Medina school district braces for ‘fiscal cliff’
State aid was paid over 15 years, instead of 20
MEDINA – The school district has some big bills to pay, nearly $1.7 million a year over four years beginning in 2017-18.
Medina took out $23.8 million in debt service for a capital project around 2000. State building aid would cover $16,763,234 of the project with the local share at $6,609,474. Aid on the costs of the bond issuance would generate another $459,579.
The state payments were to be spread over 20 years because the project was new construction. However, the paperwork with the state Education Department labeled the project reconstruction, which turned it into a 15-year schedule for state aid.
The state has paid its share, but it paid it five years early, David Boyle, the district’s interim business administrator, advised the Board of Education.
The district still needs to pay the final five years of debt service. In 2015-16 and 2016-17, Medina’s local share on the debt service will be $41,480 and then $43,805, respectively, Boyle said.
However, that payment will jump to $1,698,543 in 2017-18, $1,693,350 the following year, $1,668,081 in 2019-20, and then $1,665,625 in 2020-21. Those payments will need to be made without an influx of state aid.
Boyle advised the Board of Education and school officials to take stock of reserve funds and fund balance to help with what he called the upcoming “fiscal cliff.” Some of the higher-than-expected state aid over the 15 years helped the district build up its reserves and fund balance.
The district will also need to factor in those four big debt payments as it plans two budgets before the first large payment is due.
“We caught it now and we can deal with it now,” Boyle said. “We’ll try to ease into the cliff so it’s not a cliff.”
Boyle said the district needs long-range planning for its finances, and a multi-year approach for tackling the debt payments.
Board of Education members agreed and said they would work with the business administrator and Superintendent Jeff Evoy for a long-range plan for finances.