Five Year Forecast Financial Report

Transcription

1 May, 2018 TEAYS VALLEY LOCAL SCHOOL DISTRICT PICKAWAY COUNTY Five Year Forecast Financial Report 1

2 Table of Contents Table of Contents 2 Executive Summary 3 PAGE # Revenue Overview General Property Tax (Real Estate) Public Utility Personal Property Income Tax Unrestricted Grants in Aid & Restricted Grants in Aid Property Tax Allocation All Other Operating Revenues Total Other Financing Sources 12 Expenditures Overview Personnel Services Employee Benefits Purchased Services Supplies and Materials Capital Outlay Intergovernmental & Debt Other Objects Total Other Financing Uses 21 Forecast Compare 22 Five Year Forecast 23 Cash Balance Projections & Benchmarks 24 Forecast Changes: 3 Year View 25 Enrollment Supplement 26 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. 2

3 Executive Summary May, 2018 Five Year Forecast Simplified Statement Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Beginning Balance 18,277,744 21,924,603 20,997,561 20,394,966 20,290,586 + Revenue 40,697,718 40,600,684 41,891,600 43,082,930 44,381,708 + Proposed Renew/Replacement Levies + Proposed New Levies Expenditures (37,050,858) (41,527,726) (42,494,195) (43,187,310) (45,182,725) = Revenue Surplus or Deficit 3,646,860 (927,042) (602,595) (104,380) (801,017) Ending Balance 21,924,603 20,997,561 20,394,966 20,290,586 19,489,569 Revenue Surplus or Deficit w/o Levies 3,646,860 (927,042) (602,595) (104,380) (801,017) Ending Balance w/o Levies 21,924,603 20,997,561 20,394,966 20,290,586 19,489,569 Summary: During the spring of 2016, the District concluded work on a collaborative bargaining agreement which covers FY2017 FY2019. The new agreement is expected to help continue the District s financial stability. Elements of the agreement included adjustments to the District s health insurance program that enabled affordable base wage increases for employees. A new State funding system has also leveraged the district's local revenue sources since the new formula supplies additional revenue per pupil. Since Teays Valley's funding is not limited by any formula caps or guarantees, additional students translate to additional revenue (of course up to cap limitations). Spending is expected to exceed revenue by the end of FY2019 eroding some of the cash balance reserve, however, the projected deficits are manageable. An updated capital spending plan has been established that requires General Fund support to fully implement. However, this spending plan can be scaled back if finances deteriorate between now and the start of a given capital project. $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 Revenue vs. Expenditures $41,527,726 $42,494,195 $43,187,310 $45,182,725 $37,050,858 $40,697,718 $40,600,684 $41,891,600 $43,082,930 $44,381, Revenue Renew/Replacement Levies New Levies Expenditures 3

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 3.32% 6.38% 2.53% 3.28% 2.31% 2.24% 2.34% Public Utility 1.75% 1.79% 1.20% 1.00% 1.00% 1.00% 0.48% Income Tax 19.95% 6.70% 2.30% 2.30% 2.30% 2.30% 3.18% State Funding 4.30% 5.72% 0.51% 3.97% 3.63% 3.97% 3.56% Restricted Aid 10.52% 23.13% 10.14% 0.00% 0.45% 0.36% 2.76% Restr Federal SFSF % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Property Tax Alloc 2.72% 3.16% 3.72% 1.74% 2.39% 2.40% 2.68% All Other Operating 11.34% 20.90% 3.15% 1.55% 1.67% 1.67% 4.53% Total Revenue 5.19% 6.65% 0.06% 3.18% 2.85% 3.02% 3.13% Total Other Sources % % 80.27% 0.00% 0.00% 0.00% 44.03% Total Rev & Other Srcs 5.20% 6.82% 0.24% 3.18% 2.84% 3.01% 3.12% State funding (including property tax allocation) and tax related revenue account for approximately 95% of the District s total operational revenue. These revenue sources (state and local tax revenue) are expected to maintain steady growth through the forecasted period. Overall, revenue is expected to average a 3.12% annual growth rate. Public Utility 2.8% Real Estate 21.3% 20.4% Public Utility 2.8% 2.3% Income Tax Income Tax 17.6% 17.6% 17.7% State Funding 51.1% 52.2% Prop Tax Allo 2.9% 2.8% Real Estate All Othr Op Re 4.2% State 4.5% 21.3% Othr Sources 0.1% Funding 51.1% Public Utility 2.3% Real Estate 20.4% Income Tax 17.7% 2022 State Funding 52.2% Othr Sources 0.1% All Othr Op Rev 4.2% Prop Tax Alloc 2.9% Othr Sources All Othr Op Rev 4.5% Prop Tax Alloc 2.8% 4

