Canal Winchester treasurer: proposed state reserve cap could force districts to spend or transfer millions

Nick Roberts, treasurer for Canal Winchester Schools, told the school board on April 14 that proposed changes in the Ohio House budget would impose a 30% limit on general‑fund carryover and roll back the phased‑in fair school funding formula, a combination he said could force the district to spend, transfer or return roughly $28 million.

Roberts said the district’s cash‑balance history rose after receiving about $12.5 million in ESSER (federal COVID relief) dollars, and that changes to how disadvantaged funding is calculated — including the district’s adoption of the federal Community Eligibility Provision (CEP) — added roughly $2.5 million to the district’s revenue. “We would not give money back,” Roberts said. “We will find a way. It actually would help us. What I would do is transfer the money into a capital projects fund to earmark to pay off that debt.”

The treasurer said the House budget (members and board discussion referred to House Bill 96 and earlier numeric references to the House budget) eliminates the current fair funding phase‑in and guarantees districts won’t receive less than the current year but adds the 30% carryover cap. Under Canal Winchester’s current forecast, a 30% cap would mean reducing the district’s general‑fund carryover to about $17.3 million; Roberts said the district has not been below $18.8 million in the past 10 years.

Why this matters: carryover balances affect credit ratings, borrowing costs and a district’s ability to plan. Roberts said the district earns significant interest on invested cash — roughly $1.9 million year‑to‑date and about $3 million last year — and that trimming reserves would reduce that revenue while increasing reliance on borrowing or short‑term decisions. He warned staff and board members that a forced reduction in carryover could prompt a downgrade from ratings agencies and make capital borrowing more expensive.

Board President Barnes and other board members urged residents to contact state lawmakers. Barnes said she plans a community town hall to explain the proposed budget’s local effects and to collect questions residents want relayed to state senators and representatives before final votes. She named State Senator Michelle Reynolds and State Representative Meredith Lawson Rowe as the district’s legislative contacts during the current budget process and encouraged constituents to use the Senate Finance Committee contact information as a starting point.

Board members and Mr. Roberts outlined three advocacy priorities: keep or restore a phased fair‑funding formula with base‑cost adjustments; remove the 30% carryover cap; and address the expansion of voucher funding for private and charter schools, which they said diverts public dollars without the same reporting and accountability requirements that apply to public districts.

The treasurer stressed that the district timed capital projects — including an all‑day kindergarten expansion — to capture favorable funding under the earlier formula and to preserve the district’s financial flexibility. He described one approach to complying with a cap: transferring general‑fund cash to capital projects funds to pay down general‑fund debt, which he said would “get us halfway there” on some planned projects.

Board members asked about legal options; one member suggested investigating a home‑rule challenge if the cap is enacted. Roberts said legal challenges are possible and noted large pending lawsuits over school finance that involve hundreds of districts.

Ending: The board made no formal vote on the budget presentation; trustees instructed staff to continue monitoring the legislature, to prepare public materials explaining the local impact, and to consider timing and fund‑transfer options if the 30% cap remains in the enacted budget.