Superintendent's Message

Brent Welker

Brent Welker
Superintendent

10.15.18

Dear Community Members:

 

I hope this email finds you well! Fall is now definitely here and we are nearing the end of the first nine weeks. That means Parent/Teacher Conferences are just around the corner.

 

I have several notes for you today.

 

SALE OF WEBSTER SCHOOL PROPERTY

 

The Board of Education meets tonight and there will be two resolutions on the agenda that will prepare for the sale of the former Webster School property to the Webster Township Trustees. In the first resolution the Board will be combining the two parcels currently occupied by the school property into one new parcel. That parcel will be recorded and eventually sold to the Trustees. The second resolution will be to approve a purchase agreement with the Trustees for the amount of $1,963. This price covers the Board’s cost for a survey and work on the new deed.

 

As with the Village of Luckey, it is the Board’s belief that selling these properties to the local political subdivision at cost is good for the village and township. In Luckey’s case they can manage interest and development and for the township it is a smart strategic investment for their future. We are all tasked with providing the best services for our communities and being strong partners only can serve to benefit the greater interest.

 

NEW POTENTIAL DEVELOPMENT IN TROY TOWNSHIP

 

Tonight the Board will also consider an Enterprise Zone Agreement with NSG Glass North America (Pilkington). Pilkington is looking to build a 500,000 SF facility on Pemberville Road south of Garling Road. This facility will produce mainly solar panels that one would assume will help support the new First Solar facility under construction in Lake Township. The employment estimate is around 150 but there will some excellent paying positions.

 

Under the proposed Enterprise Zone Agreement, Eastwood Schools will receive $343,000, which is now the equivalent of about 1 mill in taxation, annually for 15 years starting in January of 2021. We would welcome the new revenue, but to keep this in perspective, the Home Depot agreement is for $675,000 per year. This will be a welcomed source of revenue, but it will marginally impact the overall 5 year forecast.

 

What is exciting is that there will be new opportunities for residents in our district to find good paying jobs both at this facility when it opens and at the First Solar plant in Lake Township. We have been in contact with someone who is looking to do outreach as they need to find 500 employees. We will be meeting with them in November and having them out here to meet with students later. If you are interested, here is a link to their career opportunities:

 


http://www.firstsolar.com/en/Careers 

 

5 YEAR FORECAST

 

Annually, we approve the 5 Year Forecast in the month of October. This is a long term tool that we use for financial planning. I have a couple of major items to share with you that will impact our revenues and expenses.

 

Please remember that our financial goal is to get to July 2025. On that date the district will be debt free as both the HS addition and ES will be paid off freeing up over $1.2 million in cash flow per year.

 

REVENUE

 

1.      Property Taxes – Over the next five years there are going to be some significant changes in our property tax collections. Some of this will be positive and some negative. I have to say this upfront, and I do not want this to be taken the wrong way. We have several new sources of revenue that are coming in starting in 2021. Our low property tax rates will mean that they do not generate as much revenue as they may in another district with higher effective tax rates.

a.      Troy Energy – The value of the power plant is declining annually by $2-$3 million. As the value declines, so will the property tax collections. We also need to keep in mind that while we as residents pay an “effective millage rate” which is just over 22 total mills including our bond and PI levies, they pay the “voted millage rate” which in this case is just under double what residents pay. That is what makes it so valuable. We know this would happen, which is one of the reasons we borrowed money for the elementary school for only 10 years.

b.      Residential Housing – On the plus side, we are seeing more homes go up which is helping to offset some of what we lost in the value of agricultural land. If the proposed subdivision in Pemberville starts selling lots in 2019, we can expect to see some additional homes which will increase our district valuation positively.

c.       Nexus Pipeline – The single biggest influence on our property taxes in the next 5 years will be the Nexus Pipeline. Unfortunately, it now appears that we will not see any revenue until the end of 2021 at the earliest. We were hoping for the pipeline to be valued this fall so we could collect some money in 2020, but that does not appear the be the case. When fully collected it could be well over a $1 million per year, but it will depreciate steadily. Again, a very positive impact for our taxpayers.

2.      State Funding – We are projecting fairly level state funding numbers as our enrollment is slowly increasing. However, once we get just outside of the 5 Year Forecast, there is some potential for funding reductions since we will be getting money from the Nexus Pipeline as well as Pilkington. The state will say that we have a windfall and can raise more local money, so we could see a funding reduction. Too far in the future to tell.

3.      Income Tax – We have been very fortunate with the income tax and should see modest growth as long as wages and the economy continue to grow. Obviously, any additional houses have the potential to bring with them new families etc.

 

EXPENSES

 

1.      Salaries and personnel – We are in a period where we are slowly adding staff as enrollments are beginning to increase in the upper elementary grades. Next year we are anticipating 1.5-2.5 additional teachers. We have also been adding additional support staff to help serve students who have more needs. This is going to put pressure on our salary lines and increase expenses.

2.      Insurance – One positive area for insurance has been the stability in our premium increases. They have been manageable, but the overall line in our budget will increase as more employees are needed to serve additional students.

3.      Purchased Services – There will be a spike in this number over last year because we chose to fund the entire LED lighting project upfront. We also do multiple other tasks last summer beyond the Permanent Improvement budget. We anticipate that nearly all PI new dollars from the Replacement Levy will be channeled to the roof on the HS addition.

 

SUMMARY

 

So what’s the bottom line?

 

We are projecting a positive cash balance of $2.2 million at the end of FY 2023 (June 30, 2023). While it is always good to have a positive balance, there are many unknowns that can and will impact the district over the next five years.

 

In a worst case scenario we will need something in 2021-22 to help bridge the gap until such time as the ES is paid off. That is 3-4 years away and many things can change. We are in a tough spot because we are going to see some natural increases in employees. We have classes which require four teachers now but will need a fifth teacher as larger classes move up. We have classes with enrollments of 100-105 be served with four teachers with an average of 26 or so kids in a class. Now those numbers are going to go over 110 which means we will need another teacher to avoid classes nearing 30 students.

 

All in all, we expected things to get tighter as we moved closer to 2025. The additional revenues will be helpful as we look to avoid needed a levy to replace the Emergency Levy that expired. In the meantime we will try our best to get the best value for your dollar.

 

I will have a follow-up email later this week.

 

Have a great rest of the week!

Brent Welker, Superintendent
Eastwood Local Schools
120 E. College St.
PO Box 837
Pemberville, Ohio 43450
419-833-6411
 

"Leaders create Culture, Culture drives Behavior, Behavior produces Results." - Tim Kight




10/15/2018


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