Cardinal Faces Fiscal Issues by 2023 If Levy Fails

May 27, 2021 by Ann Wishart

Cardinal Schools’ five-year financial forecast looks a little better than it did in November, but Treasurer Julia Rozsnyai said the general fund will be in serious trouble by 2023 unless a 9.7-mill operating levy passes in 2022.

Rozsnyai, who became district treasurer in January upon the retirement of Merry Lou Knuckles, presented the forecast to the board of education at its virtual meeting May 12.

When creating a five-year forecast, a school district is not allowed to assume a levy will pass, so the revenue from levies due for renewal cannot be included in the revenues section. Cardinal receives less and less money from the state, leaving it up to residents to support the district’s budget of nearly $14 million, Rozsnyai said.

“The state is helping us with less than 30% of our total revenue,” she said, adding it is part of a trend that includes phasing out tangible personal property taxes.

The website tax.ohio.gov describes TPP as taxes that are based on the value of the tangible assets used to generate income in a business or rental property, such as furnishings, fixtures, signs, supplies, tools and equipment used in the operation of business.

That revenue began to decrease under Ohio H.B. 66, which started to phase out the TPP in 2005, according to the site.

In 2011, Cardinal Schools received $2.3 million in TPP funds, Rozsnyai said.

Since the phase out began, the district has not received a total of about $10 million it would have received if TPP was in place, she said, adding it is the reason why the district has been facing financial hardship.

Rozsnyai estimated the district has lost nearly $400,000 in state revenues over the last two years because of H.B. 66.

Overall, the district taxpayers cover 71% of the district’s budget from property taxes, she said.

The district has been assured it will receive the same amount of funds it did in 2019 after taking a revenue decrease in 2020 due to the COVID-19 pandemic, Rozsnyai said, adding Cardinal will receive about $464,000 specifically for student wellness and that will be used to supplement the general fund.

Under expenditures, she said she could not include employee raises until there are negotiations, so those remain stable for four years in the forecast, which does not include those teachers and aides who are paid through title programs and through Student Wellness Funds.

Outside services such as those rendered by the Geauga County Educational Services Center account for 26.2% of the budget, Rozsnyai said.

Health insurance is expected to go up 3.9% in July and estimated to go up 4% and 5% in the next two years, according to the consortium, she said.

Local revenue is not growing as fast as the district’s expenditures even though the district received more from real estate taxes than anticipated.

The district was warned to expect only 95% collection of property taxes, but 98% came in, providing about $214,000 more than predicted, Rozsnyai said.

“Every school district has a story. I think our story is, unfortunately, the states had promised us PTT reimbursement funds, then decided to take it away. This is mainly the school district story now,” she said.

Going forward, she recommended using the Elementary and Secondary School Emergency Relief funds strategically.

The superintendent is in the process of applying for Cardinal’s share of them, but they won’t be coming in until next school year, she said.

“We need to reduce costs and increase revenue, long-term, if we are to sustain our current operating level,” Rozsnyai said. “We must pass the 9.7-mill levy.”

The board approved her recommendation to spend $7,000 for an analysis of the district’s food service program and to have the free staffing analysis done.

Board member Wendy Anderson said the analyses will provide useful data and show the Ohio Department of Education the district is doing everything possible to use funds wisely.

In other business, the treasurer said the finance committee met recently and noted only 54 students were interested in participating in the summer lunch program based on the results of a recent survey. The committee recommended not having the program via the district since there are other programs in the community providing free food to families in need. The board approved that recommendation.

Interim Superintendent Michael Chaffee presented a document commending the entire Cardinal staff for their superior work during the last year’s COVID-19 crisis that allowed the schools to remain open when many were closed for much of the school year.

He presented a resolution by the board of education and administrative team naming all employees Leaders of the Year for the 2020-2021 school year. It passed unanimously.