Budget cuts help, Elyria Schools still deficit spending ahead of levy vote

A massive package of cuts carried out last school year is expected to limit Elyria Schools' deficit spending over the next several years. But the district projects that falling revenues and continued inflation necessitate a current expenses levy to prevent deeper cuts. Elyria Schools Treasurer Colleen Aholt gave the first of her two annual budget forecast presentations to the Board of Education during a meeting on Aug. 19. She told the board that the $9 million budget reduction plan that it had approved in February had succeeded in greatly reducing the district's projected budget deficit over the next two years, but that beyond that point the district still faced the risk of eventually spending its cash balance. The reduction plan was pursued after voters shot down two new money levies, and the district is now seeking an 8.9-mill current expenses levy on the Nov. 3 ballot. District officials have said that if that levy fails, more cuts will follow. Before delivering her projections, Aholt said that recent changes at the state level have impacted the accuracy and timing of school budgets and projections. School budget forecasts have been moved to August and February rather than November and May. Aholt said that because of those deadline changes, the district does not know exactly how much it will get in property taxes for 2026 at the time of the initial projection, as those numbers are not available until later in the year. "We always forecast out but usually the first year we have that information," she said. "We don't have it yet, so it is based on historical trends. "Staffing for the upcoming school year is also not complete, so we also don't know exactly how much the district will be spending on personnel costs in the first year of the forecast." Lastly, the state has changed the forecast requirement from a five-year projection to just a three-year projection. Aholt said she still prepares the five-year forecast to allow the board to better plan for the future, but she will only submit the required three-year plan to the state. From 2026 through 2030, Aholt projects that the district's revenue will decline from a projected peak of $90.2 million in 2026 to $84.2 million in 2030. Alternatively, the district's expenses are expected to increase over the next four years to reach nearly $100 million by 2030. Initially, Aholt projected that the district's spending would fall from $92.1 million in actual spending in fiscal year 2026 to a projected $89.8 million in 2027. She said that this was due to the reduction plan passed by the Board of Education in February. Without those cuts, Aholt said that the district would have spent roughly $96 million in 2027. "The district as a whole should be commended for their tremendous work and difficult decisions involved in achieving the $9 million budget reduction while also prioritizing the students," Aholt said. Under the plan, the district laid off dozens of teachers, administrators and staff and combined many of their positions, reduced its supplemental options and instructional material budgets, increased class sizes and expanded its busing radius to the state-mandated minimum of 2 miles. Aholt said that the breathing room bought by these cuts could easily be seen in the district's projected cash on-hand numbers. The state typically wants districts to keep enough cash on hand to pay for 90 days worth of operating costs. "You're right, super hard decisions that had to be made, but to me that is like, huge, that that is down to ($89 million)," board President Elaine Seguin said. "I think that is great, we will have to figure out how to explain that to the community." Before the reduction plan, the district anticipated having 107 days worth of cash on hand at the end of 2026 but just 66 days by 2027, falling below the benchmark. The district projected to have almost no cash left on hand by the end of the following year. Following the reduction plan, Aholt said she expected the district to end 2026 with 119 days worth of cash on hand and for 2027 to conclude with 118 days of expenditures left. The district is projected to remain above the benchmark by the end of 2028, with 97 days of cash on hand, before finally falling below it in 2029, when Aholt projected it would still have 55 days of operating money in its coffers. The Ohio auditor of state can flag a district for financial caution if it falls below the 90 day threshold. "So we are not looking into any fiscal caution until fiscal year '29," Aholt said. "There was a lot of work on that (reduction plan) and a lot of hard, difficult decisions." Despite the successes of the cuts, the district still projects to see a budget deficit of about $998,000 in fiscal year 2027, and that deficit is projected to balloon quickly, Aholt said. She projected the deficit to increase to $4.7 million in 2028, and then increase by about $5 million over each of the following four years to surpass $20.8 million by 2030. Under Aholt, the district tries to maintain a year-end cash balance above 30 percent of its expenditures. It is projected to beat that benchmark in 2027 and end with a cash balance worth 32 percent of its expenditures and fall just below it in 2028 with 27 percent. But, as with other financial health markers, the district probably will see the benefit of the reduction plan diminish by 2029, when it is expected to end with a cash balance of just $14.4 million, 15 percent of expenditures. "We are good with our cash balance for this fiscal year, for next fiscal year we are slightly under 27 percent of our cash to our expenditures, and then moving forward we are not doing so well," Aholt said. All of those projections are assuming that the district does not receive any new operating money by levy, which Aholt said was a great segue into her discussion of the levy the district is now pursuing. Aholt said that the 8.9-mill current expense levy, which has been labeled Issue 4 on the Nov. 3 ballot, would eliminate the district's deficit spending and ensure it meets the necessary fiscal benchmarks to stay out of fiscal watch, at least over the next five years. "The levy would provide critical operating dollars to help the district continue paying for the teachers, support staff, technology and tools that educate more than 6,000 Elyria students every day," she said. "It also supports the day-to-day operating costs like utilities and transportation that every organization must pay." If passed, the levy would cost residents $312 for every $100,000 of county auditor appraised value on their home. The 2027 August financial forecast can be found in the Elyria Board of Education agenda for August 19, and the presentation can be found on the district's YouTube page. Contact Owen MacMillan at (440) 329-7123 or omacmillan@chroniclet.com.