Five-year forecast explained


The goal of Madison Local Schools is to ensure our school district is constantly moving forward; in an ever-changing world, and with ever-changing generations of students, the financial support of the district is also ever-changing. This is why the district creates and uses “five-year forecasts.” 


“The five-year forecast serves as a tool to communicate and assess the financial health of a school district,” explains Sarah Palm, Treasurer. “The main goal of the forecast is to communicate to all stakeholders in the district – community, staff, administration, Board of Education – the financial status of the district this year and what’s projected for the next four years.” 


All city, local, exempted village, and joint vocational school districts are required to submit five-year forecasts twice annually to the Ohio Department of Education (ODE). According to ODE, the forecast contains two components, the first being historical and projected financial data, and the second being notes to explain any significant changes or “assumptions” a district used to develop the reported financial projections.


Superintendent Angela Smith says, “The five-year forecast is an excellent tool that allows the district to financially ‘regroup.’ We are able to take a step back, observe where we are, and create a comprehensive plan that holds us accountable.” 


Ms. Palm served as the lead in developing the latest five-year forecast, which encompasses fiscal years 2023-2027. Ms. Palm also utilized Frontline Analytics, a software company, that helped bring in live information from the district to produce visuals that clarify data and are easily comprehensible. The forecast was finalized at the end of October and presented to the Board of Education at the Board Meeting on November 22. 


If you would like to read more about what was considered in the 2023-2027 five-year forecast, keep reading below for a brief summary. 


Major forecast considerations included the following: 

  • The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on reserve balances to 3.9%, effective November 3, 2022. This added slightly to income earned on interest.
  • The cost of diesel fuel, food, and materials are all expected to continue to rise due to inflation. 
  • Special Education costs have risen significantly this year, causing a large spike in salaries and purchased services for outplacements to other facilities. 
  • With the most recent negotiations, a 1-year, 3% raise was approved for both the certified and classified staff; previously, raises had not been given since 2020. 
  • To help offset the cost of those raises, the union agreed to eliminate one health insurance plan offered to employees, reducing the overall cost of health insurance. 
  • The district was granted funding through the ODE for new school buses; the grant will provide funding of $180,000 towards the purchase of four school buses, and the district will provide the remaining balance. 
  • Given the age of the fleet of our school buses, the cost of bus repairs continue to rise. 


The five-year forecast predicts the district’s cash balance will be positive at year-end in fiscal year 2023, but it is projected to move into the red by the end of fiscal year 2025; a worsening cash balance can erode the district’s financial stability over time. This is not helped by the gradual decline of enrollment seen at MLS throughout the past years. In 2017, MLS had enrollment of 2,879, but that number has since dropped to 2,585 for this fiscal year. Enrollment is projected to drop to 2,424 in the subsequent years of 2024-2025, based on live birth rates and historical trends. Enrollment is directly correlated to funding from the state, but it is hard to tell how much that will equate if enrollment continues to decline. 


These are a few of the identified and projected issues found during research for the five-year forecast. Final insights and considerations are included below: 

  • Look into alternative revenue sources to offset expenses while providing the best possible education for our students.
  • Continue to use surplus funds toward projects that produce cost savings in the future. This will effectively decrease future expenditures.
  • Stay up-to-date on Fair School Funding in regard to the state budget.
  • Increase educational opportunities to increase overall district enrollment, thus increasing funding from the state.
  • The Permanent Improvement Levy which generates 1 mill will need to be renewed on either the May 2023 or the November 2023 ballot.
  • The Emergency Levy that generates 1.54 mills will need to go on either the May 2024 or November 2024 ballot.


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