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Five-Year Forecast Highlights Capital Investment Needs

Five-Year Forecast Highlights Capital Investment Needs

MAY 15, 2024 | The Lorain City Schools' five-year fiscal forecast now includes necessary maintenance needs, offering the community insight into how upcoming improvement projects at 14 schools and other district facilities will impact future finances.

On Monday, May 13, District Treasurer Tia Kearney provided a fiscal update to the Lorain Board of Education. In her presentation, Kearney outlined the district's current revenue projections and expenditure estimates. Her updates followed a presentation by Director of Operations Tony Dimacchia, who discussed growing capital improvement needs.

Dimacchia shared photographs of cracked pavement, standing water, and roof leaks leading to potential water damage. He emphasized the need to prioritize crucial investments in HVAC systems, walls and masonry upgrades, parking lot maintenance, and playgrounds to maintain optimal learning conditions and safety standards. Additionally, routine maintenance such as ceiling tile replacements, lighting upgrades, floor repairs, and door replacements are necessary in many buildings. Dimacchia also noted the need for safety, security, and technology improvements.

"Our latest five-year forecast highlights the significant capital improvement needs facing the district's aging facilities. Over the next 15 years, we estimate over $45 million will be required for necessary repairs, regular maintenance, and upgrades to ensure our buildings meet the educational standards our students deserve," said Superintendent Jeff Graham. "While this presents a financial challenge, addressing these capital needs is vital to providing a safe learning environment.

"We will need to carefully prioritize investments to sustain core academic programs and services," Graham added. "Community input will be critical as we make difficult decisions to align spending with available resources and explore potential funding solutions to maintain our facilities as community assets."

Twenty years ago, Lorain Schools rebuilt school buildings for $41 million, with the majority funded by the state of Ohio. Maintenance and upkeep are necessary as these facilities age to keep the buildings in good working order.

Kearney informed board members that the five-year forecast includes an average of $5 million in capital improvement costs each year beginning in the 2024-2025 school year.

This comes as Lorain Schools grapples with a financial situation that will require careful planning to prioritize student learning and high-quality curriculum in the future. Based on current revenue projections and spending plans, Lorain Schools anticipates deficit spending in its general fund by the end of fiscal year 2025, leading to a projected negative cash balance exceeding $11.8 million by the end of fiscal year 2026, growing to an estimated $71.8 million by fiscal year 2028.

Lorain Schools has not received additional local funding from voters in the last 12 years, managing its operations despite other districts typically requesting new funding every 5 to 10 years.

Kearney noted that these figures provide a conservative estimate of the district's financial outlook based on current data and that adjustments will be made as necessary. Potential factors affecting the forecast include Ohio's biennial budget, changes to the district's strategic plans and goals, tax levies, operational costs, and grant funding allowances. The district plans to update its forecast in November 2024.

"Maintaining safe, modern learning environments for our students is a core responsibility," said Board of Education President Courtney Nazario. "While addressing the district's capital needs presents financial challenges, made worse by rising inflation costs impacting us all, we must prioritize these crucial investments to uphold the educational standards our children deserve.

"Through strategic prioritization and community input, we will chart a fiscally sustainable path forward to secure our schools as invaluable community assets."

The forecast offers the community a clearer understanding of the district's finances, Kearney said, noting anticipated decreases in revenue and increased competition for state aid. Additionally, expenses are expected to rise in the next five years due to inflation and staffing changes.

Lorain Schools received $58 million in Elementary and Secondary School Emergency Relief (ESSER) funding over three rounds, with no additional federal funding anticipated.

The November 2024 forecast may include additional funding projects not mentioned in Monday's presentation, such as expansions at the high school, updates to the alternative school, and facilities for additional student supports, as well as plans for programs, services, initiatives, and potential requests for voter support.