Westerville City district projects modest revenue gains from new earned-income tax but warns of long-term shortfall

Westerville City (Regular School District) officials presented an updated financial forecast on Feb. 9, 2026, showing partial revenue from a newly approved earned-income tax but projecting the district will fall short of its 90-day operating cash reserve by 2030 if current trends continue. Nicole, the district presenter, said the document is intended as a long-range planning tool and the basis for signing the Ohio Revised Code 5705.412 certificate that governs appropriations and long-term contracts.

The forecast reflects recent statutory changes in House Bill 96 that altered the filing structure from a five-year forecast to the current-year budget plus a three-year projection. "The purpose of the forecast is that it is a valuable long range planning tool," Nicole said in the presentation, which the board heard as a recorded voiceover. Staff added the board had voted to continue receiving multi-year projections as a planning aid.

Board members were told the largest change since the October 2025 forecast is revenue from a voter-approved earned-income tax incorporated using Department of Taxation estimates. "We will see partial collections beginning as early as fiscal 2026," Nicole said, but she cautioned that full collections are not expected until fiscal 2028 as the tax phases in. The forecast projects average annual revenue growth of about 2.2% and average expense growth of about 3.6%, a gap staff said will require attention if revenue does not increase or expenses are not realigned.

Staff highlighted other drivers in the forecast: a 13.8% increase in the district's medical-plan premiums for calendar year 2026 is already included, and updated student counts in state payment reports slightly reduced state funding. The presenter also noted a one-time transfer tied to a November 2024 bond/levy action that was later reversed when the ballot measure failed; the transfer is an anomaly and not recurring revenue.

Officials summarized federal funding the district anticipates in fiscal 2026 as about $7,500,000 in entitlement grants (ESSER and Title programs), but warned national policy discussions could change how that money is delivered. "There's talk about returning that money to the state" or converting aid to block grants, the presenter said, and staff emphasized that the district has not adjusted out-year forecasts to reflect possible federal-policy changes.

In post-presentation updates, Miss Hendricks told the board that recent Congressional action approved an education budget that rejected proposed K–12 cuts, meaning district grant funding is likely to remain similar for the coming fiscal year and avoided an estimated $1,000,000 hit the district had previously considered.

When asked whether the district would meet its 90-day operating cash policy, staff said it would not under the current projection. "Ninety days in 2030 would be about $66,000,000, and our unreserved cash balance in that year is being shown at about 55 and a half million," Miss Hendricks said. That leaves an approximate shortfall of $10,000,000 under current assumptions, though staff noted projections five years out are highly sensitive to legislative and economic changes.

A board member asked what the forecast covers beyond the general fund. Miss Hendricks explained the district accounts for other funds separately — including debt service, capital projects, building-level student activity accounts, state grant funds (400 series) and federal grant funds (500 series) — and said those are not part of the general-fund forecast presented.

The board did not take formal action on the forecast at the meeting; staff will continue to monitor legislative and federal developments and bring future updates as needed.