Brunswick City School District Five Year Financial Forecast Fiscal Year 2017 to Fiscal Year 2021 (Including Historical Data)

Transcription

1 Brunswick City School District Five Year Financial Forecast Fiscal Year 2017 to Fiscal Year 2021 (Including Historical Data) Prepared by the Office of the Treasurer/CFO 3643 Center Road Brunswick, Ohio Version 2 (May 2017)

2 Revenue General Property Tax (Line 1.010) has been calculated with a rise in total assessed valuation for our district FY The Auditor s last reappraisal occurred in 2014 and we realized a net decline as real estate values decreased about 5.0% in Medina County; this is due to the down turn in the market. The County conducted the triennial update in 2016 and provided preliminary estimates to the District. While tax values may rise/decrease in future years, the result will depend largely on the strength of the Medina County real estate market and the County Auditor s subsequent assessments. Emergency Levy I was originally passed in November 1992 for a five year period for 5.91 mills and it generates $2.02 million per year. It has been renewed four times and in March of 2012 was renewed for an eight year period and it will expire in December It is currently collected at 2.2 mills. Emergency Levy II was originally passed in November 1994 for a five year period for 7.82 mills and it generates $3.4 million per year. It has been renewed three times and in May of 2009 and 2016 was renewed for an eight year period. It will expire in December It is currently collected at 3.4 mills. Emergency Levy III was originally passed in May 2004 for a five year period for 6.7 mills and it generates $5.78 million per year. It has been renewed twice and in May of 2014 was renewed for an eight year period and it will expire in December It is currently collected at 6.1 mills. Emergency Levy IV was originally passed in May 2006 for a five year period for 4.9 mills and it generates approximately $4.67 million per year. It has been renewed once in November of 2010 for a seven year period and it will expire in December It is currently collected at 4.9 mills. Non-municipal owned electric utilities and rural co-ops are now deregulated in the State of Ohio. All other electric company personal property will be reduced from 100% assessed valuation to 25%. Effective May 1, 2001, a kilowatt-hour (kwh) tax has been collected, 37.8% of these new dollars are being deposited into the Property Tax Replacement Fund (PTRF). The monies in the PTRF are being paid to school districts that lost revenue. In 2005 the Public Utility Tangible Valuation was $15.1 million. In 2014 the assessed value was re-adjusted to $16.2 million. Tangible Personal Property Tax (Line 1.020) (Class IV) affirms that the assessed valuation for Personal Property has been eliminated. The State planned to reimburse the district for losses incurred above and beyond the change in the assessment rates due to AMSubHB 95. The cumulative loss of this action is $6.7 million from FY 2012 through FY However, the district receives a small reimbursement on its fixed sum levies. Forecast FY 2017 V2 Page 1

