WHEELERSBURG LOCAL SCHOOL DISTRICT FINANCIAL REPORT: SUMMARY AND ANALYSIS OCTOBER 2018

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1 WHEELERSBURG LOCAL SCHOOL DISTRICT FINANCIAL REPORT: SUMMARY AND ANALYSIS OCTOBER 2018 Appendix A GENERAL FUND OCTOBER 2018 OCTOBER 2017 OCTOBER 2016 Beginning Balance October 1 $2,344, $2,122, $2,035, Revenues $869, $1,114, $839, Expenditures $1,141, $1,037, $1,012, Ending Balance October 31 $2,072, $2,199, $1,862, INTRODUCTION A school district s General Fund is its main operating fund containing most of its operational costs and the revenues to support those operations. This is why the emphasis of this financial report and its explanatory comments is the General Fund. A comparative summary of three years span of the General Fund for the month of May has just been presented. On the rest of this page we briefly mention May s results, particularly major financial events causing a variance from the normal cash flow cycle. On the next page the reader can compare year-to-date activity for the current and two previous fiscal years for the General Fund according to revenue and spending components. We provide details regarding major revenues and spending components in the section entitled Notes Regarding Significant Revenue and Expense Categories. A careful financial study should include an understanding of the school district s cash flow cycle. The district receives only state funding during most months of the year and state aid alone does not cover monthly costs, resulting in operating deficits in most months. GENERAL FUND NOTES REGARDING SIGNIFICANT EVENTS FOR OCTOBER October 2018 General Fund revenue is less than in the prior year, as the early September revenue payments (state funding bonuses for good test scores and graduation rates, and real estate tax discount reimbursements) evened out. State aid spiked in October as the state began using actual enrollment data and showed our district with an increase of resident students. (This is not what our in-house numbers led us to expect. We will be reviewing this to see if an adjustment to our Forecast may be needed. See more in the Notes section.) 2. October 2018 expenditures appear to above normal, but along with some expected higher costs of operation the district also make one extra check run at the end of the month. 3. November Outlook: With no local tax revenue coming to the district, November will be a deficit-spending month. TOTAL OF ALL FUNDS (EXCLUDING CONSTRUCTION & BOND RETIREMENT FUNDS) OCTOBER 2018 OCTOBER 2017 Beginning Balance October 1 $3,814, $3,759, Revenues $1,164, $1,399, Expenditures $1,355, $1,219, Ending Balance October 31 $3,623, $3,939, TOTAL OF ALL FUNDS CASH-FLOW NOTES FOR OCTOBER 2018 Besides the General Fund, the Total of All Funds primarily consists of district scholarship funds, the Permanent Improvement Fund, the Facility Maintenance Fund, the Severance Reserve Fund, various state and federal grants, various student activity funds and the food service fund. There are normal fluctuations for each of these funds throughout the year. The Total of All Funds decreased due to the General Fund decrease, which offset some smaller fund increases. State and Federal grant funds increased, as the first significant cash arrived to our district for the new school year. (The district had been spending grant cash that it actually didn t yet have, which is normal for this time of the year.) The Food Service Fund also saw a cash increase, as the district received its first federal meal reimbursement of this school year.

2 WHEELERSBURG LOCAL SCHOOL DISTRICT OCTOBER 31, 2018 TREND FINANCIAL REPORT CURRENT FISCAL YEAR BEGINNING JULY 1, 2018 COMPARED TO PAST TWO YEARS (2) FY 2019 compared to FY 2018 (2) Impact Impact Forecast Budgeted Actual YTD Positive / Actual YTD Positive / Actual YTD Line FY 2019 (1) FY 2019 (Negative) FY 2018 (Negative) FY Beginning Cash Balance $1,738,609 $1,738,609 $0 $1,741,684 ($3,075) $1,567,710 Revenues 1.01 Real Estate Taxes $1,357,963 $1,372,960 $14,997 $1,357,963 $14,997 $1,354, Unrestricted State Foundation $2,459,600 $2,509,155 $49,555 $2,488,333 $20,822 $2,473, Restricted State Aid $38,544 $38,422 ($122) $47,235 ($8,813) $53, Property Tax Allocation $198,247 $198,918 $671 $198,795 $123 $194, All Other Operating Revenue $863,992 $909,862 $45,870 $845,353 $64,509 $772, Advances In $8,028 $8,028 $0 $0 $8,028 $ All Other Financial Sources $147,500 $146,786 ($714) $142,592 $4,194 $65, Total Revenues $5,073,874 $5,184,131 $110,257 $5,080,271 $103,860 $4,914,235 Expenditures 3.01 Personal Services $2,689,648 $2,672,221 $17,427 $2,534,492 ($137,729) $2,464, Employees' Retirement/Insurance $973,600 $1,001,741 ($28,141) $915,126 ($86,615) $945, Purchased Services $826,589 $882,291 ($55,702) $816,595 ($65,696) $850, Supplies & Materials $247,546 $215,521 $32,025 $234,862 $19,341 $253, Debt Service: Principal & Interest $0 $0 $0 $0 $0 $0 4.3 Other Expenditures $83,745 $78,112 $5,633 $92,500 $14,388 $85, Transfers Out $0 $0 $0 $28,919 $28,919 $20, Total Expenditures $4,821,128 $4,849,886 ($28,758) $4,622,494 ($227,392) $4,619, Ending Cash Balance $1,991,355 $2,072,854 $81,499 $2,199,461 ($126,607) $1,862, (3) Revenue in Excess of Costs (Loss) $252,746 $334,245 $81,499 $457,777 ($123,532) $294,784 Notes and Methodology: (1) The "Budgeted YTD FY 2018" column is based on the district's most-recent Five-Year Financial Forecast, which was approved by the Board of Education and was submitted to the Ohio Department of Education. This Forecast, along with its notes containing assumptions, can be accessed at (2) The "Impact Positive / (Negative)" column is either positive or negative depending upon the effect on the district's cash balance. For example, if an expenditure category decreases, then this has a positive cash balance effect and it is shown as a positive number. (3) "Revenue in Excess of Costs (Loss)". This reflects the district's financial measure of its ability to pay future costs. The previous page contains a discussion of how most months are deficit-spending months. Tax revenues in July, August, February, and March carry our school district through leaner months. A positive value on this line is a savings account to be used later in the year.

