Berea City School District

Transcription

1 Financial Report Five Year Forecast May, 2018 Public Finance Resources,

2 Table of Contents Table of Contents 2 Executive Summary 3 PAGE # Revenue Overview General Property Tax (Real Estate) Public Utility Personal Property Unrestricted Grants in Aid & Restricted Grants in Aid Property Tax Allocation All Other Operating Revenues Total Other Financing Sources 11 Expenditures Overview Personnel Services Employee Benefits Purchased Services Supplies and Materials Capital Outlay Intergovernmental & Debt Other Objects Total Other Financing Uses 20 Forecast Compare 21 Five Year Forecast 22 Supplement 1 Forecast Projections using House funding proposal 23 Forecast Purpose/Objectives Ohio Department of Education's purposes/objectives for the five year forecast are: To engage the local board of education and the community in the long range planning and discussions of financial issues facing the school district. To serve as a basis for determining the school district's ability to sign the certificate required by O.R.C , commonly known as the "412 certificate." To provide a method for the Department of Education and Auditor of State to identify school districts with potential financial problems. Public Finance Resources,

3 May, 2018 Executive Summary Berea City School District Five Year Forecast Simplified Statement Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Beginning Balance 17,387,685 18,951,403 19,263,838 19,842,702 18,878,881 + Revenue 85,312,150 82,748,075 82,783,440 82,680,048 82,664,102 + Proposed Renew/Replacement Levies + Proposed New Levies Expenditures (83,748,431) (82,435,640) (82,204,576) (83,643,869) (85,860,210) = Revenue Surplus or Deficit 1,563, , ,864 (963,821) (3,196,108) Ending Balance 18,951,403 19,263,838 19,842,702 18,878,881 15,682,774 Revenue Surplus or Deficit w/o Levies 1,563, , ,864 (963,821) (3,196,108) Ending Balance w/o Levies 18,951,403 19,263,838 19,842,702 18,878,881 15,682,774 Summary: The district's revenue base is projected to decline throughout the forecast period, primarily due to the continued phase out of the TPP reimbursement from the State of Ohio. Minimal increases are projected in the district's property tax revenue and state funding, the district's two main sources of revenue. The district will continue to try to offset the decline in revenue through budget reduction initiatives that have been incorporated into the forecast expense projections through FY21. While continued increases in health insurance premiums, out of district tuition expenses and minimal certified staff retirements cause overall increases in expenses to exceed the budget reduction initiatives that the district has planned for future fiscal years, the total year over year increases in annual spending fall far below the rate of inflation. Beginning in FY22, no additional annual operational budget reductions are anticipated or included in the expenditure projections. Cash and Stability A balanced budget and adequate cash balance are two sound business practices that ensure fiscal stability and a consistent and dependable educational experience for our students. Since FY14, the district has had a balanced budget. Based on the projections in this forecast, the district will also be able maintain a balance budget through FY20, as well as, maintain a minimum cash balance that is sufficient to fund district operations for one month of the school year for the entire forecast period. The district will need to research available options to increase revenue and/or reduce expenditures within the next few years to avoid deficit spending and reduced cash balances FY21 and subsequent fiscal years. $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 Revenue, Levies, Expenditures, and Cash Balance 2014 Actual 2015Actual 2016Actual 2017Proj. 2018Proj. 2019Proj. 2020Proj. 2021Proj. Total Revenue Replace/Renew Levies Total Expenditures Cash Balance Public Finance Resources,

4 Revenue Overview Prev. 5 Year PROJECTED 5 Year Avg. Annual Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Avg. Annual Change Change Revenue: Real Estate 2.04% 1.70% 2.42% 1.44% 0.46% 0.56% 0.35% Public Utility 6.47% 12.58% 3.80% 3.49% 2.01% 1.93% 4.76% Income Tax n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% State Funding 11.06% 4.55% 0.55% 2.39% 2.46% 2.66% 0.70% Restricted Aid % % 7.16% 4.99% 4.59% 0.43% 42.84% Restr Federal SFSF 90.13% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Property Tax Alloc 5.72% 6.96% 7.46% 7.95% 8.70% 9.45% 8.10% All Other Operating 1.85% 54.85% 13.51% 1.89% 1.49% 1.91% 9.33% Total Revenue 1.49% 2.51% 3.07% 0.56% 0.13% 0.02% 0.03% Total Other Sources 54.28% % 7.41% 80.95% 0.00% 0.00% 51.73% Total Rev & Other Srcs 1.49% 2.96% 3.01% 0.04% 0.12% 0.02% 0.03% Over the past five years, the district's overall operating revenue levels have increased by 1.49%, on average annually. For the five year forecast period, the district is anticipating an average annual decrease in revenue of.04%. The continued phase out of the tangible personal property (TPP) reimbursement and the elimination of the TPP supplement (received during FY16 and FY17) are the largest contributing factors to the declining revenue from FY18 to FY22. The two largest revenue sources for the school district, real estate tax revenue and state funding, are projected to increase over the next five years. However, the minimal growth in these areas do not generate enough income to overcome the loss of the TPP Reimbursement and TPP Supplement. Othr Sources 0.1% Real Estate 63.3% 64.6% Public Utility 3.5% 4.5% Real Estate Income Tax 63.3% State Funding 14.8% 15.7% Prop Tax Alloc 14.1% 9.2% Public All Othr Op Re 4.2% 5.9% Utility 3.5% Othr Sources 0.1% State 0.1% Funding Prop Tax 14.8% Alloc 14.1% All Othr Op Rev 4.2% 2017 Othr Sources 0.1% All Othr Op Rev 5.9% Real Estate 64.6% 2022 Prop Tax Alloc 9.2% State Funding 15.7% Public Utility 4.5% Public Finance Resources,

