Dear Community Members:
I hope you are off to a great start on this Wednesday. Just six more days with kids, and we put the 2018-19 school year to bed. I think everyone is ready for some summer weather and fun!
At Monday’s Board of Education meeting we took action on several items, and I wanted to provide some background and thoughts on where we are and where things are headed.
There is a great deal of information today.
Over the last couple of years we have had some turnover in our admin team due to retirements and career moves. This year is no different, but there are a couple of key staff members who have been with us for some time who will be moving on to new opportunities or the joys of retirement.
Phil Donaldson will be retiring from the district this summer. Phil has been with us for 11 years and has been a key member of our team. There is no way to calculate just how much money he has saved the district in maintenance costs. When he came we did not have a point person on facilities that could do the things he has done. He has been a tireless worker whose commitment to the district and taxpayers has been exemplary! We are grateful for all he has done for the district and wish him all the best!
Matt Routson was the first admin hire I made as superintendent 12 years ago. Before Matt, we did not really have a cohesive technology program or network. We hired Matt to move the district into the 21st century. Since then we have introduced 1:1 devices to 6th-12th grade students, provided hardware and software to help meet the needs of students and staff, and developed an infrastructure that is reliable and dependable. Matt is leaving the tech world to become the AD at his Alma Mater Genoa. Thank you Matt for all you have done at Eastwood!
Dr. Ann McVey has been with the district for the last four years as our Director of Student Services and Curriculum. She also works with federal programs and preschool. It has been a big job and there is no question that with the increase in numbers of students that need additional time and support, we needed her expertise. Ann is leaving to take a similar position at Northwood where her daughter is an elementary principal. It is a great opportunity for her to be able to work with her. Again, thank you Ann.
While it is hard to see friends and colleagues leave, it is an inevitable part of the life of any organization. The key is to bring in great people who you feel can be a part of the team we have built.
Melissa Wagoner is our current elementary Assistant Principal. Before coming to Eastwood she had experience in special education and curriculum. She is a natural fit to take over for Dr. McVey as our new Director of Student Services and Curriculum. She has been a phenomenal addition to our Admin Team this year and will thrive in her new role. Her departure from her current position will mean that Mr. Wank will need to hire another Assistant Principal. We currently are taking resumes and will look to have this filled early in June.
Eastwood graduate Matt Bostdorff will be the new Director of Technology and Network Administrator. He has 15 years of experience at Van Buren in a similar position and is regarded as one of the best in his field. When we began to build our program here, Matt was often someone we spoke with to seek his input. He has been an innovator and will bring a wealth of experience and expertise to Eastwood.
Kris Wagoner will be the new Director of Operations after Phil’s retirement. Kris brings significant mechanical and HVAC experience to the district along with experience in construction and facility maintenance. He currently works at BP/Husky and in a management role and was a key cog in their recent billion dollar upgrade. He brings with him experience in preventative maintenance, break/fix, and overall management and planning. The job is a big one as we work to manage buildings that range from 83 to 2 in age as well as all of our athletic fields and grounds in general.
There is a great deal of change around the corner with a tremendous amount of institutional knowledge leaving this summer. As with all transitions there will be growing pains, but at the end of the tunnel we hope to emerge ready to meet any and all challenges!
DISTRICT AND TEACHERS RATIFY A NEW COLLECTIVE BARGAINING AGREEMENT
The Board on Monday night voted to ratify a new three year collective bargaining agreement with our teachers. Negotiating with our certified and classified bargaining units always presents a challenge. For two years and 364 days, you work to build relationships so we can accomplish our main task which is to provide our students with an outstanding educational experience. During negotiations, however, you have to change roles and work on a new agreement where you seek to meet the needs of the staff while keeping the district budget in line. You also want to preserve the good things that are going on with the district.
This year, we successfully completed the process with our certified staff. We are grateful for their continued partnership in helping us deliver a terrific product for the Eastwood community. Their base salary increases over the next three years will be 2.25% in 2019-20, 2% in 2020-21, and 1.75% in 2021-2022. There will be some additional cost sharing in insurance for all teachers and administrators. There were other mutual give and take items that go along with any collective bargaining process that will help both sides.