3 Assessment Percentages on Tangible Property Tax Year This chart is included for historical perspective. Tax Year Inventory 23.00% 18.75% 12.50% 6.25% 0.00% 0.00% 0.00% Machinery & Equipment 25.00% 18.75% 12.50% 6.25% 0.00% 0.00% 0.00% Telephone Company (post 1995) Telephone Company Legacy 25.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 67.00% 46.00% 20.00% 15.00% 10.00% 5.00% 0.00% Revenue (continued) Unrestricted Grants in Aid (Line 1.035) are projected for FY 2017 based upon current State Foundation Funding (SFPR) data and no additional legislative changes due to the DeRolph funding decision. In fiscal year 2015, the School District received just over $25 million of school foundation support (Basic Aid) in the general fund. This aid comprised approximately 37% of our operating revenue. The estimate also reflects the Governor s most recent changes to Basic Education funding. These changes have adjusted the basic aid amount, added Targeted Assistance, K-3 Literacy, and other pupil-teacher based reimbursements. The State anticipates additional revenue to school districts with the Casino Tax; the 33% tax netted us about $21 per pupil in FY 2013 and approximately $52 per pupil in FY This equates to $159K in FY 2013 and $384K in FY 2016 and beyond. (Assumptions made are that all Casinos will continue to generate a steady stream of revenue for the State and local governmental entities.) Restricted Grants in Aid (Line 1.040) is for Career Tech funding and bus purchase reimbursements (funding currently eliminated). Any future increases in State Aid are estimated due to increased enrollment. Funding is negligible and projected at $119k per annum FY 2017 through FY Note: The formula calculations and projections for State funding have been finalized for FY 2016 and FY State Funding for schools is based on several factors all of which are subject to future legislative action. School Funding beyond fiscal year 2017 will be set as part of the State s biennial budget for fiscal years 2018 and As mentioned previously, due to recent economic conditions within the State and the anticipated change in tax revenues in the next bi-annual budget, the level at which the State will fund schools is uncertain. Funding is estimated based upon the most recent information from the Legislative Service Commission (LSC). Federal Restricted Grants in Aid (Line 1.045) is for Federal revenue. Historically, this short lived (FY 2010 & FY 2011) revenue stream was a result of the American Recovery and Reinvestment Act (ARRA) and flowed through the State as the School Foundation Stabilization Fund (SFSF). The federal government had subsidized basic aid so the revenue was recorded in Fund 532 but remained a component of the General Fund for the SM-1 & the Five-Year Forecast. The Federal Government has also provided an Education Jobs Fund 504 for FY Currently we only record and receive Federal Medicaid reimbursements in this line item (FY FY2021). Property Tax Allocation (Line 1.050) contains three revenue components for FY 2017 through FY The first, Rollback, is a mathematical calculation and function of Class I and Class II Real Estate tax collections. The second component was revenue from the Property Tax Replacement Fund (PTRF) that has since expired for Fixed Rate Levies. Note: Property Tax Rollback reimbursement is set to be discontinued as is the Homestead Exemption for all NEW levies effective November, Forecast FY 2017 V2 Page 2

4 Revenue (continued) The elimination of Rollback & Homestead does NOT impact our revenue stream, it only means that the taxpayer (homeowner) now will pay 100% of any new levy (i.e. will not receive 12.5% credit). The final component is generated from the Personal Property Tax (PPT) reimbursement mechanism as required under the provisions of ORC The revenue from PPT reimbursement is generated from the Commercial Activity Tax (CAT) a product of HB 66. Due to the economic downturn the CAT is producing less revenue than anticipated by the State and shall result in a reduction of the PPT reimbursement and eventually a total elimination in FY 2020 and beyond for Fixed Sum Levies. All Other Revenues (Line 1.060) consist of several components including revenue from tuition, student fees, interest income, rental income, and transportation fees. All components remain relatively constant in this projection. We cannot forget to mention the negative impact of HB 920 on our revenue stream (mitigates inflationary growth) and the need to continually go back to the voters for additional funds. Note: Revenue calculations anticipate the renewal of all expiring emergency levies. Expenditures Personal Services (Line 3.010) are estimated to increase to account for the respective experience credit provided to our certified and classified staff and incorporate wage adjustments negotiated with our collective staff thru The step increases for certificated staff are approximately 2.3% and the steps for classified staff are about 2.1% per year. Incremental steps are included for FY , and an increase on the base is estimated for FY Special Note: The State reversed its previously mandated all-day kindergarten (ADK) for FY 2011; The District was provided a waiver for FY 2011 but had to increase the number of classrooms available for instruction and added teaching staff for FY 2012 ( school year) to accommodate ADK programming. Fringe Benefits (Line 3.020) costs are a function of Personal Services (wages) and are approximately 18% of the total annual expense for personnel. Employee benefits were then factored in to accelerate at the same rate, except for medical benefits. We anticipate an increase of 10% in FY 2018 and 8-9% in subsequent years due to rising medical and prescription drug costs. This compounding increase in cost will continue unless there is a change in the medical plan design or additional cost sharing from district employees. Note: Due to a change in the negotiated agreements severance pay is no longer a salary item and the expenditure is moved to the fringe benefit category and becomes a Tax Deferred Benefit. Purchased Services (Line 3.030) increased over 8% in FY 2016 primarily due to an anticipated increase in Special Education Service Contracts, Tuition to other Districts and the State deduction (payment) for Community Schools. The estimate for FY 2017 is just under $6m with a 1-2% annual growth factor in subsequent years. Reduction to anticipated utility (gas & electric) charges was a direct result of recently initiated cost saving measures and utility usage monitoring. Supplies and Materials (Line 3.040) are set to increase approximately 2% for this year. In FY 2018 through FY 2021, the district plans to expend $500K-$750K per year for classroom textbooks and software/technology related materials. We anticipate approximately spending $1.8m in FY 2018 with an annual growth factor of 2% in subsequent years. The cost of bus and vehicle fuel will continue to impact this line item. Forecast FY 2017 V2 Page 3