5 1.010 General Property Tax (Real Estate) Revenue collected from taxes levied by a school district by the assessed valuation of real property using effective tax rates for class I (residential/agricultural) and class II (business). FY 2017 Real Estate as a % of Total Revenue $60,000,000 Projected General Property RevRenewal Tax (Real Levy Estate) Revenue Actual and Projected 2013 $49,721,919 $1 FY 2017 Rea $50,000, $50,302, $50,152,648 $40,000, $50,949,819 $30,000, $52,481, $53,375,461 $20,000, $52,085, % $10,000, $52,836, $53,081, $53,377, Projected Revenue Renewal Levy Revenue Real estate revenue represents the largest source of revenue, at 63.3% of total general fund revenue. $49,721,919 $50,302,943 Between 2008 and 2016, the district has experienced reductions in real estate property values totaling over $200 million or 13.75% of the real estate tax base, which caused several of the district's existing levies to reach their full voted rate. Due to the restrictions of Ohio House Bill 920, the district's tax levies cannot collect more than they did in the previous tax year. As a result, the district experienced permanent losses of tax revenue since 2010, that total more than $739,000 annually. Overall, the district's property values increased by 1.5% in tax year 2017, with Class II property values having the largest increase in over decade. This change in values was due to a 1.75% increase, caused primarily by increases in board of revision/tax appeals and a 2.7% increase in values due to new construction. The district will go through a countywide property reappraisal in Based on current home sales and trend data, the district is anticipating a 2% increase in Class I property values and a.3% increase in Class II property values. Between 2012 and 2016, the district had to repay over $6,000,000 in refunds due to Board of Revision appeals and property tax complaints. These refunds have had a negative effect on the district's gross collection rate, which as seen below, reached its lowest level in tax year 2013 at 94.9%. Tax year 2017 was the first time in the past five years that the district did not see tax refunds negatively effecting the overall collection rate. The district actually had a tax credit of $1.55 million during tax year 2016 due to a tax appeal case being decided in the district's favor. As a result, the gross collection rate exceeded 100%. Higher than average delinquency collections received during the first half of tax year 2017 (collection year 2018), as well as, some property owners paying their tax year 2018 property taxes one year in advance due to changes in the federal tax law, has resulted in the district's gross collection rate projecting to exceed 100% for the second straight year. Subsequent year's projected gross collection rates for the forecasted period are expected to maintain a level just below 100% through tax year $50,152,648 $50,949,819 $52,481,805 $53,375,461 $52,085,306 $52,836,499 $53,081,686 $53,377, % of Total Real Estate 42.88% of Total Real Estate Revenue Revenue Gross Effective Effective Collection Real Property Yr Over Yr Residential Yr Over Yr Business Yr Over Yr Rate Tax Year Valuation Change Percentage Tax Rate Change Tax Rate Change All Taxes ,291,052, % ,298,186,320 7,133, % % ,301,850,930 3,664, % % ,275,009,230 (26,841,700) 2.1% % ,256,415,050 (18,594,180) 1.4% (0.01) (0.02) 102.0% ,276,139,870 19,724, % (0.83) 100.1% * ,299,666,268 23,526, % (0.77) (0.12) 99.7% * ,302,741,656 3,075, % % * ,305,867,537 3,125, % % Note: Tax Rates Include Existing Renewal Levies Included as Renewed, No New Levies Included * = These tax year valuations are projected based on current trends. Public Finance Resources,

6 1.020 Public Utility Personal Property Revenue generated from public utility personal property valuations multiplied by the district's full voted tax rate. FY 2017 Public Utility as a % Projected Tangible RevRenewal Personal Property Levy Tax Revenue Actual and Projected FY 2017 of Pub Total Revenue $4,000, $2,230,777 $2,230,777 $3,500, $2,441,091 $2,441,091 $3,000, $2,616,663 $2,616,663 $2,500, $2,725,893 $2,725, % $2,000, $2,926,720 $2,926, $3,295,005 $3,295,005 $1,500, $3,420,300 $3,420,300 $1,000,000 $500,000 $2,230,777 $2,441,091 $2,616,663 $2,725,893 $2,926, $3,539,732 $3,539, $3,611,045 $3,611, $3,680, $3,680, Projected Revenue Renewal Levy Revenue $3,295,005 $3,420,300 $3,539,732 $3,611,045 $3,680,816 Public Utility Personal Property Tax Revenue is generated from telephone, natural gas, electric and water lines and equipment. This source of revenue represents 3.5% of the district's overall revenue. Over the past ten years, public utility property values have increased by an average of 6.23% annually. Over the past two years there have been a significant amount of improvements made to this type of property throughout the district, resulting in a 21.5% increase in values. This is the largest increase the district has experienced in public utility personal property taxes in more than 15 years. This increase in property values has also increased the tax revenue the district receives, which by fiscal year 2019 will be $1,294,401 higher than the amount the district received in FY11. The average rate of increase to these property values are expected to increase at a slower annual rate for tax year 2018 and beyond. 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% 6.47% Year over Year Revenue Trend Year over Actual 5 YeProjected 5 Year Average % 6.47% % 6.47% % 6.47% % 6.47% % 6.47% % 4.76% % 4.76% % 4.76% % 4.76% % 4.76% 4.76% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies Public Finance Resources,

