Sinking fund discussed as revenue source
By Shelby Stewart-Soldan
OXFORD – On Oct. 24, during the regular meeting, the Oxford Board of Education received an updated presentation on the five-year projected budget for fiscal years 2024-2028.
“One of our improvement items from the audit are that we need to get better with the budget,” said Courtney Makowski, director of budgets for the district. “In the spring, we presented a five-year budget to you, and we recognize that it was pretty ugly.”
Over the summer, the district looked at places where they could spend money more efficiently and cut down some projected costs, as well as put some policies in place to help keep the budget down.
“You can see that each year we have the net revenues over expenses, that’s where we can anticipate where we’ll end each year at,” said Makowski. “I totaled the five years, so you can see if we stay with this budget plan, the deficit would be at a total of $7.8 million over the next five years. So. although we’ve put a lot of practices in place, we still have some work to do.”
The budget revenues are based on assumption and projection, and the district won’t know exact numbers for state funding until each new calendar year. The five-year forecast shows the district having an operating deficit of just over $3 million in 2025, $4 million in 2026, and around $1.8 million in 2027, which would total about a $7.8 deficit for the district over that time, even with 2024 and 2028 being projected to have a surplus of funds at year-end.
The district also has several grants that will end soon, such as the ESSER funds that were received due to the COVID-19 pandemic over the last few years, which will run out in September of 2024, and the funds received due to the school shooting in 2021.
“If we continue to do business exactly as we are, along with adding the five-year plans for facilities, (the) five-year plan for safety and security, and the five-year plan for technology,” said Superintendent Vickie Markavitch. “There are buses that eventually have to be built, we have roofs that eventually need to be fixed, we have boilers that are nearing (their) end of life. Between facilities and some of our athletics and extracurriculars, there are things that we need to do to spend money on equipment and facility kinds of things.”
One of the solutions proposed to the board for future consideration was a sinking fund, which the district had previously from 2017 to 2022.
“It was .75 mills, and it was designated for a sinking fund. Your community had voted it in 2017,” said Markavitch. “And it brought you close to $1 million every year, and that $1 million was used to offset those boilers and roofs and equipment and buses that you needed to have. Which left you an additional almost million dollars in your general fund to pay for programs and staff. You can’t use sinking fund for programs and staff, you can only use it for facilities and equipment.”
With the district possibly facing a budget deficit, Markavitch and Makowski presented two possible millage rates for a sinking fund, and how it would reflect on the projected budget.
“This is a pretty formidable task, to say you can cut $8 million out of your budget without touching programs for kids,” said Markavitch.
If it was put on the ballot and approved by voters, a sinking fund of .75 mills, the same as before, would bring about $1 million to the district per year. This would bring the deficit over five years down to about $3.8 million.
“Or, you could even go a step further and see if the community would want to do one mill, which would put $1.5 million back in your budget through the sinking fund,” said Markavitch.
A sinking fund of one mill would bring $1.5 million into the district, which would bring the deficit down to $1.8 million over five years. For residents of the school district, one mill would equate to about $100 per $100,000 taxable value on a residential property.
“I can’t imagine what it will look like to try and get to the $7.8 million,” said Markavitch. “That would entail a lot of different kinds of programming than what you’re doing now. We are not the only ones facing deficits.
Markavitch is working on a budget deficit elimination plan that would be presented to the board in the spring.
The potential projects for a possible sinking fund include roof replacement, backup generators, HVAC updates, boiler updates, bus purchases, teacher/student technology, OHS football turf replacement, track replacements at various buildings, Wildcat Stadium press box and bathrooms, plumbing upgrades in Wildcat Stadium, swimming pool bulkhead and performing arts center upgrades.
“Some of the things you might be able to push out further, but roofs and boilers and things, you’d probably need to eat that in the budget,” said Markavitch.
Currently, the district spends over 80 percent of expenses in the classroom for direct instruction.
“And so, when you’re looking to eliminate numbers this big, there’s no way around impacting direct instruction,” said board Vice President Dr. Erin Reis. “They’re tough conversations to have. These things will all have to be spent.”