Talawanda City Board shifts general-fund dollars to severance and capital accounts, adopts five-year forecast

The Talawanda City School District Board of Education on May 19 approved transfers from the general fund to create a severance fund and to support a five-year capital plan, and adopted the district's required five-year forecast.

The board voted to create a severance (termination benefits) fund and to transfer funds from the general fund to it. The agenda listed a transfer of $1,450,106; an attached document included $1,450,107. The board approved the transfer; members discussed the discrepancy during debate but did not record a different final total in the public discussion. Treasurer-provided materials say the fund is intended to pay severance and leave going forward rather than drawing those payments from the general fund.

Treasurer said the transfer creates a separate fund so severance and leave payments are paid from Fund 035 going forward. "This is the creation of the severance fund. So instead of it being paid out of the general fund going forward, all severance and leave would be paid from this 035 fund," the Treasurer said.

The Treasurer told the board the transfer amount reflects the district's current liabilities if all eligible staff retired immediately: "We have 60 people who are eligible in some form or fashion to retire today so if they retired today we would be paying out that 1.4" (million), the Treasurer said. Board discussion indicated staff will re-evaluate the fund annually; the Treasurer said future transfers will be calculated as a portion of prior-year payroll (about one-half percent of prior-year actual payroll) and that the district expects ongoing yearly transfers to build the fund as employees reach 25 years of service.

The board also approved transferring $11,903,980 from the general fund to the permanent improvement (PI) fund to support a five-year capital improvement plan covering buildings and grounds, curriculum and textbook adoption cycles, technology 1:1 initiatives and athletics/band uniform and equipment replacement. The Treasurer said these are funds the district already plans to spend and that moving them to the PI fund consolidates and clarifies capital-cycle funding.

Board members discussed flexibility and risk. One member asked whether moving the money would "handcuff" the district if a future emergency arose. The Treasurer said the district believes it is fiscally strong through the forecast and that, if necessary, the district could petition the courts to transfer money back from the PI fund to the general fund.

The board also approved the district's five-year forecast, a document the Treasurer said is required by state law. "A five-year forecast is required by Ohio Revised Code 5705.91 and must be approved in November and May of each fiscal year," the Treasurer said. The forecast covers the general fund only, uses three years of historical data, and projects revenues, expenditures and ending cash for the current year plus four future years. The Treasurer said the forecast shows a deficit for the current fiscal year that is attributable to the transfers to the severance and PI funds; the forecast projects balanced budgets for fiscal years 2026 through 2029 under current assumptions.

In the forecast presentation, the Treasurer said property tax revenue (including PUPP values) provides about 49% of district revenue, the district's 1% school income tax contributes about 21%, and state aid and other sources make up the remainder. The Treasurer warned the board that the pending state biennial budget (House Bill 96) could materially change the district's revenue picture and that the forecast must be filed before the legislature finishes its work.

Votes at a glance - Transfer to severance fund: motion to transfer (agenda listed $1,450,106; attachment listed $1,450,107). Approved; vote recorded as: Board member Mead: Yes; Board member Otto: Yes; Board member King: No; Board member Dr. Howard: Yes. - Transfer to permanent improvement (PI) fund: $11,903,980 approved for the district's five-year capital plan. Vote recorded as: Board member Mead: Yes; Board member O'Hara: Yes; Board member King: No; Board member Dr. Howard: Yes. - Five-year forecast: Approved; vote recorded as: Board member Otto: Yes; Board member Mead: Yes; Board member King: No; Board member Dr. Howard: Yes.

Why it matters: The transfers move current budgeted spending out of the general fund into dedicated accounts intended to stabilize future severance obligations and to fund recurring capital and curriculum cycles without returning to voters for new levies or bonds. The forecast frames the district's near-term fiscal health and notes uncertainty tied to pending state action.

Next steps: The Treasurer said staff will review and adjust transfers annually and monitor the state budget. The board will receive updated forecasts in November or sooner if conditions warrant.