7 1.035 Unrestricted Grants in Aid Funds received through the State Foundation Program with no restriction. FY 2017 Unres State Aid as a % of Total Revenue FY 2017 Unr % $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Unrestricted Grants in Aid Actual and Projected $7,388,021 $8,641,888 $9,647,054 $10,903,803 $12,085,298 $11,535,610 $11,599,043 $11,876,685 $12,168,655 $12,492,477 On July 1st, 2017, the biennial budget implemented a change to the state foundation calculation that set the per pupil expenditure amount at $6,010 for FY18 and $6,020 for FY19. In addition, the new biennial budget capped annual increases in state aid at no more than 3% in additional revenue from the amount received in the previous year. The most significant change to the district that was made to the state funding formula was the elimination of the TPP Supplement, which generated $1,127,768 in FY17. This supplement was replaced with a TPP Offset adjustment which only applies to FY18. Under the TPP Offset, the district would have the funding cap increased by the difference of the loss in the TPP Supplement between FY17 and FY18 and the increase in state aid funding between FY17 and FY18. This calculation results in an increase in the funding cap for the district of $547,435 for FY18. For FY20 and subsequent fiscal years, the district is projecting that the per pupil expenditure amount will be increased to $6,100 initially, and increase $100 each year thereafter. In addition, the state funding projections assumes that the funding cap will remain at the 103% level. This funding cap results in the district not being able to receive over $3.8 million in revenue annually that the funding formula calculates the district should receive. Beginning in FY18, federal Medicaid reimbursements totaling a projections of $350,000 annually, were moved to the Other Revenue line. 12 Year over Year Revenue Trend Public Finance Resources,

8 1.040 & Restricted Grants in Aid Funds received through the State Foundation Program or other allocations that are restricted for specific purposes. FY 2017 Rest State Aid as a % of Total Revenue FY 2017 Res 0 0.2% $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Restricted Grants in Aid Actual and Projected $183,206 $139,766 $1,466,985 $749,660 $145,674 $432,707 $463,709 $486,860 $509,216 $511,384 Restricted grants in aid represent.2% of the overall general fund budget and include funding for catastrophic special education reimbursements, economic disadvantage funding and career tech funding. The catastrophic special education reimbursement represents approximately 83% of the total restricted grants in aid revenue. FY15 funding for this revenue line item is elevated due to the district not receiving the FY14 catastrophic special education reimbursement until FY15. During FY17, the catastrophic special education reimbursement was misposted to the Other Revenue receipt code. Therefore, the total revenue for this restricted grants in aid was significantly lower than previous years. For FY18 and subsequent fiscal years, catastrophic special education reimbursements are projected to total $300,000 annually. Career tech funding is projected to be $35,211 for FY18 FY22 and economic disadvantaged funding is expected to total $97,495 in FY18 and increase approximately $31,000 in FY19 and an additional $20,000 in FY20 FY Year over Year Revenue Trend % 42.84% 20 Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

9 1.050 Property Tax Allocation Includes funds received for Tangible Personal Property Tax Reimbursement, Electric Deregulation, Homestead and Rollback. FY 2017 Prop Tax Property Tax Allocation Actual and Projected Projected RevRenewal Levy Revenue Allocation as a % of Total $16,000,000 FY 2017 Pro Revenue $14,647,850 $14,000, $14,955,331 $12,000, $14,946,945 $10,000, $13,306, % $8,000, $11,668,046 $6,000, $10,855,797 $4,000, $10,045,988 $2,000,000 $14,647,850 $14,955,331 $14,946,945 $13,306,711 $11,668, $9,247, $8,443, $7,645, Projected Revenue Renewal Levy Revenue $10,855,797 $10,045,988 $9,247,596 $8,443,270 $7,645,013 During FY17, property tax allocation revenue represented 14.1% of the district's overall general fund revenue. This percentage will continue to decrease due to the phase out of the TPP reimbursement which was restarted in FY16. This reimbursement was designed to hold districts "harmless" from the impact that resulted with the elimination of the tangible personal property tax revenue that began in Since 2006, several state budgets have changed the amount and length of time school districts received this reimbursement. Originally, the district received $10,205,000 in TPP reimbursement, which was reduced to $8,699,000, where it remained from FY12 to FY15. The phase out in current law substantially reduces this reimbursement based on a phase out calculation. The district has modeled the impact of the phase out and should there be no change in legislation to alter the current phase out formula, the district will lose all of the $8,699,000 in TPP reimbursement by FY23. For FY18 this reimbursement will total $4,724,390. Homestead and Rollback property credits paid by the State of Ohio are also posted revenue line item. For the current fiscal year, rollback tax credits are expected to total $4,335,894 and homestead credits are expected to total $1,788, % 2.0% 2.0% 4.0% 6.0% 8.0% % 14.0% 5.72% Year over Year Revenue Trend Year over Actual 5 YeProjected 5 Year Average % 5.72% % 5.72% % 5.72% % 5.72% % 5.72% % 8.10% % 8.10% % 8.10% % 8.10% % 8.10% 8.10% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies Public Finance Resources,

