Mentor Schools District Unveils 5-Year Fiscal Projections

The Mentor Public Schools district needs to pass three levies in the next three years -- two renewals and a new one -- or it will face a $30 million deficit by the 2015-2016 school year, according to the district's 5-year financial projection.

Additionally, this school year is expected to be the first since 2004 -- the last year when Mentor Schools passed a new levy -- that the district spends more money than it brings in.

And a school district can only survive off savings for so long before it must seek new revenue or make drastic cuts, Mentor Schools CFO Daniel Wilson said.

"We haven't had a new levy since 2004 and we're going to need some new money by 2015-2016," Wilson said.

"We're never happy with the idea of asking for more money," he added, "but we're now living off of a levy for 11 years when we expected to live off of it for half of that time."

• Wilson's 5-year projection for the Mentor Public Schools district is attached to this story as a PDF.

However, Wilson clarified, that the district has two levies it hopes to see renewed before it pursues any new levies.

First, Mentor Schools has a permanent improvement levy that brings in about $1 million per year that expires at the end of 2013. Because it is a permanent improvement levy, the district can only spend that money on improvements for grounds and equipment.

The bigger concern is the district's operating levy that expires in 2014. It brings in about $15 million a year and represents about 17 percent of the district's general fund.

The Board of Education has not decided when it intends to go to the ballot for either renewal levy and it also doesn't have a time set to pursue any new levy. However, Wilson said the Board will discuss a timeline during this school year.

Making conservative projections

Putting together a 5-year fiscal plan for a school district involves some educated guess work.

For example, Wilson had to estimate what the state subsidy for education will be from the state's next 2-year budget. (He expects a 10-percent cut.)

Wilson also has to anticipate what the inflation rate will be for school districts for the next five years. (He's expecting a 4.5 percent increase each year, based on a study done by the University in Washington.)

He also expects the district's health-care expense to increase 12 percent annually -- 10 percent for medical inflation; another two percent because of changes to national health care laws.

Furthermore, Wilson has not budgeted any financial bump because of casino tax revenue. He expects any money received from that will be offset by other revenue cuts from the state.

Wilson admits that his estimates are financially conservative.

For the last eight years, the school district has brought in -- on average per year -- 3.4 percent more revenue than expected and spent 3.7 percent less than budgeted.

Wilson said guessing low is a much safer bet than guessing high when it comes to budgeting.

"It's easier to make adjustments when things go better than we assume," he said.

Shrinking revenue

The biggest issue facing the school district, as Wilson has said in the past, is not increased spending. It's shrinking revenue.

The district received $98 million in revenue during the 2009-2010 school year and is anticipated to receive $92 million this year. By 2016-2017, Wilson expects that figure to drop to just above $80 million.

Wilson has listed several reasons for the expected drop in revenue, including a still-weak economy, difficulty recovering delinquent real estate taxes and inflation rates that are unusually high for recovery from a recession.

However, the single biggest blow to school revenues in the last eight years has been changes to state tax and funding policies, Wilson said.

Those changes include .

All totalled, these policy and tax changes will cost Mentor Schools $10 million this year and have cost the district more than $30 million since the 2005-2006 school year, Wilson said.

Click here for more on the district's shrinking revenue.