Wednesday, February 27, 2008

Olentangy Levy -- Breaking News: A District Flush with Cash

Important news ... Please read carefully.


Two recent reports show that Olentangy is a district flush with cash.

As always, I have provided either the document or its link. Take some time to read these financial statements in order to understand the district's financial condition. I encourage you to research, ask questions, and learn.

By the way: You won't find this analysis at the Olentangy for Kids website. They just stick to the district spin. And, when I was involved with the committee (even chaired it), my numbers and analysis were consider the end; the final answer. Now that I don't like their levy, they don't like my numbers and analysis. Oh, well. Such is life.


First -- The monthly Comparative Statement of Receipts and Expenditures

The statement below -- reported to the board last night -- shows that revenue is up and expenses are down. Likely, though it's too early to be certain, the ending negative balance for next fiscal year -- the reason for the levy -- will be gone when the district updates its Five-Year Financial Forecast in May.

The deficit is gone! No need for a levy.

(note: Click on the document to enlarge. Also, the second analysis follows this document.)
Second -- Investment Income

The district's latest Comprehensive Annual Financial Report (CAFR) is now available on the state auditor's website. This CAFR reports financial activities within the district for the fiscal year ending June 30, 2007 (FY07).

Once again, the district is reporting bond investment income -- $4.7 million worth. Over the past three fiscal years, the district has reported $9.6 million in investment income. And, more is being generated this fiscal year.

This money is available to be used for operating expenses. There is no need for the levy.

While it is true that money generated through bond sales cannot be used for operating expenses -- in fact such money must be used in the manner specified on the ballot, the investment earnings can be used for operating expenses. And, most likely, they will be used for expenses that are typically funded through the general fund.

There is no need for this new levy. There is more than enough available through the investment income alone to offset any negative year ending balance for FY09.

Oh, sure, the administration and levy committee will state that the investment income was approved by voters for future capital expenses. But, that contradicts the claim that the district only sells bonds when needed. In order to earn investment income, the district must have excess bond funds to invest. Therefore, bonds were sold before they were needed; if they are even needed at all.

The district typically puts more debt on the ballot than will be needed to fund the capital projects listed. There is a reason for that: to protect against rising and hidden costs. It is a contingency plan. Makes sense, but this pot of money is not supposed to continually grow.

The voters never approved a large bond fund to be used as a means to generate investment income. That money -- your tax dollars -- should be in your account generating investment income for you.

So, the district sells more bonds than needed, before they are needed, builds up a pot on bond funds as an investment tool, all the while claiming it is out of cash. Hmmm. Doesn't sound too honest to me.


See if the levy committee addresses either of these documents. Likely, they won't as these truths don't match their story. But, ask them anyway.

11 comments:

Anonymous said...

I've looked at your data and links and don't see the same situation that you do. Doing a cash flow analysis shows the district is operating at a minimum reserve for a responsible business. Looking out at 2010 and its $25M deficit means the district needs to raise money or make significant cuts in 2009 or earlier if possible.

Jim Fedako said...

Please ... it's not a business, it's a governmental entity.

While we are on the "as a business" subject, what business would plan on the need for close to 10% annualized increase in prices in order to stay affloat?

Any business that operated under that model would soon be out-of-business.

Anonymous said...

You seem to like to compare it to a business when talking about salaries and increases.

Businesses routinely plan for price increases when they need to. A business that doesn't won't stay in business for very long which is where you seem to want the schools to end up.

Compare this issue with regulated businesses (like utilities) since the revenue sources for schools are regulated by the state. Utilities routinely petition for rate increases to keep up with growth and rising costs.

Jim Fedako said...

Yes, and regulated utilities are grossly mismanaged and over-priced.

Show me a business that is budgeting 6.5% annual raises and 12% annual healthcare increases.

And, show me a business that is relying on 10% increases in prices.

Show me.

Scott said...

anonymous,

These are taxes. This isn't some product that a consumer can choose not to buy. Even in the case of a utility, conserving electricity can lower the monthly bill. No such remedy exists in this case. Taxpayers are forced to pay, plain and simple. The only choice given to them is to vote no or to sell their home and move. Selling isn't a good idea right now so voting no is the only remedy.

Jim Fedako said...

Well said!

Anonymous said...

Actually you can still sell you home on the district. Homes around me are selling every day. People still want to move into the district. One year of property appreciation pays for 3-4 years of this levy increase. I'll take the appreciation every time.

Want to move? Go find a cheaper district with the property values. You won't, it is the reason I moved into Olentangy.

As far as budgeting for healthcare, it is obvious you haven't lately. I have for my business and we routinely budget double digit increases. We also routinely work revenue increases in our budget.

Jim Fedako said...

House in my neighborhodd have appreciated less than 15% in 8 years. Not much of a return.

Interestingly, there is no difference in house prices between Olentangy and Big Walnut, and Olentangy and Buckeye Valley. Search for my post where I explain this fact.

You are conflating revenue with prices. I doubt you raise your prices 10% per year.

Anonymous said...

You live in the wrong neighborhood. My home has appreciated about 35% in the same period.

But there is a big difference between the Olentangy district and those two districts. Try comparing home values in Dublin or Worthington.

Jim Fedako said...

My increase matches that of most folks I talk to in the district.

The point of my previous post -- which you obviously did not read -- is that there is no difference in house prices when you control for size and quality of house.

The market drives house prices, not schools. You may feel otherwise, but feelings are not proof.

Scott said...

Anonymous,

I see homes in my neighborhood on the market for months without selling. However, even if I could sell and recoup my investment, are you saying that I should pull my kid out out school and make him leave all of his friends instead of imposing a little belt-tightening on the district? Instead of forcing the district to not give 6.5% salary increases?

I would have no issue with a more reasonable tax increase. Something at 2 or 3% annualized. The district is asking for way too much at exactly the wrong time. My budget is stretched thin and I simply can't afford it.

I moved here in 2001 because taxes were reasonable. Now look at them.

I got a 2% raise this year for doing excellent work at my job. Why should I vote to allow consistent 6.5% raises paid out of my taxes?

The district needs to start living in the real world.