10 1.060 All Other Operating Revenues Operating revenue sources not included in other lines; examples include tuition, fees, earnings on investments, rentals, and donations. FY 2017 Other Operating Revenue as a % of Total FY 2017 Oth Revenue 0 4.2% $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 All Other Operating Revenue Actual and Projected $4,036,017 $3,303,519 $3,765,760 $3,446,596 $3,441,335 $5,328,971 $4,608,918 $4,696,068 $4,766,176 $4,857,174 Other operating revenue represents 4.2% of the district's overall general fund operating revenue and includes revenue received for tuition from other districts, student fees, fines, interest earnings, as well as, rental income and miscellaneous revenue. As a result of instituting a new cash flow investment program in FY16, the district has seen a substantial increase in interest earnings over the past three fiscal years. During FY16, investment income only totaled $16,210. By the end of FY18, interest from investment earnings are expected to total $325,178 with an increase of 3% in FY19 and 1% annually thereafter. Tuition revenue represents 75% of all revenue receipts to the other operating revenue line. During FY17, only a half of the tuition revenue from the O.D.E. for the district's SF14 (court placed/foster placed students), SH14H (handicapped court placed/foster placed/snow students) and SFPD (Non handicapped snow school students) was paid. Due to the timing difference of when this revenue was received, as well as, changes in law around how the district bills tuition for students that attend Snow School, tuition revenue is expected to increase by $1,464,726 in FY18 to total $4,050,371. Beginning in FY19, regular and special education tuition revenue is expected to decrease to $3,275,000 and increase in subsequent fiscal years by 3% annually Year over Year Revenue Trend 9.33% 1.85% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

11 2.070 Total Other Financing Sources Includes proceeds from sale of notes, state emergency loans and advancements, operating transfers in, and all other financing sources like sale and loss of assets, and refund of prior year expenditures. FY 2017 Other Financing Sources as a % of Total FY 2017 OthRevenue 0.1% $700,000 $600,000 $500,000 $400,000 Other Operating Financing Sources Actual and Projected $300,000 $200,000 $100,000 $299,533 $208,834 $651,266 $315,115 $113,054 $488,598 $524,811 $100,000 $100,000 $100,000 This revenue line item also accounts for return of advances to the General Fund from the prior year, transfers from other funds and refunds of prior year expenses. Depending on the year end fund level of other funds, temporary advances can vary from year to year. For FY17, $86,153 was returned from FY16 year end advances. For FY18, this amount was much higher, totaling $488,598 in returns of FY17 yearend advances. Due to anticipated advances at the end of FY18, FY19 return of advances are projected at $524,811, followed by $100,000 annually for FY20 FY22. During FY17, $26,141 was transferred from the 200 funds to the General Fund for dormant accounts. No transfers are projected for the current or subsequent fiscal years. During FY15, the Ohio Bureau of Worker's Compensation issued a one time rebate which caused the Other Sources line item to increase by more than $260,000. Future year revenue levels for this line are expected to only include returns of advances from the previous year Year over Year Revenue Trend 51.73% 54.28% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

