the District’s state funding is the second lowest by the State of Ohio. Though funded low by the state of Ohio, the District’s residential millage rate is number 9 out of 14 school districts in the county.
The District has been very aggressive in cost cutting measures, while maintaining the quality programs that are a trademark of the District.
Retire/ rehire has been a very successful cost savings program. The District is afforded a lower cost per teacher, while retaining quality and expertise for up to a three year period. The School Board continues to explore areas to reduce expenditures. These areas include health care, natural gas, electricity, workers’ compensation and all insurances. These cost savings have minimized expenses and have extended the five year levy, which was passed in 2003.
For fiscal year 2012 [the current school year], the District has eliminated 26 teaching positions, two administrative positions, and five classified positions. This was done in anticipation of state funding decreases, personal property reimbursement decreases, and projected deficits. Fiscal year 2011 is the third consecutive year in which expenditures exceeded revenue. The District has a three year contract which commences in fiscal year 2012 for all employees. The base wage has been frozen for three years.
Several significant legislative and judicial actions have occurred that have had a major impact on the District. Community schools, open enrollment and autistic scholarships have reduced the amount of funding for the District by...$1.40 million for fiscal 2011.
The Board of Education has met with State Legislators on the issue of Community School funding. State Sen. Joe Schiavoni introduced Senate Bill 175 which would excellent rated school districts [like Boardman] that lose students and funds to lower performing Charter Schools. District officials have testified on this matter to the state senate education committee. The School Board is committed to continue supporting this legislation. The District will continue to lobby to the State of Ohio for changes in the way the funding is distributed for community schools, open enrollment and autistic scholarships.
The District receives approximately $1,200 for each student through the state foundation. When a student leaves Boardman to go to a Community School or Open Enrollment, approximately $5,732 is reduced from the District’s funding...Increased dollars...are being diverted to Community Schools, Open Enrollment Schools, and private schools that receive autistic scholarship funding.
The state’s 2011 school foundation level had no increase from fiscal year 2010, which was the second year of the state budget.
The state basic aid percentage of support for the District is 23.33 percent. House Bill 66 eliminated personal property taxes. In the new two year state budget which commences in fiscal year 2012 the District will lose approximately $860,000 each year for the personal property reimbursement and remain at the reduced level going into fiscal year 2014. The school district has joined the Coalition for Fiscal Fairness in Ohio. This group consists of school districts who have hired two lobbyists to speak on behalf of the districts which are at risk of losing the remaining replacement funds. This will have devastating effects on school districts throughout the state if the legislatures decrease the remaining replacement funds in the new state biennium which starts in fiscal year 2014. The Board of Education is very concerned about the uncertainty after fiscal year 2013. The personal property [funds that will be eliminated] represent 10 percent of the District’s revenue...This will have a tremendous impact on the District’s revenue and the ability to maintain financial stability [if no reimbursement is provided].
Description of the District
The Boardman Local School District is the 72nd largest in the State of Ohio (among the 876 public school districts in the State of Ohio) in terms of enrollment. The District is staffed by 269 non-certificated and 368 certificated personnel to provide services to approximately 4,734 students and other community members.
The District has implemented House Bill 264 (HB 264) energy conservation projects. The HB 264 program is a House Bill that allows special financing opportunities for energy conservation permanent improvements in school districts. The project will encompass heating, air conditioning, and lighting improvements. The special HB 264 capital lease financing agreements were for $543,072 over eight years at 3.61 percent and also $3,488,480 over 15 years at rates ranging from 3.30 percent to 3.62 percent. The notes mature Oct. 1, 2011 and Jan. 1, 2024, respectively.
On July 3, 2008 the District entered into a lease-purchase agreement in the amount of $6.050 million for classroom additions. The term of the lease is for 28 years at a rate of 4.40 percent and will mature on Dec.1, 2036. (Principal and interest payments on the classroom additions lease in the 2011 fiscal year totaled $187,000 and $240,477, respectively. These amounts are reported as debt service payments of the Permanent Improvement Capital Projects Fund).
On July 3, 2008 the District entered into a lease purchase agreement in the amount of $1.010 million for the Performing Arts Center refinancing. The term of the lease is for 12 years at a rate of 4.45 percent and will mature on June 1, 2020. (Principal and interest payments on the Performing Arts Center lease in the 2011 fiscal year totaled $72,000 and $35,526, respectively. These amounts are reported as debt service payments of the Permanent Improvement Capital Projects Fund.