3 NOTES REGARDING SIGNIFICANT REVENUE AND EXPENSE CATEGORIES Revenues Forecast Line # Forecast Item Description 1.01 The district received its August Real Estate Tax settlement. Since this is one of our major revenue sources we were glad to see a slight increase in this year's August payment compared to last year's. The district does not expect a significant increase in revenue, so any increase is welcome. We will receive the next advance in February with the final settlement in March; then some delinquent tax payments will following during April, May and June Unrestricted State Foundation and Restricted State Aid & 1.04 The district received $35,340 less in state funding in FY 2018 than it did in FY Because of declining resident enrollment, the district expects to see no increase in state funding for FY The increase thus far is less than 1/2 of one percent. The following table shows in four years we have 55 fewer Wheelersburg resident students. Annual Cumulative Cumulative Enrollment Change Change % Decrease FY 2014 Enrollment (ADM) 1, FY 2015 Enrollment (ADM) 1, (21.13) (21.13) -1.55% FY 2016 Enrollment (ADM) 1, (8.17) -0.60% FY 2017 Enrollment (ADM) 1, (17.35) (25.52) -1.87% FY 2018 Enrollment (ADM) 1, (29.38) (54.90) -4.02% In October the state began funding our district based on an increase of 8 resident students. While this is a welcome development, it is a surprise, since internal numbers indicated another decrease. This result can be affected by other district's data entry into the state's data system, so at this point our district is still evaluating our funding The Property Tax Allocation category shows state payments to the district for real estate tax discounts, called "rollback" and "homestead exemption", given to taxpayers for their primary residences and to low-income seniors. The first payment, based on discounts given to taxpayers for the August 2018 real estate tax settlement, arrived in September All Other Operating Revenue consists of Open Enrollment revenue, open enrollment special education weighted funding, state Catastrophic Aid, Medicaid in Schools program funds, and investment earnings. The district was surprised to receive a final settlement (FY 2016) for the Medicaid program in September. It normally comes in March. For this category, it was a significant amount ($67,609) and created a significant revenue increase compared to this time last year. Open enrollment has accounted for 89% of this category's total at this point in the year The district received payments in All Other Financing Sources derives from other districts for personal aide services our district provides to their students ($91,516). Also, the Bureau of Workers' Compensation paid a rebate to the district due to BWC's cash balance surplus. Our district's amount was $39,944. In September the district received an e-rate reimbursement of $13,635.