12 Expenditures Overview Prev. 5 Year PROJECTED 5 Year Avg. Annual Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Avg. Annual Change Change Expenditures: Salaries 1.16% 0.44% 0.06% 0.93% 0.35% 1.56% 0.65% Benefits 5.24% 6.15% 5.79% 3.77% 3.02% 4.81% 4.71% Purchased Services 8.60% 4.43% 10.87% 2.76% 3.74% 3.31% 2.15% Supplies & Materials 2.83% 20.47% 33.95% 3.97% 1.87% 2.08% 2.69% Capital Outlay 29.79% 96.47% 45.16% 82.11% 2.74% 2.22% 5.17% Intergov n/a n/a n/a n/a n/a n/a n/a Debt 18.38% 15.07% 16.13% 6.95% 0.03% 0.38% 1.10% Other Objects 5.31% 5.58% 1.78% 2.08% 1.78% 0.31% 1.59% Total Expenditures 1.04% 1.65% 2.55% 0.10% 1.57% 2.66% 1.67% Total Other Uses 53.56% % 90.86% 44.50% 80.17% 0.00% 43.97% Total Exp & Other Uses 0.87% 5.02% 1.57% 0.28% 1.75% 2.65% 1.51% Over the past 5 years, the district has been able to reduce operating costs by an average of 1.04% annually, due to the districtwide consolidations that occurred between FY12 and FY14, as well as, additional reductions in staffing in FY15 and FY17 and an overhaul of the health insurance program in FY16. The projected average increase in annual operating expenditures over the next five years is 1.67% annually. However, the largest expenditure category, salaries, is only projected to increase by.65% annually. The school district passed a 4.20 mill bond issue in November of 2016 to close three buildings in Brook Park, construct a new elementary school, renovate the Middleburg Heights Junior High and Middlebrook Education Center to become the 5 8 grade level campus and to demolish and build a new high school. The expenditure projections noted above include the estimated cost savings from the consolidation of these buildings that is estimated to be completed in FY21. For all non salary and benefit expenses, the FY19 expenditure projections include the addition of purchase orders that were obligated in FY18, but are not expected to be expended by the end of the fiscal year. Othr Uses 1.2% Othr Objects 1.5% Intergov & Debt 2.2% Salaries 54.9% 52.6% Benefits 24.0% 28.0% Purch Salaries Serv 13.1% 13.4% Supp & 54.9% Mat 2.0% 2.0% Capital Outlay 1.2% 0.2% Intergov & Deb 2.2% Benefits1.8% Othr Objects 1.5% 24.0% 1.5% Othr Uses 1.2% 0.4% Capital Outlay 1.2% 2017 Purch Serv 13.1% Supp & Mat 2.0% Salaries 52.6% Othr Uses 0.4% Othr Objects 1.5% Intergov & Debt 1.8% 2022 Purch Serv 13.4% Capital Outlay 0.2% Supp & Mat 2.0% Benefits 28.0% Public Finance Resources,

13 3.010 Personnel Services Employee salaries and wages, including extended time, severance pay, supplemental contracts, etc. FY 2017 Salaries as a % of Total Expenditures FY 2017 Sala % $50,000,000 $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Personnel Services Actual and Projected $46,466,889 $44,739,050 $42,910,134 $43,121,621 $43,764,525 $43,959,018 $43,933,159 $44,341,379 $44,498,732 $45,194,185 The district's salary related expenses are the largest expenditure category in the general fund, representing 54.9% of total expenditures in FY17. These expenses have gone from a high of $46,448,123 in FY12 down to a low of $42,910,134 in FY15. The reductions in cost during this time were the result of continuous staffing reductions that began in 2012 and have continued through the current fiscal year due to building consolidations, declining enrollment and financial instability. Even though year over year salary expenses have increased during the past three years, they have been limited due to costs savings from additional reductions in staffing and hiring employees lower on the salary schedule when experienced employees resign/retire. For the current fiscal year, the district eliminated five teaching positions, one tutor position, three aide/associate positions and one administrative position. Further reductions in staffing are included in FY19 FY21 projections based on the school building reconfiguration plan. FY18 FY19 salary projections include base salary increases that are aligned with the increases that were agreed upon in the certified, classified and administrative contracts, as well as, increases in salaries due to staff members progression on various salary schedules. The district also experienced a decrease in severance payments of ($338,000) and overtime expenses ($95,056) over the past two years. Expenses further decreased during the current fiscal year due to lower classified sub costs ($82,659), that resulted from reductions summer workers, custodial subs and substitute bus drivers. 2.0% 1.0% Year over Year Expenditure Trend 0.65% 1.0% 2.0% 1.16% 3.0% 4.0% 5.0% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

14 3.020 Employees' Benefits Retirement for all employees, Workers Compensation, early retirement incentives, Medicare, unemployment, pickup on pickup, and all health related insurances. FY 2017 Benefits as a % of Total Expenditures FY 2017 Ben % $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Employees' Benefits/Insurance Benefits Actual and Projected $26,146,683 $21,415,900 $20,036,464 $18,589,359 $19,100,715 $20,275,909 $21,450,227 $22,258,448 $22,930,025 $24,032,835 Employees' Benefits is the second largest expenditure category in the general fund and represents 24.0% of the overall budget in FY17. The district's medical insurance plan has gone through many changes over the past five years. Due to a major overhaul of the medical insurance plan in FY16, along with the reductions in staffing that are noted on page 13, retirement and benefit expenses went from $26,146,683 in FY13 to $18,589,359 in FY16. Significant high dollar claims incurred during FY17 caused the district's healthcare claims to exceed the employee and employer premiums paid into the self insurance fund, as well as, the reserve balance. As a result, medical premiums were increased by 12% for FY18. The district experienced additional high dollar claims in FY18, mainly related to prescription drug costs, that will cause the FY19 medical premiums to increase by an additional 15%. Due to the uncertainty of the Affordable Health Care Bill, and the uncertainty of increased high dollar, high risk claims, annual premium increases of 8% have been included in FY20 FY22 benefit projections. FY19 FY21 benefit projections also include savings from the building reconfiguration plan that are described on the previous page. Should these savings not occur, these projections would need to be adjusted accordingly % Year over Year Expenditure Trend 4.71% 5.0% % 15.0% 2 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

