Treasurer Presents Updated Five-Year Financial Forecast

Treasurer Matthew Brown presented an update on the district's five-year financial forecast during the Beachwood Board of Education meeting held on May 20. The forecast projected a positive fund balance through 2028 despite relatively flat revenues and rising operating costs. 

Required by state law, the five-year forecast is updated twice annually in November and May. It focuses on the district’s general fund, which includes staff salaries, service contracts, materials and supplies, and capital expenditures.

Revenue Highlights 

The Beachwood School District's total revenues are projected to remain stable over the next several years, increasing slightly from $38.4 million in 2024 to $38.9 million in 2028.

Property taxes comprise 82.2% of total revenue, with an even split between residential and commercial properties. "In most communities across the state of Ohio, you will see a much higher residential level of ownership in the property tax," noted Mr. Brown.

State funding contributes 10.7% of the district's revenue, while other local revenues, including interest income, tuition and fees, rentals, and tax settlements, account for 7.1%. These other local revenues are estimated at $2.7 million for fiscal year 2024.

Recent changes in state legislation have affected the district's ability to defend property values and negotiate tax settlements. This contributes to the challenge of increasing total revenues to keep pace with rising costs.

Expenditure Highlights

Total expenditures for the Beachwood School District are expected to rise from $41.0 million in 2024 to $45.8 million in 2028. This increase is driven by higher costs in personal services, employee benefits, and purchased services.

Salaries and wages are projected to grow annually as the district aims to maintain competitive compensation and high staff retention. “We’re always trying to retain and attract the best and brightest,” said Mr. Brown. "That’s something that Beachwood takes a lot of pride in and wants to continue.” 

The district will maintain a positive fund balance through 2028. However, expenditures began exceeding revenues starting in the fiscal year 2024. Consequently, the cash balance is projected to decrease from $22.5 million in 2024 to $2.4 million in 2028.

"That process is pretty typical in public schools,” said Mr. Brown. “We usually see a period where your revenues are outpacing your expenditures, but as our expenditures are continually rising due to things outside our control, like inflation and wage demand, there becomes a point where you begin to start deficit spending, and we are at that point."

Looking Ahead

To address these challenges, Mr. Brown said the district will continue strategic financial planning to control costs and collaborate with the City of Beachwood to attract new businesses and investments into the city. “We’re very blessed to be able to have a great working relationship with them,” Mr. Brown said. “We’re always in the discussion when there’s a new business or there’s a plan that helps to attract or retain a business.”

Last year, the district and city formed an innovative tax partnership to support the $65 million elementary facilities project. The City of Beachwood agreed to pause levying its 2.4 charter mills during the first three years of construction, maintaining a flat tax rate.

Mr. Brown highlighted Beachwood City Schools’ strong fiscal stewardship, which has delayed the need for a new operating levy. “It just goes to show the effort that has been taken in the past, and we continue to take that effort to control our costs where we can and try to push out that ‘ask’ as long as we can,” he said.

Despite this, the updated five-year forecast projects the need for a new operating levy in calendar year 2026. An operating levy funds the district's daily operations, while the bond levy passed in May 2023 finances the construction of new Bryden and Hilltop schools.

Beachwood voters last approved a 5.9-mill operating levy in 2018. Mr. Brown explained that this levy was expected to last four years before needing another. “That four years has come and gone,” said Mr. Brown. “We’re now approaching eight years based off of this forecast.”

To review the updated five-year forecast and assumptions, please visit the Finance webpage.