4 NOTES REGARDING SIGNIFICANT REVENUE AND EXPENSE CATEGORIES (continued) Expenditures 3.01 Personal Services and Employees' Retirement / Insurance & 3.02 This is the district's main area of cost. Schools by nature have people as their main assets and costs. The factors leading to increased costs in this area compared to last year: (1) The district spent more for salaries due to the following reasons: a. The district paid all Title I grant teacher salaries in July & August 2018 from the General Fund. The Title I grant allocation has been reduced over the years until it no longer pays for all our staffing costs connected to the grant's services. b. The district had retirements in June 2017, so there was corresponding savings in July The district had no retirements in June 2018, so the effect is a cost increase in July 2018 compared to July c. Not only did the district have more employees due to lack of retirements, but the district added several instructional aides during the school year. The district had more people on its payroll in July & August 2018 than one year before. d. The district granted employees a 3% base salary increase for the school year. (2) The district spent more for employee fringes and retirement for the following reasons: a. The district paid Title I grant teacher fringe benefits in July and August 2018 from the General Fund. b. The district had employees add medical insurance at the time of the open enrollment period with a few others adding coverage at other times due to qualifying events. The district's medical insurance costs climbed as a result The chief costs for Purchased Services include: 1. Tuition for district students who attend elsewhere (Open Enrollment, community schools, CAPE, college credit plus). 2. Special Education cooperative units and student support services (school psychologist, speech services, etc.). 3. Contracts for technology services. 4. Utilities for the district's preschool through 12th grade building, as well as the maintenance building, bus garage, administrative building, the stadium and a few other smaller usage points. Costs for Purchased Services (year-to-date) are both more than this year's budget and last year's actual. The reasons are: 1. The district received a payment from another school district for services provided by Wheelersburg. The district realized it had been over-paid and repaid the other district $32,030. That overpayment refund now shows as an expense for us. 2. Special Education cooperative units are $23,000 more year-to-date, but are based on last year's enrollment. We believe we receive a decreased billing later this year that will show savings on actual spending later. 3. Tuition for students attending elsewhere (open enrollment-out, community schools, college credit plus) is up by $14, Utilities cost is up by $13, Other Objects is a miscellaneous expense category, mainly consisting of fees charged the district by the Scioto County Auditor and Treasurer; the County Board of Education; the district's Information Technology Center ("META"); and the district's auditors. The decrease from last year is due to the timing of our liability insurance payment There will be no need to Transfer Out money to the Severance Reserve Fund in this fiscal year Excess of Revenues over (under) Expenditures While the district is performing better than anticipated at October 31, 2018, the end result is still mixed. While the General Fund balance has grown at a faster rate than expected, it has grown at a slower rate than last year. The growth in the fund balance is necessary to cover the negative cash flows that will happen during November, December, January and early February when the district will be in deficit-spending mode, with no incoming local tax revenues.

5 October 31, 2018 WHEELERSBURG LOCAL SCHOOL DISTRICT Cash Reconciliation Report Total Fund Balance $4,834, Gross Depository (Bank) Balances: Wesbanco (Checking) $681, Investments Certificates of Deposit $1,565, Other Securities (cost as of October 31, 2018) $1,142, Other Investments (Star Ohio, money market funds, etc.) $1,538, Sub-Total: Investments $4,246, Cash in Transit to Depository (recorded but undeposited monies) $2, Petty Cash Balances: Wheelersburg Elementary $ Wheelersburg High School $ Administrative Office $ Sub-Total: Petty Cash Balance $1, Change Funds $4, Total $4,936, Less Outstanding Checks -$102, Total (Reconciled Balance) $4,834, Adjustments: (1) Check returned by the bank NSF. $ Adjusted Total $4,834, George Grice Submitted by George Grice, Treasurer, Wheelersburg Local School District

6 INVESTMENT SUMMARY AS OF OCTOBER 31, 2018 Federal Agency Securities (General Fund) 21.3% of Portfolio Next Par Moody s Purchase Market Yield Date of Date of Next Paid Coupon ID/Cusip# Description Value Rating Date Value to Maturity Maturity Next Call Coupon Payment 3134GAJX3 FHLMC (g) $400,000 AAA 09/27/16 $398, % (step) 09/27/19 12/27/18q 03/27/19 $2, AAE46 FHLB (g) $500,000 AAA 01/25/17 $498, % 01/16/19 N/A 01/16/19 $3,125 $897, (Call notations: q = quarterly; a = annual call) Negotiable Certificates of Deposit 36.5% of Portfolio SN1 Capital One Bank (sc) FDIC 06/24/15 $189, % 06/24/19 N/A 12/24/18 $1, QS0 Discover Bank (g/sc) FDIC 06/24/15 $189, % 06/24/19 N/A 12/24/18 $1, REB0 Capital One NA (g) FDIC 10/14/15 $236, % 10/21/20 N/A 10/14/18 $2, XKE4 JP Morgan Chase Bank (g) FDIC 10/31/16 $193, % 10/31/19 07/30/18q 10/30/18 $ 750q H5 Wells Fargo Bank NA (g) FDIC 06/30/16 $240, % 06/30/21 N/A 10/28/18 $ 340m 02007GCJ0 Ally Bank (g) FDIC 05/03/18 $243, % 05/03/21 N/A 11/03/18 $3, M6A4 Morgan Stanley (g) FDIC 09/17/18 $249, % 09/20/19 N/A 09/20/19 $6,125 $1,541, (g=general; sc=scholarship) NOTE: Negotiable Certificates of Deposit are insured by the FDIC up to $250,000. Commercial Paper 5.8% of Portfolio 46640QTQ4 JP Morgan $250, A-1+/P-1 09/28/18 $245, % 06/24/19 N/A 06/24/19 $4, Money Market Accounts & STAR Ohio immediate liquidity 36.4% of Portfolio STAR Ohio $1,535, Huntington Investment Company money market account---gen. Fund $ Fifth/Third Securities money market account General Fund $3, $1,538, TOTAL PORTFOLIO $4,223, Investments decreased from last month s $4,462, as the district used funds from a matured Certificate of Deposit to cover deficit spending.