15 3.030 Purchased Services Amounts paid for personal services rendered by personnel who are not on the payroll of the school district, and other services which the school district may purchase. FY 2017 Purchased Services as a % of Total Expenditures FY 2017 Pur % $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Purchased Services Actual and Projected $7,805,078 $8,927,968 $9,454,283 $9,107,020 $10,433,489 $9,971,080 $11,054,881 $10,749,842 $11,151,472 $11,521,014 The purchased service expenses represented 13.1% of the overall general fund operating budget in FY17. Tuition related expenses represents 40% of the total annual purchased service costs and include tuitions costs for charter schools, special education, college credit plus, court placed/foster placed students and scholarships. Between FY15 FY17 these costs have increased by 22%. For FY18, the district experienced a reverse in these trends, with overall tuition related expenses expected to decrease by $145,664 or 3.1% by fiscal year end. The primary factor in this reduction is lower tuition costs to outside facilities ($359,483). Due to an excess balance of natural gas on hand at the district's purchasing cooperative, the district experienced a reduction in natural gas expenditures of $448,000 for FY16 and a minimal increase of only $85,446 in FY17. FY18 included a colder than normal winter and the depletion of the district's excess balance of natural gas. This resulted in a 67.5% or $125,356 increase in natural gas cost. FY19 natural gas expenses are expected to decrease by 11.6% or $35,000 due to the closure of Ford Intermediate School. 3% Inflationary growth has been included in projections for each year thereafter. Districtwide substitute costs increased by more than 51% or $286,085 during FY17 due to the addition of 14 permanent building subs and increased absences. Due to the district reducing the amount of overall permanent subs for FY18 and year to date absences being down, these costs are expected to go down by more than $360,000 by the fiscal year end. Included in the purchase service projections for FY19 are $549,000 in purchase orders that are currently encumbered but not expected to be expended by June 30, As a result, they are moved into the FY19 projections. These encumbrances are reduced from future projections to avoid overinflating the subsequent yearly budgets. 2 Year over Year Expenditure Trend 15.0% 1 5.0% 8.60% 2.15% 5.0% 1 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

16 3.040 Supplies & Materials Expenditures for general supplies, instructional materials including textbooks and media material, bus fuel and tires, and all other maintenance supplies. FY 2017 Supplies & Materials as a % of Total FY 2017 Sup Expenditures 0 $2,500,000 $2,000,000 Supplies & Materials Actual and Projected 2.0% $1,500,000 $1,000,000 $500,000 $1,964,836 $1,824,623 $1,512,472 $1,291,410 $1,591,693 $1,265,803 $1,695,539 $1,628,286 $1,658,812 $1,693,255 Supply costs represented 2% of the district's overall budget in FY17. Included in this expense line item is general office supplies, instructional supplies, health supplies, custodial/maintenance supplies and transportation supplies, including fuel for buses. During FY16, the decline in fuel costs, as well as, lower transportation repair costs resulted in reduced supply expenditures of $140,000 and only an increase of $15,000 in FY17. Due to increasing fuel costs and the district's aging fleet needing additional repairs, FY18 transportation supply expenses increased by $52,500 or 12.5%. For FY19, the anticipated increase in these expenses have been reduced due to the district acquiring 12 new buses, which will require less service on the existing fleet. The district put off several textbook adoptions in FY18, which reduced the anticipated textbook expenditure level from $301,190 to $138,000. The majority of this variance is expected to be carryover into the next year, resulting in an overall textbook budget for FY19 of $370,000. Subsequent fiscal years maintain a base level for textbook purchases of $350,000 annually. The instructional supply expenses totaled $328,707 in FY17, a 4% decrease from the amount spent in FY16. Based on year to date expenditure data, this expense line will only total $276,024 by the end of FY18. Based on building and department budgets submitted for FY19, the instructional and general supplies budget will total $404,202. Also included in the supplies and materials projections for FY19 is $83,565 in purchase orders that are currently encumbered but not expected to be paid by June 30, As a result, they are included in FY19 projections. These encumbrances are reduced from future projections to avoid over inflating the subsequent yearly budgets. 4 Year over Year Expenditure Trend % 2.69% 3 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

17 3.050 Capital Outlay This line includes expenditures for items having at least a five year life expectancy, such as land, buildings, improvements of grounds, equipment, computers/technology, furnishings, and buses. FY 2017 Capital Outlay as a % of Total Expenditures FY 2017 Cap 0 1.2% $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Capital Outlay Actual and Projected $376,861 $280,355 $347,987 $513,587 $942,096 $1,850,933 $1,015,094 $181,613 $186,584 $190,722 The capital outlay expense category represents buses, equipment, building improvements and grounds improvements with a useful life of more than five years. The district has added a considerable amount of funds to this category over the past three years to address the needs of the aging bus fleet. For FY18, the district increased the original bus budget from two smaller school buses to eight 72 passenger buses and six smaller school buses (four more than the original budgeted amount). This one time additional increase of $800,000 in bus purchases was to ensure the district had sufficient buses to pass state inspection and start the school year. Due to this large purchase, transportation supplies and purchased service budgets were decreased by $48,000 annually, starting in FY19. During the current fiscal year, the district used $2,573,998 of the general fund cash balance to payoff debt that was being repaid from the permanent improvement fund. As a result, all bus, maintenance vehicles and paving expenditures will be paid out of the permanent improvement fund, beginning in FY19. This will significantly reduce the general fund capital outlay expenditures after FY18. Also purchased during FY18 was the one time expense of a $311,000 phone upgrade system Year over Year Expenditure Trend 29.79% 5.17% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