I say this with all sincerity. We have partners when we bargain. In many places this can be very adversarial, but that has not been our experience here. Our teachers work very hard and deserve every penny they get. Our academic performance has been very good and our teachers deserve the lion’s share of the credit. Because of what we have done here as a district, we are able to recruit and retain some excellent teachers. We have our partners to thank.
RECENT SENTINEL STORY ON ATTEMPTED CHECK CASHING FRAUD
In October there was an attempt to defraud the district when phony checks were cashed, or were attempted to be cashed. This week there was a story about individuals who were charged in the attempted fraud. While the overall amount in this incident was minor, the district did not lose any funds in the process.
Our Treasurer, Mr. Brad McCracken, has worked diligently to put systems in place to try and prevent larger attempts to defraud the district. There have been several stories recently about attempts to con school districts around the state. He has worked with our financial institutions to put systems in place that will try to keep our funds secure. It is a constantly evolving battle, and he does a terrific job of monitoring trends in security and best practices. As taxpayers, I wanted you to be aware of what he is doing to protect our assets.
5 YEAR FORECAST
On Monday the Board of Education approved the 5 Year Forecast presented by Mr. McCracken. The 5 Year Forecast provides a very broad general view of the district’s finances going out for the next five years. It is at best a guestimate, but it is based on possible known trends. There are however, things that can change the forecast very quickly both positively and negatively.
I am attaching the 5 Year to this email for you to review. I will give you a brief Executive Summary and then do a deeper dive for those that are interested below.
· The goal of the Eastwood School District financially is to get to June of 2025 when the Elementary School is paid off and the district is largely debt free. This will free up $1.25 million in cash flow that can be channeled to operating expenses.
· The way we look to manage revenues and expenses always is a battle between enhancing the quality of our services and facilities while keeping the end goal in mind.
· We have new revenue streams that will come on line in the next 18 months that will provide a windfall during that time period but could negatively impact what we receive in state funding starting in 2022.
· We are deficit spending as was predicted when we made the decision to invest our carryover balance into helping pay for a new elementary school. Our deficit spending will narrow over the next two years due to new revenue sources before widening again starting in 2022.
· Providing we renew the Income Tax in 2021, we should still have a solid account balance in June 2023. The rate of deficit spending may necessitate action in the form of new money as early as 2022-23. My guess is that this will have to coincide with an overall district-wide discussion on the future of our facilities. By then the HS will be over 60 years old and the MS over 50.
For those of you who are a glutton for a deep dive into the numbers….here you go!
· General Property Taxes – There are several things that will heavily influence what our revenues will look like over the next five years.
o Nexus Pipeline – When Nexus put its projections out for what the pipeline would generate, the number was $1.8 million. However, recent experience with districts who had the ROVER pipeline in southern Wood County saw their actual valuations come in at just over 70% of their projected value. Therefore we are estimating that when fully collected it will bring roughly $1.4 million in the first year. They do have a depreciation schedule and often times they appeal their valuation. We look for revenues from this to decline over time.
o Troy Energy – The peak power energy plant continues to see its valuation depreciate. This happens slowly, but over five years it becomes noticeable.
o CAUV – There is a strong belief that there will be yet another decline in overall values on agricultural land. This will have an impact on home owners and will also contribute to a loss in overall revenue.
o Home Construction and Valuation – We have seen an increase in the number of homes in the district and do anticipate seeing more homes when the subdivision in Pemberville begins to take shape and lots are sold. The pace of new homes has slowed this year as compared to the previous year, but we hope to see growth here. We have also seen the values in homes appreciate which does create wealth for home owners but it also bumps up the taxes.
