The Warren County School District projects a $9,017,252 fund balance at the conclusion of this year, as well as a $4,587,434 deficit.
But increases in retirement contributions, medical expenses and a need for textbook replacement and technological infrastructure have left the district with $5,142,753 in committed fund balance, meaning the deficit will need to be covered in other ways.
And that could mean a tax hike.
While district officials acknowledged during Monday's school board meeting that the proposed preliminary budget is a high-level view, the projected numbers paint a fairly ominous picture.
The budget projects $66,981,545 in revenues for the upcoming school year, countered against $71,568,979 in expenditures.
Of the total, $27,256,115 of revenues are expected to come from local sources, including real estate tax, the vast majority at $21,669,615, as well as local services, $100,000, and earned income taxes, approximately $3.1 million.
The proposed budget does not include a tax increase, but the state's index, which caps how high school districts can raise real estate taxes without a referendum, will allow the district to raise millage rates three percent, which equates to 1.53 mills added to the rate.
That increase would generate an additional $625,000, pulling the deficit slightly under $4 million.
On Monday, the board reserved the right to go over the index, which can be done in one of two ways. The less controversial method is to seek a state-approved referendum exception, which would allow the district to increase millage to cover, for example, its contribution to the state retirement system, PSERS. The application period for applying for exceptions has yet to open.
The proposal indicates a "tax levy needed" at 53.044 mills, which would require going over the index.
The ongoing non-profit tax exempt assessment cases, including such entities as YMCA, Warren General Hospital and the Crary Home, could also shape local revenue.
The other option is a tax increase approved by voters via referendum in April.
The budget projects total state revenue at $37,952,854; of that total, $24,145,858 is the basic education funding allocation from the state.
A couple of factors could impact that total. Superintendent Dr. William Clark noted that it is possible additional money could be appropriated for education given the fact that Gov. Tom Corbett is up for re-election this fall.
Another factor is "hold harmless," the state policy that ensures funding to rural districts will, at least, stay the same regardless of changes in enrollment. Clark noted that the WCSD has had a 25 percent reduction in student enrollment over the last 10 years.
"That's dramatic," he said. "Hold harmless has a great impact on the Warren County School District. We have to watch that."
"The governor has twice drastically reduced state funding," said Board President Arthur Stewart. "But the governor has said in both of those incidents (cuts were made) so districts sitting fat and happy will use those fund balances. If he is, in fact, true to that philosophy, one would think that if he would be accountable politically we would have to see a return to that two- to three-percent increase we have seen historically."
The district's federal allocation, also subject to shifts for a host of reasons, has been estimated at $2,515,011.
On the expenditure side, according to a presentation prepared for the meeting, some of the big-ticket spending increases include more than $1 million in salary increases, a 25-percent jump in the district's state retirement contribution that amounts to $1,536,000 as well as an increase in health care costs projected preliminarily at $678,000.
Stewart asked Clark if there were other issues the district should be considering.
"I think we're looking at programs," said Clark, specifically mentioning a new approach to special education issues, Response to Instruction and Intervention (RTII), high school reform and the middle-level model. "Administration is very thin in some buildings," he added. "(We) would have to take a look at as well. That is something I think the district needs to consider. Yes, your population is declining, but your responsibilities have not."
On Monday, the board approved the preliminary budget but elected not to approve a resolution stating that the district will not exceed the state index.