18 Intergovernmental & Debt These lines account for pass through payments, as well as monies received by a district on behalf of another governmental entity, plus principal and interest payments for general fund borrowing. FY 2017 Intergov & Debt as a % of Total Expenditures FY 2017 Inte 0 2.2% $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Intergovernmental & Debt Service Actual and Projected $2,553,633 $1,681,256 $1,541,604 $1,456,444 $1,719,673 $1,460,515 $1,696,041 $1,578,209 $1,578,661 $1,584,639 The debt expenses in this line item are used to pay the principal and interest on the Grindstone Elementary Building Year over Year Expenditure Trend 1.10% 18.38% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

19 4.300 Other Objects Primary components for this expenditure line are membership dues and fees, ESC contract deductions, County Auditor/Treasurer fees, audit expenses, and election expenses. FY 2017 Other Objects as a % of Total Expenditures FY 2017 Oth 0 1.5% $1,400,000 $1,200,000 $1,000,000 $800,000 Other Objects Actual and Projected $600,000 $400,000 $200,000 $1,108,025 $691,498 $1,127,210 $1,141,293 $1,208,893 $1,276,364 $1,253,600 $1,279,699 $1,302,483 $1,306,460 Other Object expenses represent 1.5% of the overall general fund budget. County Auditor and Treasurer fees, annual audit costs, banks charges and districtwide dues and fees are charged out of this expense line item. Prior to FY14, the district charged all county auditor and treasurer fees to the general fund. The district should have charged a portion of these costs to the debt service fund and the permanent fund based on the collection allocation for the applicable County Auditor and Treasurer fees. The district made a one time correction in FY14 to recapture the $498,667 that was charged to the general fund in error. As a result, there was a one time reduction in the FY14 Other Object expense levels. 8 Year over Year Expenditure Trend % 1.59% 6 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

20 5.040 Total Other Financing Uses Operating transfers out, advances out to other funds, and all other general fund financing uses. FY 2017 Other Financing Uses as a % of Total FY 2017 Oth Expenditures 0 1.2% $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Other Financing Uses Actual and Projected $165,112 $346,279 $372,589 $1,159,249 $983,529 $3,688,809 $337,100 $187,100 $337,100 $337,100 As part of the budget development process, the district's administrative team identifies specific goals and objectives to be allocated in the general fund budget. For FY17, $460,000 was transferred to the permanent fund to meet the goals identified in the areas of instructional technology, special education technology, the district network and building improvements. For FY18, $590,000 was transferred to meet the financial costs of these goals and objectives. As noted in the capital outlay note, the district utilized $2,573,998 in general fund cash reserves to pay off debt that was being repaid from the permanent improvement fund in FY18. As a result of the costs savings incurred to the permanent improvement fund by not having to repay this debt in future years, the district will reduce the projected transfer of funds from the general fund to the permanent improvement fund, starting in FY19. The teacher laptop replacement cycle will be completed in FY19 and there will be a one year gap before the cycle is restarted in FY21. As a result, the technology allocation will be reduced by $150,000 for FY20 only. As noted in the benefits note, the district's self insurance fund had a negative cash balance at the end of FY17 that required an advance of $374,664. In addition, due to other funds having negative cash balances, an additional $113,934 was transferred to various other funds from the general fund. All of these funds were returned to the General Fund in FY18, as shown in the other financing sources note. The district is anticipating a negative balance in the self insurance fund again at the end of FY18, as well as, advances needed to temporarily cover negative fund balances in other funds. Therefore, $524,811 has been projected in advances out of the General Fund for FY18. $100,000 has been budgeted for each year thereafter Year over Year Expenditure Trend 43.97% 53.56% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average Public Finance Resources,

