Understanding Cash Balance & Carryover: Why It Matters for Middletown City Schools

Recently, the Ohio House passed its version of House Bill 96, the state’s biennial budget, which includes a provision that could significantly impact school districts across the state, including Middletown City Schools. The bill proposes capping school district cash balances or “carryovers” at 30%, penalizing districts with a higher reserve by reducing funding. While this may sound like a technical change, it poses real threats to student programs and long-term financial planning. This could reduce Middletown City Schools’ funding by as much as $8,000,000 next school year!

What is a Cash Balance or Carryover?

A cash balance, or carryover, is the amount of money a school district has on hand at the end of its fiscal year, typically June 30. Think of it like your checking account at home: it’s not extra money, it’s what’s used to pay daily expenses like transportation, salaries, utilities, instructional materials, and student services. It ensures operations continue while waiting for the next round of local tax revenue or state payments to arrive. It's not an emergency fund - it's our operating cash.

Where Does the Money Come From?

For Middletown City Schools, the majority of funding comes from the Ohio Department of Education and Workforce, which distributes funds bi-monthly. Our second largest source is local property taxes, which are issued twice a year, followed by federal, state, and local grants. Smaller amounts come from student activity fees for athletics, parking, and field trips.

How Is the Money Used?

Approximately 80% of Middletown City Schools' operating expenses go toward salaries and benefits for our dedicated staff. The rest of the funds are for essential services like busing, fuel, facility maintenance, instructional materials, technology, and more. These funds help us maintain safe, clean schools and deliver high-quality instruction every day.

Why Carryover Matters for Our District

Middletown City Schools currently holds about 138 days (38%) of operating expenses in reserve, our highest projection in the current five-year forecast. This figure is expected to drop to about 110 days (31%) in the coming years. These funds are essential for:

• Paying bills while waiting for semiannual property tax payments
• Covering grant-related costs, which are reimbursed after we spend them (over $15 million in grant expenses last year alone)
• Managing cash flow to avoid borrowing when expenses spike unexpectedly
• Responding to emergencies, such as infrastructure repairs or unexpected costs

This financial planning helps keep Middletown City Schools stable and prevents levy requests, which could become frequent if this law passes, ultimately saving taxpayer dollars and keeping focus where it belongs, on students.

What Happens If HB96 Becomes Law?

If the 30% carryover cap is enforced, Middletown City Schools could lose access to critical funding or be forced to consider placing levies on the ballot sooner than planned. While the Ohio Department of Education and Workforce currently recommends a minimum reserve of 75 days (20%), Middletown City Schools responsibly targets no more than 150 days (40%), balancing operational needs with respect for taxpayers. Any time our projections show we might exceed this level, our Treasurer is required to report it, and a plan is developed with the Board of Education and Superintendent to responsibly reduce the balance.

Removing this financial flexibility would severely limit our ability to plan for the future, manage cash flow responsibly, and serve students effectively. It could even force us into short-term borrowing to cover basic expenses - a costly and unnecessary burden.

How You Can Help

We are working closely with our legislative partners to remove this harmful provision from the Senate’s version of the budget before it becomes law on July 1, 2025. We encourage you to make your voice heard in support of public education.

 Contact Senator George Lang and ask him to oppose the 30% carryover cap and protect Ohio’s public schools:

• Online: Contact Senator Lang
• https://ohiosenate.gov/members/george-f-lang/contact
• Phone: (614) 466-8072

Conclusion

Cash balance and carryover are not luxuries, they’re vital to maintaining strong, stable schools. Help us ensure Middletown City Schools can continue serving our students effectively and efficiently by advocating for smart, student-focused policies in the state budget.