Elyria schools financial forecast projects ballooning deficit

The annual Elyria Schools financial forecast that was presented this week projects that falling revenues and climbing costs will lead the district to expend nearly all of its cash balance by the end of the 2028 fiscal year. The forecast comes as the district is seeking a 10-year, 4.9 mill emergency operating levy to "maintain the district's educational programs" in the Nov. 4 general election. An identical levy was narrowly defeated by voters in May. When the 2026 fiscal began on July 1, the district had more than $32 million dollars. But in her three-year forecast given on Wednesday, Treasurer Colleen Aholt projected that the district's revenue surplus will increase by over $4 million each of the next three years, leaving the district with just an estimated $1.8 million on hand heading into the 2029 fiscal year. According to the five-year projection, the district would be in the red by nearly $40 million by 2030 without any new money. "I don't want to scare anybody with that number, but I do think it is important to show that number that without new money coming in or without cuts coming in, it's not sustainable," Aholt said. "So the bottom line is for this fiscal year, we're at a 29 percent cash balance. Thirty percent is my recommendation. We're at 29, I think of that as fairly good. But when it goes to next year, we drop down to 18 percent cash balance because we are deficit spending." For decades, the state has required schools to present an annual five-year financial forecast, but in 2025, Ohio House Bill 96, the Budget Bill, changed the required projection to be a three year forecast and moved its deadline earlier in the school year. Aholt said that she would be submitting a three-year forecast to the state as required, but the projections given in her presentation on Wednesday still include the next five years because Aholt said it was "best practice." Regardless of where the projection cuts off, it shows a troubling trend: revenues are expected to begin to decrease at the same time that prices continue to rise for school districts across the state. Costs have been gradually increasing for several years, with the main drivers being inflation, transportation costs and healthcare costs. Aholt said that healthcare costs increased by 18 percent in the past year. While costs have been rising, Aholt said that the district has been able to mostly keep up because its revenue has increased by about 1.85 percent annually for the past five years. However this increase has not kept pace with inflation, which is projected to be 2.9 percent in 2026, and revenues are anticipated to begin to fall. "Our revenues are going up and our expenses are going up more, it's just not sustainable, it's not going to happen," Aholt said. "We have a projected decrease for revenue going forward at 0.4 percent, it's less than a percentage, but the fact that our expenses are increasing, those two together, it's a perfect storm." Aholt said that a significant portion of the drop in revenue will be caused by an anticipated loss of $2.2 million per year in state funding that the district has previously received. "It's one of the biggest drivers on the revenue side for why our revenue isn't growing," she said. The reduction in state funding is due to the fact that property taxes in Elyria, as well as across the county and much of the state, increased in 2025, but the amount of funding the state is taking away is significantly more than the new amount raised by the higher property taxes. If the projections hold, the number of days of operation that the district can afford with its cash on hand will decline sharply in the coming years without any new revenue. How many days of operating a district could receive if it were to stop receiving money entirely is a common measure of school districts' financial health. According to Aholt's latest projections, the district will have enough money on hand to pay for all necessary operations for 105 days of school in 2026. In 2027, that number is projected to drop to 65 days, well below the 90-day threshold at which the Auditor of State may flag a district for "financial caution." Aholt projected that in 2028, the district would be down to just seven days worth of cash on hand. Elyria's total expenses for the 2026 fiscal year is a projected $93,613,338. Overall, 76 percent of the district's expenditures go to personnel costs (54.17 percent to salaries and 21.84 percent to benefits), 19.70 percent go to services for the district and just over four percent goes to all other expenses, including purchasing supplies and managing debt. At the conclusion of her presentation, Aholt said that her suggestions for the Board were to push for the passage of the emergency levy on Nov. 4 and to reduce spending. If the levy passes, she said that the district would have to cut about $3 million in spending per year. If the levy fails, Aholt said, the district would have to aim to cut $9 million in spending a year. Superintendent Ann Schloss said on Friday that the district is always looking for ways to reduce spending, but she expressed concerns about how much more could be cut without negatively impacting students. "We are always streamlining, whenever someone retires we always say 'Do we need this position, really?'" Schloss said. "But the bigger thing is right now, there's a lot of money that isn't guaranteed. Public education is financially struggling right now… But at the end of the day, we are going to try and stay away from (cutting) as much programming as we can, because we have a lot of things in place that make us a unique and wonderful school district, and the last thing we want to do is start pulling things off." Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.