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Groveport Madison treasurer warns proposed state reserve cuts would strain district cash flow
Summary
The district treasurer presented cash flow details and a five-year forecast, warning a proposed state policy to cap reserves near 30% could force districts to borrow or place levies on local ballots to maintain operations.
The Groveport Madison Local School District treasurer told the board that district cash flows and the state’s budgeting timetable make a proposed cap on district reserves potentially harmful.
The treasurer explained that, because local property-tax settlements come twice a year, the district experiences prolonged months with negative cash flow. He said that using the district’s five-year forecast (roughly $94 million in budgeted activity), a 30% reserve standard would equate to about $28 million. The treasurer warned that if the state were to seize or otherwise reduce roughly $19 million of settlements in one settlement period, the district could face extended months of negative cash without borrowing or a local levy.
“It's a telltale fact,” the treasurer said, noting that March and August are the months with major property-tax receipts and that “in 12 months…that's still 19,000,000 for broke point.” The treasurer urged board members to consider cash-flow timing and recommended sending letters to legislators; several board members agreed to receive and forward advocacy emails.
The treasurer also presented the district’s five-year forecast showing a modest surplus for the current year and a beginning cash balance rising from the mid-40s to low-50s percentage points. He noted that interest income from short-term investments this year added roughly $1.5–1.7 million and that removing reserves would also reduce that revenue stream.
The board approved the five-year forecast by roll call. The treasurer also requested authorization to make year-end transfers and advances as needed to close funds for June 30; the board approved that authorization, with the treasurer noting he will bring any transfers requiring a two-thirds vote back to the board.
Board members asked questions about management of reserves and exceptions; the treasurer and superintendent said they had discussed the issue with OSBA and other professional associations and would share documents and the financial-health indicator data with the board and post them to BoardDocs.
