The Olentengy School District claims that it is in dire need of another property tax levy. Things are bad, and the district is running on a shoestring. Yet ...
The Comprehensive Annual Financial Report (CAFR) is the audited document that details the financial position of the Olentangy School District. It's lengthy and a little esoteric for average readers, but it is a wealth of information.
The CAFR -- available on the district and state auditor websites -- is addressed to the board and community. In a representative form of government, the community gives the power and responsibility of governance to its elected officials. So, the board needs to read the CAFR and understand all of its nuances. Yet, I would venture to say that not a single sitting board member has ever taken the time to read this annual report. By not doing so, the board simply allows the administration to run the schools. I term that lazy and irresponsible at best.
Also, the district is required by state law to create a Five-Year Forecast every October, with an update every May. In addition, the district is supposed to update the forecast whenever a significant change occurs to its financial position.
The board approves the Five-Year Forecast and any subsequent updates, after which the forecast is sent to the state department of education (ODE). The latest version of the forecast is available on both the district and ODE websites.
A momentary diversion. The district earns investment income from surplus operating funds -- cash -- invested in a number of investment vehicles. The income from these investments is deposited back to the operating fund. The district also earns investment income from the cash received from the sale of bonds; cash that has not yet been used to pay construction costs. The income from these investments is initially deposited into the building funds.
School districts cannot use revenue generated from the sale of construction bonds for operating expenses, but districts can use the investment income resulting from these bonds for any purpose, subject to board approval.
OK, we have a CAFR and a Five-Year Forecast, as well as investment income from operating surpluses and bond sales.
The Five-Year Forecast is reporting an approximate $3 million shortage for FY 2009. This is the reason for the dire need for a March 2008 levy. However, the 2006 CAFR reports over $3 million in investment income resulting from construction bonds. They wash.
Keep in mind that additional investment income was generated in FY07, as well as being generated this fiscal year.
It is prudent for the district to hold onto that money as a contingency should something occur during construction. However, since the majority of construction will be completed by the start of FY09, the majority of the investment income will be freed from contingency planning and available to be moved to the operating fund.
So, the questions to be answered in just a few weeks are these: Will the district recognize its stash of bond investment income as operating funds in order to wipe away the FY09 negative balance on the October Five-Year Forecast? Or, will the district hide its investment income under the mattress and continue to claim that the end is near?
I'm betting that the latter is the case, as the district has remained too quiet over its investment income for too long.