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CMSD projects multi‑year deficits even after credit upgrade, CFO says
Summary
Cleveland Metropolitan School District officials presented a May five‑year forecast that assumes flat state funding, projects growing annual deficits after this year and shows cash‑balance improvements from recent cost reductions; the CEO also announced an S&P upgrade to A‑minus that will save roughly $750,000.
Cleveland Metropolitan School District officials told the board that the district faces ongoing multi‑year budget deficits even after measures that have improved its long‑term cash outlook.
Chief Financial Officer Mister Stockdale presented the district’s May five‑year forecast and said the projection assumes flat state funding over the next four years because the state appears to be moving away from the fair school funding formula. "We are projecting out flat funding," Stockdale said.
The forecast shows a small negative balance in the current fiscal year — about $5 million below earlier projections — and recurring, growing budget deficits in the out years under the assumptions in the presentation. Stockdale said the district has narrowed the budget gap compared with earlier forecasts and has pushed the projected cash shortfall farther into the future through negotiated changes, school budgeting, calendar adjustments and other cost reductions. "Over time, there's been a really substantial improvement … the cash balance improvement is $474,000,000," he said.
Why it matters: the board must approve and submit financial forecasts under Ohio law and watch two metrics the state reviews — being in the black in the current year and two years out. Stockdale said the district now projects to meet those near‑term requirements but that structural risks remain, including local property tax volatility, continued enrollment declines and potential changes to Medicaid reimbursements.
Key assumptions and figures: the forecast assumes flat state aid amid a shift away from the fair school funding formula; salaries and benefits account for roughly 78 percent of current expenses; the district’s current year position moved from a small surplus earlier in the year to a roughly $5 million negative balance in the updated projection; Stockdale said interest and investment earnings have been a short‑term positive. He also warned that carryover caps proposed by the state (30 percent) could affect districts, though he said CMSD expects to be just under that cap at year end.
Board members asked for sensitivity and scenario analyses showing downside risk if state funding falls below the forecast, and for clearer links between the forecast and the district’s Building Brighter Futures savings proposals. Stockdale said the team works with multiple state budget versions and will provide additional scenario work as the legislative picture becomes clearer.
Also noted in the meeting: Dr. Morgan, the district CEO, announced the district received an A‑minus credit rating upgrade from S&P, which the CEO said will save about $750,000. "I'm happy to report the CMSD has been upgraded in our credit rating, to an A minus grade," Dr. Morgan said, and credited recent fiscal actions and board approvals.
Ending: Stockdale closed by saying the May forecast will be submitted as required to the Ohio Department of Education and Workforce and that further adjustments will be reflected in the November forecast once the district’s Building Brighter Futures recommendations are finalized.
