Lakewood OH
Cloudy
76°F
 

Rocky River school board votes for rainy day fund

Rocky River

By Sue Botos

Rocky River schools have weathered a number of storms over the past few years, including a weak national economy, state budget cuts, unfunded state mandates and the initial failure, then passage, of an operating levy. In response, the Board of Education has established a “rainy day” fund to provide a lifeboat for the district.

Beginning with fiscal year 2014, the plan is to add a minimum of $175,000 to a cash reserve over several years until the amount reaches 2 mills of property taxation, which, according to board Treasurer Greg Markus, would currently amount to approximately $1.4 million. Markus said the money would be accumulated “during the normal course of district operation” and has previously been diverted to other funds. In addition, the board can add cash above the yearly amount of $175,000 from any budgetary windfalls, such as increased savings or other dollars received by the board.

“This is a conservative amount, but it’s a plan that we can work with. This is the best and most constructive way to reach our goal,” Markus stated, referring to the 2-mill amount. According to the plan, the use of the money would be voted upon by the school board per the recommendation of Superintendent Michael Shoaf.

Markus said that participation from the school board, as well as the district’s citizens finance committee, was instrumental in coming up with the cash reserve plan. The citizens group was established at the end of 2012 in an effort to connect with residents and receive their input regarding school finance. Lowell Davis, a school finance expert who was contacted by administrators after the failure of the 5.9-mill levy in March 2012, assisted in the structuring of the group. A 4.9-mill levy was eventually approved by voters in November 2012.

Designating dollars for a cash reserve is not a new idea, Markus said, but in part, this has not been financially possible until now. “After the levy defeat we talked about it. We also discussed it in ’08 and ’09, but we didn’t have the cash. The thought was always there, but we couldn’t act upon it,” he noted.

“Once the levy failed, this really came to the forefront. When it passed, we then asked what we could reasonably do,” Markus added, referring to a financial buffer.

Shoaf remarked during discussion of the fund’s establishment, “Imagine if we would have had this when the March 2012 levy failed. We still may have made cuts, but it may not have been such an urgent situation.”

Thanks to passage of the levy, however, the district is on firmer financial ground. Markus has prepared his five-year budget projection with an eye to the cash reserve as a safety net for a still uncertain economy.

“We have enough to get through 2017, but a lot of things could play into this,” Markus said, referring to the fact that the district would probably begin to see red ink in the budget at that time.

One of the things that will affect the budget is collection of taxes from the Westgate Shopping Center. Markus explained that most of Westgate is located in Fairview Park, but is in the Rocky River school district. Seven years ago, Fairview Park granted tax abatement to the center for the construction of new buildings, but beginning in 2016, Rocky River will be able to collect taxes from the center for the schools. Over a period of three years, Markus said, this will amount to $900,000.

Although asking for another operating levy is inevitable, Markus is hopeful that the district can extend the current one to four or even five years, rather than the traditional three. “We hope to stretch the levy again as long as possible without damaging our programs,” he stated, adding that the cash reserve allows for levy planning with a more “sustainable” approach.

 

Archives