21 Forecast Compare Comparison of Previous Forecast Amounts to Current Forecasted Numbers F.Y Current Previous Dollar Percent Forecast Forecast Difference Difference Amounts For Amounts For Between Between F.Y F.Y Previous Previous Prepared on: Prepared on: and and Revenue: 5/10/ /23/2017 Current Current 1 Real Estate & Property Allocation $64,231,258 $63,321,752 $909, % 2 Public Utility Personal Property $3,295,005 $3,170,659 $124, % 3 Income Tax n/a 4 State Foundation Restricted & Unrestricted $11,968,317 $12,437,972 $469, % 5 Other Revenue $5,328,971 $4,747,182 $581, % 6 Other Non Operating Revenue $488,598 $488, % 7 Total Revenue $85,312,150 $84,166,163 $1,145, % Expenditures: 8 Salaries $43,959,018 $44,088,811 $129, % 9 Fringe Benefits $20,275,909 $20,382,394 $106, % 10 Purchased Services $9,971,080 $11,193,939 $1,222, % 11 Supplies, Debt, Capital Outlay & Other $5,853,615 $6,486,993 $633, % 12 Other Non Operating Expenditures $3,688,809 $690,000 $2,998, % 13 Total Expenditures $83,748,431 $82,842,138 $906, % 14 Revenue Over/(Under) Expenditures $1,563,718 $1,324,025 $239, %* 15 Ending Unencumbered Cash Balance $18,951,403 $18,711,710 $239, %* *Percentage Expressed In Terms of Total Expenditures Current revenue projections exceed the amounts projected in the October forecast for FY18 by 1.25%. The following areas represent the causes of the larger variances noted above: Real Estate Taxes Due to increases in property values and some property owners paying their taxes a full year in advance, actual FY18 revenue projections exceeded the amount projected n October. Other Revenue During FY18, the district started receipting federal Medicaid reimbursements to Other Revenue rather than State Foundation. As a result, this changed the revenue projections in both revenue lines by approximately $350,000. In addition, interest earnings exceed the previous fiscal year's collections by $180,000. Current expenditure projections exceed the amount projected in October by 1.09%. The inclusion of additional funds for year end advances and the $2.5 million transferred into the debt service fund caused the current expenditures to exceed the October projections. Purchased Services: There are four factors that represent the majority of the decrease in current projections compared to the October projections. They include $549,866 in expenditures obligated in FY18, but anticipated being paid in FY19, a reduction in anticipated substitute costs of $236,000 from the October projections, reductions in budgeted legal expenses of $140,000 and a reduction in overall tuition expenses for the current year of $145,644. Supplies: The district received a preschool grant from the County that increased the supply budget in the October forecast by $145,611. These funds were not expended out of supplies in FY18 and were primarily used to offset tuition expenses to parents. Other reductions in current supply projections include $83,565 in expenditures have been obligated in FY18 but are not expected to be expended until FY19, $110,000 in textbook adoptions being postponed until FY19 and approximately $160,000 in instructional supply budgets that were not encumbered/expended in the current fiscal year. Public Finance Resources,

22 Actual FORECASTED Fiscal Year: Revenue: General Property Tax (Real Estate) 52,481,805 53,375,461 52,085,306 52,836,499 53,081,686 53,377, Public Utility Personal Property 2,926,720 3,295,005 3,420,300 3,539,732 3,611,045 3,680, Income Tax Unrestricted Grants in Aid 12,085,298 11,535,610 11,599,043 11,876,685 12,168,655 12,492, Restricted Grants in Aid 145, , , , , , Restricted Federal Grants SFSF Property Tax Allocation 11,668,046 10,855,797 10,045,988 9,247,596 8,443,270 7,645, All Other Operating Revenues 3,441,335 5,328,971 4,608,918 4,696,068 4,766,176 4,857, Total Revenue 82,748,879 84,823,552 82,223,264 82,683,440 82,580,048 82,564,102 Other Financing Sources: Proceeds from Sale of Notes State Emergency Loans and Adv Operating Transfers In 26, Advances In 86, , , , , , All Other Financing Sources Total Other Financing Sources 113, , , , , , Total Rev & Other Sources 82,861,933 85,312,150 82,748,075 82,783,440 82,680,048 82,664,102 Expenditures: Personnel Services 43,764,525 43,959,018 43,933,159 44,341,379 44,498,732 45,194, Employee Benefits 19,100,715 20,275,909 21,450,227 22,258,448 22,930,025 24,032, Purchased Services 10,433,489 9,971,080 11,054,881 10,749,842 11,151,472 11,521, Supplies and Materials 1,591,693 1,265,803 1,695,539 1,628,286 1,658,812 1,693, Capital Outlay 942,096 1,850,933 1,015, , , , Intergovernmental Debt Service: Principal All Years Principal Notes Principal State Loans Principal State Advances Principal HB 264 Loan Principal Other Interest and Fiscal Charges 835, , , , , , , , , , , , Other Objects 1,208,893 1,276,364 1,253,600 1,279,699 1,302,483 1,306, Total Expenditures 78,761,083 80,059,622 82,098,540 82,017,476 83,306,769 85,523,110 Other Financing Uses Operating Transfers Out 494,931 3,163, ,100 87, , , Advances Out 488, , , , , , All Other Financing Uses Total Other Financing Uses 983,529 3,688, , , , , Total Exp and Other Financing Uses 79,744,613 83,748,431 82,435,640 82,204,576 83,643,869 85,860, Excess of Rev Over/(Under) Exp 3,117,320 1,563, , ,864 (963,821) (3,196,108) Cash Balance July 1 (No Levies) 14,270,365 17,387,685 18,951,403 19,263,838 19,842,702 18,878, Cash Balance June 30 (No Levies) 17,387,685 18,951,403 19,263,838 19,842,702 18,878,881 15,682, Estimated Encumbrances June 30 1,274, Reservations Subtotal Fund Bal June 30 for Cert of App 16,113,405 18,951,403 19,263,838 19,842,702 18,878,881 15,682,774 Rev from Replacement/Renewal Levies & Income & Property Tax Renewal Cumulative Balance of Levies Fund Bal June 30 for Cert of Obligations 16,113,405 18,951,403 19,263,838 19,842,702 18,878,881 15,682,774 Revenue from New Levies & Income & Property Tax New Cumulative Balance of New Levies Unreserved Fund Balance June 30 16,113,405 18,951,403 19,263,838 19,842,702 18,878,881 15,682,774 Public Finance Resources,