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LINESVILLE — Conneaut School Board heard an in-depth analysis from Business Manager Greg Mayle over the budgetary impact of COVID-19 for the school district’s finances, as well as a look ahead to next year’s budget.
The presentation was given at Wednesday’s school board work session and touched on aspects ranging from major expenditures facing the district to the impact of stimulus money.
Starting out, Mayle went into the matter of local revenue drops. Across the board, Conneaut is down in all forms of local revenue compared to where it was last year.
“School districts everywhere and municipalities everywhere, of course, have seen decreases in local tax revenues, whether that’s real estate taxes or earned income taxes, whatever the case may be,” he said. “Really revenue is either flat or down in pretty much every government right now.”
Comparing Feb. 28, 2020, to Feb. 28, 2021, Mayle went through income from both current and delinquent real estate taxes, earned income taxes and investment earnings.
For current real estate taxes, revenue dropped about $107,000, declining from $13.3 million to about $13.2 million in the current year.
Revenue from delinquent real estate taxes saw a relatively similar decrease, dropping about $95,000 ($927,500 to $832,500), and earned income taxes dropped about $11,500 ($1.02 million to $1.01 million).
The largest drop came from investment earnings. Current investment revenue stands at $32,200, compared to about $208,000 last year, a difference of about $175,000.
“This really isn’t unexpected,” Mayle said of the outlook. “We budgeted for this. We budgeted decreases in all these areas expecting this to happen.”
Mayle said the fact the earned income tax didn’t see as severe of a drop is a possible sign the Conneaut School District area was able to withstand some of the economic damages as a result of the pandemic.
“That’s encouraging because this is through Feb. 28 of 2021, and it was March of 2020, of course, when the pandemic really first came at us hard,” he said.
In another good sign, the school district is expected to have only a slight decrease in its total taxable assessed value for the 2020-21 school year. The total value is staying between $295 million and $300 million, and is expected to climb above $300 million next year.
Mayle said the decrease in taxable assessed value was due to some property assessment appeals that occurred before the pandemic hit the area and is unrelated to the disease. Typically during economic hardship, Mayle said large dips are expected.
Examining expenditures brought about by the pandemic, Mayle called it a “mixed bag.” While Conneaut has seen “significant increases” to fund its cyber program, as well as more paid for students attending cyber charter schools instead of the public school system, and more purchases of protective and cleaning equipment, it has been able to generate savings elsewhere.
Touching on the cyber charter aspect, Mayle said the school district is about “20 students higher” than it expected it would be at this point in the year, though he said the district is making progress in getting some of those students back. Nevertheless, having 20 students more than expected — with a total number of 92 students enrolled in a cyber charter school — comes out to at least $210,000 in extra costs.
In particular, the district has seen a slight savings on transportation costs due to buses not running on Fridays during the hybrid learning schedule. There has also been less spending on school supplies, and the district has been able to save money thanks to a bond refinancing done last year.
Savings have also been generated due to a decrease in substitute teacher costs. However, Mayle said this is because the substitute agencies the school district contracts with haven’t been able to fill positions.
Looking ahead to next year, the 2021-22 draft budget currently has a deficit of nearly $1.4 million. The draft has projected revenue of $40 million and expenditures of $41.4 million.
“When we get to June and the board adopts the final budget, I would fully expect the final number to be a balanced budget due to that stimulus money,” he said.
While Mayle expects the final amount to come in lower, current estimates for Conneaut’s share of the third round of stimulus funding being considered by Congress came in at nearly $6.47 million. Comparatively, Conneaut received $1.019 million from the CARES (Coronavirus Aid, Relief, and Economic Security) Act and $2.935 million from the second round of stimulus funds.
Mayle, however, stressed the importance of looking at the structural deficit during the course of budgeting. The structural deficit is how much of a deficit the school district would have had if the stimulus money wasn’t available.
“We’ll make progress on things through trimmings and through the stimulus money, but right now as things stand, if the federal money wasn’t there, we’d expect to be about $1.3, $1.4 million out,” he said.
The deficit, Mayle explained, is mainly due to costs increasing at a rate revenue hasn’t been able to keep up with. He highlighted three major expenditures that primarily serve as a drain on the budget.
The first is the district’s contribution to the Public School Employees’ Retirement System, which will rise by almost $110,000 next year for a total cost of $4.88 million.
The second is the school district’s health insurance costs, which are increasing by nearly $200,000 to almost $3.57 million.
The final cost is cyber charter expenditures, which are anticipated to rise by $178,000 to a total of about $1.36 million.
Finishing up the presentation, Mayle said of the $2.935 million the district got in the second round of stimulus funding, about $362,000 is budgeted. All funds must be spent by September 2023, so he went over the kinds of allowable costs the money can go toward, such cleaning supplies and personal protective equipment.
Mayle said money could be used for afterschool and summer tutoring and remediation to help students catch up on education after struggling with the remote education classes during the pandemic.
More budget presentations will be given at the April 7, May 5 and June 2 board meetings. The first vote to adopt the budget will take place May 5, while final adoption will occur June 9.
Sean P. Ray can be reached at 724-6370 or by email at [email protected]
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