· State Aid – There are again several items that will impact our Unrestricted Grants-in-aid (State Aid)
o Two budget cycles – In every 5 Year Forecast there are 2 state budget cycles that need to be resolved. Some budget cycles like the current one seem to be relatively stress free as state revenues are well ahead of projections. Eastwood Local Schools is on a residual budgeting guarantee that goes back to 2013. As of right now it appears that our state funding for the next two years will look like this year.
o FY 2022 and 2023 – There are two things that will put pressure on our state funding in the last two years of the forecast. The first is that our guarantee amount from the state is always precarious. If there is a shortfall for overall education funding that may be a place where legislators look to find money to pay districts with student growth. The second is harder for people to understand. There is a wealth factor offset in state funding. As other sources of revenue like Nexus and the new NSG float glass plant come to the district, our wealth factor increases. As we get wealthier at the local level, there is a risk that we will lose state funding.
o Very interesting stats – In 2004 state funding accounted for 56.7% of our total revenues. When I first started in 2007 our state funding was roughly 49% of our overall revenues. By 2012 it made up just under 42% of our overall revenue. This year it will be roughly 35%, and by 2021 it is projected to be only 32% of our total revenue. (Thank you firefighters! The edges of some of these older forecasts had black edges!)
· Income Taxes – Overall we are anticipating a small amount of growth in each of the years. Please note that the decline in the income tax – line 1.030 in years 2022 and 2023 are because that levy needs to be renewed. The balance is picked up in line 11.010 for those years and is reflected in the overall cash balance at the bottom.
· All Other Revenue – You see an increase in this line item in 2021. In January we will begin to receive the $347,000 abatement payment from NSG for the new plant on Pemberville Road that is currently under construction.
While there are unknowns in revenues based on what happens outside of the district, expenses can be controlled to a degree. We can put estimates in for increases in insurance premiums, new staffing expectations, retirements, bus purchases, technology needs etc. But there are also things that happen that again can have a positive or negative impact on our expenses.
One issue that we have now is the debate on quality. We have an excellent staff and we work very hard to provide them with the resources needed to help students learn. Last year, we had a nearly $250,000 investment in reading materials for grades K-5. It has helped transform some of our instructional practices and the reviews have been very positive. We try to provide additional instructional supports for our students to support them where needed. Several years ago we moved our intervention specialists from being employed by the Wood County ESC to being employed by the district. This has allowed us to attract and retain some outstanding teachers who would have gone elsewhere. This year we brought our Preschool Intervention Specialists into the fold. Those are quality measures, but there is a cost associated with that. We feel that the subsequent performance on the State Report Card has validated this work.
Here are some thoughts on some of the major categories moving forward.
· Personal Services – Next year we will be adding teachers in grades 4 and 5. This will impact the budget for next year and for the years moving forward. We anticipate some movement of staff after the 2019-2020 school year but not any additional staff members as we are expecting a retirement or two. This is an area where we have had to expand staffing costs due to increases in enrollment in certain grades. For several years we were able to use attrition to keep this line item in check, but now we are on the opposite side of the ledger.
· Retirement and Insurance – We have been very fortunate that our medical insurance premiums have been stable as compared to others across the state. We are part of a solid consortium which has managed this very well for Wood County districts. We also do have more plans as we have added staff.
· Capital Outlay – We replaced our lighting and did some work with the ceiling grid and tile last summer which pushed this number higher. Now that we have full collections on the replacement of the Permanent Improvement Levy, there are items in this line item that can be correctly placed in that fund.
When you look at expenses you need to be conservative in your estimates so you do not come in over your budget. We try to keep our projections reasonable with expenses, but there have to be hedges.
Overall, I think we are in decent shape moving into the early 2020s. I was looking over some previous emails and powerpoints regarding the budget, and we have been able to successfully push out the need for new money into 2022-23. There have been points in time when we were hoping to get to 2020 and beyond. However, things like the NSG Plant and Nexus Pipeline have helped dramatically. We will see if there is any other good news from the budget that will help us moving forward. As it stands now we can continue to provide the quality programs and services needed to help students and staff.
Our next update to the 5 Year Forecast is in October/November.
If by some miracle you have made it this far, congrats! I wish there was a Pee Wees coupon or something we could attach!
Thanks and have a great rest of the week!
Brent Welker, Superintendent
Eastwood Local Schools
120 E. College St.
PO Box 837
Pemberville, Ohio 43450
"Leaders create Culture, Culture drives Behavior, Behavior produces Results." - Tim Kight