On May 21, 2025, Treasurer Jennifer Burke presented to the Finance Committee Team and to the Board of Education in open session. The Five-Year Financial Forecast for period fiscal years 2025-2029 for Reading Community City School District (RCCSD) provides a comprehensive view of the district’s projected revenues, expenditures, cash position, and financial strengths and challenges as well as next steps in relation to proposed state legislation. The presentation can be found here.
Fiscal Year 2025 Actual vs Budget (November ‘24 vs May ‘25)
Overall, revenues came in slightly below budget, with a total shortfall of $162,084 or -0.75% of the original proposed revenue budget. The variances were a result of real estate tax revenue was $83,062 under budget due to higher-than-expected delinquencies and public utility tax was down $77,206 as a result of property value challenge from Duke Energy. State revenue (both unrestricted and restricted) were slightly under forecast by a combined $21,599 as a result of enrollment projection of 1368 vs 1360 actual student adm. All Other Operating Revenues exceeded expectations by $24,392 which was driven by higher interest income.
On the expenditure side, total expenditures were lower than forecast by $176,661 (a 0.88% favorable variance). Personnel Services were under budget by $80,058 which was a result of a preschool staff resignation which was filled by a long term substitute and extended unpaid FMLA leaves. Retirement and Insurance Benefits were overspent by $64,020 largely as a result of unemployment claim. Supplies and Materials came in significantly under budget ($129,335 or 16.61%) due to savings in building budgets and delayed technology and furniture purchases and Capital Outlay was $50,082 below budget, as District was unable to find vans due to shortages in state. The District plans to move the dollars into FY26 to purchase the vans when available. The district finished with a slightly higher-than-expected ending cash balance $14,689,455 actual vs $14,674,878 projected a difference of $14,577 (0.10%).
The Future: FY26-FY29 Forecast
The District’s revenue is closely split between local and state sources with the local share increasing. Revenue projections show minimal growth. Due to HB920, as property valuations increase, tax rates are reduced. Therefore, minimal growth is seen in the revenue collection. For state aid, the Fair School Funding Plan funds students where they are educated. The District’s enrollment is expected to remain flat at 1,360 students. The forecast assumes the full phase-in of the Fair School Funding Plan (FSFP), although the Ohio legislature has yet to finalize this. Depending on the final budget bill an amended forecast may have to be filed. The FSFP was approved in the State of Ohio as the funding model for schools in FY22 as part of a planned six year phase in. The formula was designed as a shared partnership between the State of Ohio and local taxpayers to fund public education. The formula uses local capacity to pay (property tax valuation and resident income) and inputs on how much it costs to educate students. When the formula is adjusted for income and valuation but not updated cost inputs an imbalance occurs shifting the burden to local tax payers and decreasing the state share. As can be seen below, the state share in RCCSD reduces from 63% in FY22 to 48% in FY29 shifting the burden locally. This reduction is occurring statewide from 41.58% in FY22 to 39.33 in FY25. This is occurring as a result of the automated updates in income and property valuations without updating the inputs on what it costs to educate students to current levels which makes the local capacity to pay more.
Expenses are expected to rise moderately primarily associated with inflationary cost. Personnel and benefits, which together constitute 67% of the budget, are modeled with modest salary increases (2% base plus 2.8% step for FY26–29) and a projected 8% increase in medical, dental, and life insurance from FY27 onward. Staffing levels are held flat for years 27-29 and are reflective of one FTE reduction for the kindergarten section in FY26. Changes in STRS retirement guidelines were used to predict staff retirement sick time severance pay outs in FY 26‐29. Purchased services and supplies are projected to rise 3–5% annually. Overall, starting in FY27, expenditures are projected to outpace revenues, leading to annual deficits. The District’s levy planning from 2022 anticipated the early years after the levy passage to have surplus annually and as inflationary cost increases the District would deficit spend using cash reserves. RCCSD is projected to maintain a positive cash balance of $13.6M at the end of the forecast period in June 2029.
Impacts of House Bill 96 (HB96) and Future of Biennium Budget Bill
The District continues to monitor the biennium budget process. The HB96 proposal would bypass the Fair School Funding Plan and use a “temporary formula” resulting in $3.1 million less in state aid for RCCSD over the forecast period. Furthermore, HB96 proposes a cap on District reserves at 30% of prior-year expenditures. RCCSD is expected to exceed that cap in FY25 with a projected $14.7M balance (72% of its budget). If implemented, HB96 could force a tax rate reduction that would reduce the cash reserves over $8.6 million in lost local tax revenue.
These two potential effects of the projected legislation would force the District into fiscal emergency by FY26 and require a new levy within two years much sooner than the District had planned. This one-time tax savings destroys the District’s financial position and long term increased taxes for residents.
Strategic Reserve Management and Advocacy
Mrs. Burke explained the District’s strong cash reserves were planned as a result of careful planning, including levy cycles, prudent use of pandemic relief funds, energy savings, competitive grants, and lower capital needs due to the newness of its facilities. The District’s
cash balances ensure the District can meet operating expenses throughout the year. Additionally, maintaining strong cash reserves supports a healthy credit rating which is critical for securing favorable interest rates when refinancing bonds. And as buildings age, the District must plan for long-term maintenance and capital improvements.
In an effort to protect the District’s reservices, Mrs. Burke reviewed the options for transferring funds into special purpose accounts. The proposed expenses were already planned and included in the 5 Year Forecast and therefore NOT new and does NOT change the financial position of the District. Proposed transfers include the following:
- 2012 COPs Debt & Interest
- District Athletic Supplementals
- District Athletic Trsp
- Curriculum Textbook adoptions
- Chromebook Replacement
- Long Term Capital Planning (1 mill)
- Retirement Severance Payout
The District will host a public session to seek input from the Community on June 2, 2025 at 5:30 p.m.
The District encourages residents to continue to advocate by urging lawmakers to:
- Fully fund and phase in the Fair School Funding Plan, ensuring accuracy and equity.
- Update base cost inputs to reflect FY24 data.
- Remove the “30% or any cash reserve cap” provision from House Bill 96.
- Use existing categorical studies to meet the real costs of serving all students.
- Postpone any revisions to guarantee structures until full FSFP implementation is complete.
In summary, the forecast underscores the District’s prudent financial management and highlights how the proposed state-level changes could jeopardize both short- and long-term stability. RCCSD emphasizes its commitment to sustaining quality education without running frequent levies while advocating for policies that recognize and support local Board of Education control and responsible financial transparency and stewardship.