5 Expenditures (continued) The Capital Outlay (Line 3.050) and the departmental equipment budgets have been relatively frozen as management has decided to address most of this need from the Permanent Improvement Fund (003). The district derives such funds from an allocation of inside millage of 1.25 mills. The budget for General Fund capital outlay is stabilized at approximately $280K per year from FY 2017 through FY Some of the district s Capital Expenditures, including textbooks, technology, and buses will be augmented through the Medina County Sales Tax. This unique funding opportunity provides approximately $3-3.5 million per year for capital needs; however, almost $1.6 million is committed for debt service for the recent $24 million construction & renovation project. The Board of Education promised the Brunswick citizens to rescind the previously passed Permanent Improvement Levy (November 2006) thus reducing its revenues by approximately $700K per annum. This action equates to an approximate reduction of 7/10ths of one mill on the tax duplicate. (Mentioned for historic purposes only) General Obligation Debt Service (Lines ) The district had an unvoted debt issue as permitted by the Ohio Revised Code (ORC) that has approximately $143,717 in outstanding principal that will be fully paid by The District does not anticipate issuing any short term notes for General Fund debt obligations during the next few years. Other Expenditures (Line 4.300) are projected to increase at 2% per year FY 2018 through FY 2021; however, this line item may be adjusted to reflect changes in County Treasurer and Auditor Fees. Operating Transfers (Line 5.010) N/A. Advances (Line 5.020) were $10,059 last year and estimated at $170,000 per year from FY 2017 until FY The district has reinstituted the practice of advancing money to food service, and respective federal and state grants if their funds are not in the process of collection. Summary This financial forecast presents, to the best of the Chief Financial Officer s knowledge and belief, the s expected financial position as of May15, The assumptions disclosed herein are those that the CFO believes are relevant and significant to the forecast. There will be differences between the forecasted and actual results as events and circumstances frequently do not occur as expected and those differences may be material. Actions by the legislature, Ohio Board of Taxation, the Ohio Supreme Court, and other governmental bodies may also impact projections and the results of such actions could seriously alter the accuracy of this document. Respectfully submitted, Mark c Pepera CFO/Treasurer Forecast FY 2017 V2 Page 4

