Our investigation found:
- School districts across the region vary on the amount of money they keep on-hand in relation to their budget, with New Lebanon keeping well over a year of cash on hand and Franklin keeping 10% of their annual budget in the bank.
- On average, the percentage of cash on-hand compared to the entire yearly budget was 45% as of May 2024, the last time schools were required to submit a five-year forecast, a public document that helps predict if a school district will need to ask for a new levy or make cuts.
Katie Johnson, executive director for the Ohio Association of School Business Officials (OASBO), which includes school treasurers, said there are many factors that go into a five-year forecast, which is meant to help people understand school finances and plan for the future.
“It is important to keep in mind that the forecast is a snapshot of a specific place in time,” Johnson said. “Current and future year projections can and will change as a district progresses through the year(s).”
The state of Ohio tracks school finances and will intervene if a district’s balance gets low without any plans to reverse it.
“Lower cash balances in years further out in the five-year forecast provide an indication of where the district is headed if current revenue and expenditure patterns do not change,” Johnson said.
How school funding works
All schools in Ohio get some funding from the state, but they also rely on local funding from property taxes. The percentage of local versus state funding varies by district and relies on a formula that accounts for the wealth of each district.
Most of the local districts rely more heavily on local funding than state funding. When a school passes a levy, for a few years, the district will usually spend under the amount of money they are bringing in and keep some of the money in a cash reserve. But eventually, districts will begin spending through those reserves and usually, that’s when the school board begins considering a new levy.
Vandalia, Centerville and Franklin schools were all in the phase of spending into their reserves and have asked for new levies that voters haven’t approved. As a result, budget cuts have been made at all three districts.
Unlike a business, school districts are limited in getting more levy funds or more state funding, because levies are passed to collect a static amount of cash and the state sets the funding using a formula passed by the Ohio legislature. The recent property tax value raises in Montgomery and Greene counties did boost school finances some, but not enough to make a significant difference.
Districts are not required to keep a specific cash balance, but it’s generally recommended schools keep 30 to 60 days of cash on hand to cover any unexpected expenses.
The money in a school’s operating budget goes to paying staff salaries, keeping the electricity on and other daily expenses.
Low balances, but no levies passed
Franklin, Centerville and Vandalia all have a lower-than-average cash on hand balance as of June 30.
Centerville has 21% of its yearly budget as the cash balance. Voters have rejected two levies in the last year. The school board is seeking a third levy for this fall.
Centerville’s treasurer, Laura Sauber, noted that 77% of the district’s revenue comes from local levies.
“The majority of our revenue does come from local property taxes,” Sauber said.
Vandalia schools, which had two levy issues on the ballot in 2023, has 19% of the annual budget in cash on hand. The last levy the district passed was in March 2020, when an emergency levy was renewed for 10 years and generates $4.5 million annually.
This coming school year, cuts were made totaling $3.2 million.
Earlier this year, the Vandalia school district settled with the city over sharing of income taxes for new employees in reinvestment areas in the city.
“With these measures and also with the new revenue sharing agreement reached between the District and the City of Vandalia, the updated financial forecast has greatly improved,” Mary Stephens, spokeswoman for the district, said. “As a result, the Board of Education anticipates it will not seek operating funds with a new levy request for the next couple of years.”
Lowest percentage
Franklin schools has the lowest percentage in the area, at 10%, and a school levy failed in spring 2024.
A previous Dayton Daily News investigation into the five-year forecasts in 2021 found Franklin Schools had among the lowest percentage of cash on hand, at 10.5%.
About 43% of the district’s general fund comes from the state, and about 57% comes from local property taxes, according to Kevin Hawley, Franklin Schools treasurer.
Hawley said as of mid-July, the district had 23 days of cash on hand. He noted that the district’s plan to cut spending after the spring levy failed will bring the cash balance back up. The district consolidated the elementary schools, which meant some staff and teaching positions were cut.
“I think the district has already made some pretty significant changes given the levy climate,” Hawley said.
Hawley noted the goal is to stretch out the funds as long as possible before asking for new levies.
Lower balance, but no need yet
Some school districts, like Kettering Schools, keep a lower percentage of the annual budget in the cash reserve. Kettering has about 21% of the annual budget in reserve.
But Kettering typically works that way, said interim treasurer Rick Taylor.
“I don’t think it really affects our operation, but we’re planning ahead for future levies always,” Taylor said.
Kettering City Schools last passed a levy in 2022, but Taylor said the district is “looking at opportunities to stretch that [budget] out two or three years further” so they don’t need a levy within the next few years.
Fair School Funding
In 2021, Ohio enacted the Fair School Funding Plan, which was meant to level out the playing field of school funding. Because Ohio’s model of school funding relies heavily on local funding, there are plenty of schools who say they are unfairly funded, and the Fair School Funding Act was meant to change that.
The state is currently in year four of the plan.
Centerville, one of the wealthiest districts in the region, is currently on a “guarantee,” meaning the district will continue to get the same amount of money they did before the Fair School Funding Act because the act funds them at a lower level than they would have otherwise.
Huber Heights and Mad River both saw changes to their funding because of the Fair School Funding Act. Before the Fair School Funding kicked in, both Mad River and Huber Heights put school levies on the ballot in 2022, but they discovered when the money came through that they were being funded at higher levels than they’d anticipated.
Huber Heights had 84% of the district’s yearly budget in cash on hand as of the end of May. The district has a policy to keep at least four months of funding in reserve.
Huber Heights treasurer Penny Rucker noted that the district does not typically spend too much cash.
“We’re always being frugal and always working with our grants,” she said.
Mad River has 32% of the yearly budget in cash on hand. Mad River receives 80% of the district’s budget from the state.
“The increases in the school funding formula has allowed us to not be on the ballot for an operating levy,” Mad River Treasurer Jerry Ellender said. “And we hope that will continue.”
He believes that the district is in a good place financially. “Everything’s going our way.”
The district plans to go to voters in November for a 2.9 mill permanent improvement levy. District spokeswoman Jenny Alexander said the levy would go towards the costs of repairing 20-year-old buildings. In Ohio, operating levies legally can only be used for regular expenses like teachers’ salaries and electric bills, while permanent improvement levies can only be used to fix the school buildings themselves.
Alexander said the permanent improvement levy that built the schools has expired and the district is running out of money to repair the buildings.
Higher balances
New Lebanon has kept the highest balance of any local school district in its bank, at 125% of its annual budget in reserves.
“With the fluctuation of state and federal funding, New Lebanon Schools takes a long-term approach to try to mitigate the impact of any shortfalls on learning,” New Lebanon Superintendent Greg Williams said.
The district has not asked for a levy to raise funding since 2006, according to Williams.
New Lebanon is seeking a .75% income tax renewal in November.
Northridge Local Schools has kept a higher balance in the bank, at 72% of its annual budget in the reserve. Northridge treasurer Lori Green says there isn’t a particular reason for this greater balance, but it’s helpful.
“When there’s a big ticket item or some large project that we need to complete, we know we have the funds to cover that,” Green said.
Looking ahead, the district is planning some big ticket projects, including roof renovations for the district’s old high school, which is currently being rented out to the Montgomery County Educational Service Center. Green expects those renovations to cost around $1.6 million.
Springfield City Schools also keeps a relatively high cash balance, with 65% of its annual budget in the reserve, which treasurer Nicole Cottrell says helps manage unpredictable financial impacts.
“The practice has been particularly important due to the lack of a reliable funding formula in Ohio, which has not been secured beyond the current fiscal year,” Cottrell said.
Reporters Aimee Hancock and Jeremy P. Kelley contributed to this story.