Brunswick Schools discusses impact statehouse legislation could have on district's finances

BRUNSWICK — State legislation is anticipated to have a negative effect on the Brunswick Schools' finances if it becomes law. Treasurer Mark Pepera presented a financial forecast at the Brunswick Board of Education meeting on Tuesday. "The board adopted a budget back in the fall," he said. "We've committed to a majority of our contracts for the year. Now we are sitting here three, four months later, understanding that there's been legislative changes over the last two to three months that will significantly impact our revenue stream, starting actually in January of this year." House Bill 129 would include emergency levies in the 20-mill floor calculation during Medina County's next reappraisal cycle, Pepera said. The legislature currently requires every school district in the state to levy 20-mills between inside and outside millage. Taxing districts have 10 mills of inside millage, which are not voted on and are split between entities, he said. Brunswick Schools has 4.9 out of the 10-mils in the Brunswick area. Outside millage is voted on by residents through levies. Brunswick Schools is not at the 20-mill floor because emergency levies are not included in the calculation, Pepera said. "Every time we would go through a reappraisal cycle, typically every three years, we would garner some additional revenue to bring us up to that 20-mill floor," he said. "We would get some revenue from our inside millage. We would also get some additional revenue from our outside millage that was exempt from the 20-mill floor." Therefore, starting with the county's next reappraisal cycle in fiscal year 2028, the district will not get a bump in revenue. Pepera said the district counts on that increase. "That process helps to prolong and keep our school district from going back to our voters and asking for additional money," he said. House Bill 186 would cap the amount of growth the district can receive for the 20-mill floor, while House Bill 335 would cap the district's revenue relating to inside millage, Pepera said. A GDP deflator will be used to limit the amount of appreciation the district can receive in both cases. "Essentially, it's a metric that takes a look at the last three years of inflation, and it adds that up," he said. "That is the maximum amount of increase you can receive." House Bill 309 would give the ultimate authority over the school district's taxation rates to the county budget commission, which comprises the county prosecutor, county treasurer and county auditor, Pepera said. School districts would have to go before the commission annually, and the commission could adjust or maintain tax rates that have already been voted on and approved by the community. "What's very concerning to us is we have individuals on this commission that really aren't here on a day-to-day basis," he said. "They're not in the know. That's not their job, and I'm not placing blame on those individuals. I'm just saying those individuals really don't have a day-to-day understanding of our operations." The Medina County commissioners also recently instituted an additional homestead credit for residents, which will impact the district, Pepera said. "For some individuals that will be a good thing because a lot of those individuals might be on fixed income type arrangements; however, the concerning thing from a school district standpoint, is we don't have a say so in the imposition of that credit," he said. "That particular credit will not be reimbursed by the state, meaning the school district will lose money." If revenues become flat and expenses continue to go up, the district has to go into its reserves, Pepera said. "When those lines cross, that means we're spending more than the money we have," he said. "We're deficit spending, and when that happens, there's only a couple options school districts have. It's cut programs and services and or go back to your community and ask for additional support." If the legislation passes, Brunswick Schools would start to lose a bit of revenue in Fiscal Year 2026 compared to where it was originally projected, he said. Brunswick City Schools would then feel more of an impact in Fiscal Years 27-30. The Brunswick Board of Education established a minimum 90-day cash balance policy, Pepera said. The cash balance allows the district to still operate for 90 days if it loses a significant amount of revenue. Under the previous forecast, the district would have a 75-day cash reserve in fiscal year 2030, but it is down to a 54-day reserve in the new forecast, Pepera said. The forecast assumes the renewal levy in 2028 will be passed. "Obviously, we will need to begin discussions on how we can sort of right the ship in that year five to try to get back, or at least closer to the policy," he said. "That is even required in our policy itself. The superintendent and I must develop a plan and propose that to the school board, so we'll be having some discussions going forward." There is a chance the district would have to be on the ballot every few years if the legislation goes through, Pepera said. "Some of the comments I've heard from some of the Legislature are, 'If you need additional revenue, you do have an avenue to do that. You can go back to your constituents,'" he said. "Technically, that's true, but we all know the success rates of operating levies. We know feelings from not only our constituents, but nationwide on taxation, so it's easier said than done, right?" The governor has until Saturday to sign the bills into law. Pepera said the district understands that tax reform is needed, but it was not given a lot of time to plan for or react to the legislation. "We didn't have the ability, at least for this school year, to make any adjustments on the front end, because we weren't aware of these legislative changes," he said. "About a month ago is when we actually found out what kind of revenue impact it was going to have." Contact reporter Madisyn Woodring at (330) 721-4049 or mwoodring@medina-gazette.com.