6 Five Year Forecast - FY 2017 (Version 2) Actual Actual Actual Estimated Estimated Estimated Estimated Estimated Fiscal Years Ended June 30, Line # Local, State, & Federal Revenues General Property Tax (Real Estate) 32,757,150 32,768,504 33,406,320 34,669,234 35,052,004 32,997,030 31,137,998 30,599, Tangible Personal Property Tax 941,812 1,032,656 1,097,092 1,156,971 1,203,701 1,231,116 1,256,966 1,281, Income Tax Unrestricted Grants-in-Aid 22,793,493 25,755,469 27,417,848 27,671,308 28,171,308 28,216,308 28,216,308 28,216, Restricted Grants-in-Aid 26,072 16, , , , , , , Federal Restricted Grants-in-Aid (SFSF) 109,877 85, , , , , , , Property Tax Allocation 5,511,346 5,192,461 5,185,608 5,319,838 5,305,772 5,327,129 5,348,835 5,343, All Other Revenues 1,270,737 1,172,265 1,303,067 1,175,000 1,200,000 1,200,000 1,200,000 1,200, Total Local, State, & Federal Revenues 63,412,501 66,022,997 68,693,737 70,251,350 71,211,785 69,250,583 67,439,107 66,919,171 Line # Other Financing Sources Proceeds from Sale of Notes State Emergency Loans and Advancements (Approved) Operating Transfers-In Advances-In 879, , ,046 30, , , , , All Other Financing Sources ,372 17,461 28,000 25,000 25,000 25,000 25, Total Other Financing Sources 879,750 1,292, ,507 58, , , , , Total Revenues and Other Financing Sources 64,292,251 67,315,169 68,817,244 70,309,350 71,386,785 69,425,583 67,614,107 67,094,171 Line # Expenditures Personal Services 40,684,138 40,330,955 39,926,159 41,491,515 43,087,303 44,714,115 45,583,554 46,469, Employees' Retirement/Insurance Benefits 15,786,286 15,995,268 16,185,654 17,056,237 18,021,522 19,172,759 20,310,051 21,529, Purchased Services 5,265,986 5,614,853 6,084,102 5,960,000 6,120,600 6,181,806 6,243,624 6,306, Supplies and Materials 2,263,616 1,859,192 1,717,737 1,750,000 1,836,000 1,872,720 1,910,174 1,948, Capital Outlay 154,735 59, , , , , , , Intergovernmental Line # Debt Service: Principal-All (Historical Only) Principal-Notes Principal-State Loans Principal-State Advancements Principal-HB 264 Loans Principal-Other 60,865 63,817 66,912 70,157 73, Interest and Fiscal Charges 16,263 13,311 10,216 6,971 3, Other Objects 1,133, , , , , , , , Total Expenditures 65,365,155 64,721,263 65,661,755 67,514,880 70,340,553 73,157,400 75,281,403 77,506,728 Line # Other Financing Uses Operating Transfers-Out 385, Advances-Out 420, ,787 10, , , , , , All Other Financing Uses Total Other Financing Uses 805, ,787 10, , , , , , Total Expenditures and Other Financing Uses 66,170,955 64,829,050 65,671,814 67,684,880 70,510,553 73,327,400 75,451,403 77,676,728 Five Year Forecast FY 2017 V2 Exhibit 1 BOE Meeting

7 Five Year Forecast - FY 2017 (Version 2) Actual Actual Actual Estimated Estimated Estimated Estimated Estimated Fiscal Years Ended June 30, Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses -1,878,704 2,486,119 3,145,430 2,624, ,232-3,901,817-7,837,296-10,582, Cash Balance July 1 - Excluding Proposed Renewal/Replacement and New Levies 4,080,693 2,201,989 4,688,108 7,833,538 10,458,008 11,334,240 7,432, , Cash Balance June 30 2,201,989 4,688,108 7,833,538 10,458,008 11,334,240 7,432, ,873-10,987, Encumbrances June ,192 1,588, , , , , , ,000 Line # Reservation of Fund Balance Textbooks and Instructional Materials Capital Improvements Budget Reserve DPIA Debt Service Property Tax Advances Bus Purchases Subtotal Fund Balance June 30 for Certification of Appropriations 1,313,797 3,099,518 6,973,306 9,508,008 10,384,240 6,482,423-1,354,873-11,937,430 Line # Revenue from Replacement/Renewal Levies Income Tax - Renewal Property Tax - Renewal or Replacement ,335,500 4,671,000 5,681, Cumulative Balance of Replacement/Renewal Levies ,335,500 7,006,500 12,688, Fund Balance June 30 for Certification of Contracts 1,313,797 3,099,518 6,973,306 9,508,008 10,384,240 8,817,923 5,651, ,570 Line # Revenue from New Levies Income Tax - New Property Tax - New Cumulative Balance of New Levies Revenue from Future State Advancements Unreserved Fund Balance June 30 1,313,797 3,099,518 6,973,306 9,508,008 10,384,240 8,817,923 5,651, ,570 Five Year Forecast FY 2017 V2 Exhibit 1 BOE Meeting