This file photo shows students from the Logan-Hocking Local School District.

The latest yearly financial report of the Logan-Hocking Local School District shows a district that, while challenged by uncertainties in state funding, employee pension liabilities and enrollment levels, is in solid and improving economic condition, and consistently earns praise for the excellence of its financial reporting.

The report was included in, and provided the basis for, a state auditor’s report, which covers the fiscal year that ended June 30, 2020, and was released last month.

Based on its examination of the district’s financial statement, Ohio Auditor of State Keith Faber’s office found no significant problems at the level of the financial statement, or in the district’s handling of major federal programs.

Supt. Monte D. Bainter II said Monday that he’s generally pleased with where the district is at financially, while acknowledging that state funding remains a large area of concern, with the Ohio General Assembly continuing to work on school funding legislation.

“It’s a crystal ball,” Bainter said. “There’s just some uncertainty there, to be quite honest.”

He said the district so far seems to be “holding our own” in terms of enrollment, though he noted that students are being instructed on multiple platforms due to the pandemic, and the enrollment situation may change. “At the end of the day, parents do make some choices,” he observed.

District Treasurer Paul Shaw agreed that the state gave LHSD “a clean audit” for FY 2020, and added that the district continues to do its best under trying circumstances.

“In this pandemic we’ve faced challenges like we’ve never faced before, but we’ve held our own,” Shaw said.

In a letter of transmittal accompanying the district’s financial report, Bainter and Shaw note that the district, which covers almost all of Hocking County as well as small bits of Vinton and Perry, serves around 3,826 students. It enjoys a diverse local tax base, the letter says, “and recent developments characterize a relatively stable local economy.”

These developments include sustained growth in both the local residential and commercial property markets over the last 10 years. The letter also observes that while the top five assessed tax valuations in the district are public utilities, the district’s tax revenue is not heavily dependent on any particular set of payers; the top 10 valuations not including utilities account for only 2.2 percent of the district’s taxable value, and the biggest taxpayer in that group, Walmart Real Estate, accounts for less than 0.3 percent. Likewise, the letter states, “no single employer accounts for a significant portion of total jobs” in the district.

The biggest employers in the district, the letter notes, are government services, with the district itself in first place, county government second, and Hocking Valley Community Hospital – which is organized as a county hospital under Ohio law, and treated as a “component unit” of Hocking County for financial reporting purposes – third.

In Fiscal Year 2020 the district reported total revenues of $52,659,765,of which general tax revenues made up a little over 39 percent; inter-governmental unrestricted grants accounted for almost 38 percent, program revenues brought in about 22 percent, and “other” was less than 1 percent.

Compared to state averages, Logan-Hocking has low wealth levels, the letter says, but adds that these “appear to be increasing relative to the state’s other 610 public school districts,” and that the district’s most recent five-year forecast “indicates that its financial condition is improving.” Fiscal Year 2020 was recorded as a “break-even” year budget-wise – there was actually a surplus of over $116,000 – and “significant surpluses” are expected for FY 2021 through 2023.

Part of this is due to anticipated increases in revenue, thanks in part to a natural gas pipeline being laid in the district which pays significant property tax, and a triennial update of county property values that’s expected to increase property tax collections by 15 percent for calendar year 2020.

On the less positive side of the ledger are the issues of state foundation funding for public schools; uncertainties about unfunded pension liabilities; and a projected drop in enrollment for the district in coming years.

The pension issue is complex, and part of a larger issue of the funding and sustainability of the state’s public employee retirement system. The district says that it saw higher expenses in FY 2020, due in part to increases in its net liabilities for state pensions and other post-employment benefits (OPEB). Treasurer Shaw noted that inclusion of a mention of this issue was required by the state of all public school districts.

On the state school funding front, the district reports that in the last five years, the district’s state foundation funding has gone down by about 1.8 percent per year, and in the fourth quarter of FY 2020, was cut by $604,000 due to COVID-19 impacts on the state.

Growth in locally generated revenues help offset this, Bainter and Shaw suggest in the report, adding, “However, current pressures on the State of Ohio to reallocate its funding priorities pose a threat to the District’s long-term financial stability. The District’s forecasted drop in student enrollment also poses a major threat.” Regarding the state funding question, the officials promise to “watch things closely in the Ohio Statehouse.”

The impacts of the pandemic going forward are another wild card. Their “impact on the School District’s future operating costs, revenues, and any recovery from emergency funding, either federal or state, cannot be estimated at this time,” the report says.

The bottom line of the report is that “the District’s financial condition is improving.” This status is reflected in the district’s Aa2 bond rating from Moody’s Investors Service; of the 357 school districts in Ohio that are rated by Moody’s, only 31 have higher ratings than Logan-Hocking.

And the district, to judge by the awards it has received for the quality of its financial reporting as well as its academics, is both keeping close track of its money, and making good use of it.

Academic honors include Central Elementary’s recognition as a national title school of the year in 2020; Central and Hocking Hills Elementary both being named high progress schools of honor by the Ohio Department of Education in 2018; Green Elementary winning an ODE momentum award in FY 2015; Chieftain Elementary being one of nine Ohio schools inducted into the Ohio Association of Elementary School Administrators’ Hall of Fame in 2017, and the district’s special education program repeatedly receiving ODE’s highest rating.

On the financial side, the district can boast of winning, for 18 years running, both a certificate of achievement for excellence in financial reporting from the Government Finance Officers Association of the U.S.& Canada, and an international certificate of excellence in financial accounting from the Association of School Business Officials; and in 2018, an award with distinction from the Ohio Auditor of State.

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