Enduring Excellence in Learning, Leadership, Innovation, and Service

Indian Hill Five-Year Forecast May Update

Mick Davis

At the Indian Hill Board of Education Meeting Tuesday, May 19, I shared an update to the District’s five-year financial forecast. Presented twice a year, this important planning tool is required by the Ohio Department of Education. The forecast aligns our income and expenses to our District’s current and future goals with respect to academics, operations, and facilities. Typically, the spring update each May is just that – a mild revision to what we presented in November. This spring has been anything but typical. In March of 2020, COVID-19 created a global pandemic that has drastically altered many line items of our five-year forecast. The impact is not yet even fully realized. 

Preceding the pandemic, Indian Hill was already closely examining our need to bring revenues in line with expenses. Within the previous forecast update in November of 2019, we continued to anticipate near-flat revenue growth (near one percent per year). One percent per year is well below the rate of inflation mark. Inflationary costs affect us on the revenue side, as well as the expense side as things get more expensive over time but we do not see a corresponding increase to match on the revenue side. Because of this situation with our operating funds, and because of substantial issues within our facilities – both in terms of significant maintenance needs and necessary safety upgrades – during a nearly two-year process, the District conducted numerous meetings with District taxpayers through two different community committees. The Board of Education used the findings of these committees to declare the need to raise additional funds for operations as well as a substantial facilities project. These needs were communicated to educate our stakeholders on our serious and substantial needs to continue to deliver the excellent educational services our community both expects and deserves. 

The last operational levy for the District was on the ballot in 1993, while the last facility project was in front of the voters in 2001. The committee recommendations and the vote of the Board
of Education in March to place a potential combined operational and bond levy on the ballot in
November all occurred prior to the realization of the global pandemic and the resulting economic downturn. Regardless of what decisions are made financially for the District as a result of the pandemic, it is safe to say that the five-year forecast is altered in a way that no one could have predicted in November of 2019 when the prior forecast was completed.

As such, what you will find listed is a review of the loss of revenue we know the District will experience, and our outline for cash conservation we plan to enact to protect our world-class programs until we understand better the long-term financial consequence of the pandemic.

State Funding Reductions
The pandemic has created a significant and immediate shortfall in the State’s revenue which was passed to the budget items; the most substantial being the $300 million subtracted from the State’s K-12 Foundation payment. This totals $621,000 for the District in fiscal year 2020. Early news regarding fiscal year 2021 is that districts should anticipate losing at least that amount
next year, so an additional $621,000 for fiscal year 2021 was permanently removed from the forecast.

District Cash Conservation
The District uses a capital outlay planning tool to analyze capital needs and to plan future projects. The Capital Plan was examined and the District removed all items other than technology and transportation purchases from the current year’s plan into next year. The expectation is that when next year’s Capital Plan is approved the District will do the same procedure. This frees much needed cash to help sustain dwindling balances. However, this could potentially exacerbate current facility needs; all carpeting, furniture purchases, and other general maintenance will be delayed. 

What you can count on during this time of uncertainty is the District’s commitment to continue to operate in a fiscally conservative manner while working always to maintain our excellent programs that make us uniquely Indian Hill. We have a long history of fiscal responsibility. The Indian Hill School District tax rate remains the lowest in Hamilton County. The District also did a great job managing the last bond issue and has structured the refinancing of bonds to achieve taxpayer savings of $8.5 million. That savings for residents comes in the form of reduced millage paid toward the bonds. In addition, a significant share of what residents pay on this bond expired at the end of 2018 – reducing the bond debt and providing our residents a savings of $304 annually on a $500,000 home.

You can also count on continued updates about our financial well-being directly from me during this time. Please know, we are keeping a close eye on the evolving financial situation, and will communicate important updates as they become available. As always, I thank you for your continued support of the excellent educational services we provide within the Indian Hill School District. Should you have any questions about our District’s finances, please contact me. 

Sincerely,
Mick Davis
Treasurer
Indian Hill Exempted Village School District
Posted May 20, 2020