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 % Projected General Property RevRenewal Tax (Real Levy Estate) Revenue Actual and Projected of Total Revenue $10,000, $7,107,921 $1 FY 2017 Rea 2014 $7,457,265 $8,000, $7,754,060 $6,000, $7,883, % 2017 $8,100,905 $4,000, $8,617, $8,399,805 $2,000, $8,675, $8,875, $9,074, Projected Revenue Renewal Levy Revenue $7,107,921 $7,457,265 $7,754,060 $7,883,638 $8,100,905 $8,617,845 $8,399,805 $8,675,622 $8,875,800 $9,074,413 In the graphic below, nearly all the 2014 real property valuation increase was related to higher agricultural property values determined during the 2014 Pickaway County valuation update. After two straight reappraisal cycles (2011 & 2014) of stalled residential property values, residential property resumed growth in the latest 2017 reappraisal. However, due to recent changes in the formulas to calculate agricultural land value (CAUV), agricultural property values fell in the 2017 reappraisal. As a result, the loss in agricultural property value offset approximately 1/3 of the inflationary growth realized from residential property. Nevertheless, overall real estate values still increased during the reassessment. In addition, the forecast anticipates new residential property to grow by approximately 2 % per year which is nearing pre 2008 recessionary levels. As a result of the forecasted valuation growth, tax collections are expected to exhibit slow but steady growth as well. Gross collections in Tax Year 2017 (Calendar % rate), appear a bit higher than typical due to the receipt of delinquent commercial taxes accumulated the prior year. The forecast anticipates future gross tax collections will remain very consistent at a near 100% rate. See graphic below. 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 1.0% 2.0% 3.0% Year over Year Revenue Trend Year over Actual 5 YeProjected 5 Year Average % 3.32% % 3.32% % 3.32% % 3.32% 3.32% % 3.32% % 2.34% % 2.34% % 2.34% % 2.34% % 2.34% 2.34% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies 5

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 % Pub of Total Revenue $1,400, $1,285,395 $1,285,395 $1,200, $1,144,164 $1,144, $1,122,446 $1,122,446 $1,000, $1,077,695 $1,077, % $800, $1,066,845 $1,066,845 $600, $1,085,921 $1,085,921 $400, $1,072,860 $1,072, $1,062,131 $1,062,131 $200, $1,051,510 $1,051, $1,040,995 $1,040,995 Projected Revenue Renewal Levy Revenue $1,285,395 $1,144,164 $1,122,446 $1,077,695 $1,066,845 $1,085,921 $1,072,860 $1,062,131 $1,051,510 $1,040,995 Public Utility tax duplicate values for Teays Valley increased significantly with the addition of the REX natural gas pipeline in 2010 (for pay in 2011). PUPP collections reached a high point in FY2013, after REX and the ODT reached agreement on a pipeline value of approximately $29 million for Teays Valley. Since that time collections have slowly declined in conjunction with typical depreciation on existing values in this classification of property. Although a second pipeline (the ATEX pipeline) was laid in the District, it did not generate additional value nor revenue. That was due to the fact the material transported through that line is exempt from taxes. Therefore, the forecast assumes current PUPP values will continue to gradually decline due to depreciation. Obviously, we will continue to monitor activity here because investments to improve existing assets could offset a drop in overall value. Also it is important to note, our local legislators, as well as other legislators from around the state now have a heightened awareness of the pipeline taxation issue and are working to introduce legislation to address inconsistencies in tax policy related to the materials passed through public utility pipelines. Teays Valley will remain an active participant in any policy change discussions. Year over Year Revenue Trend 15.0% 1 5.0% 5.0% % Year over Actual 5 YeProjected 5 Year Average % 1.75% % 1.75% % 1.75% % 1.75% % 1.75% % 0.48% % 0.48% % 0.48% % 0.48% % 0.48% 0.48% 15.0% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies 6

7 1.030 Income Tax Revenue collected from income tax earmarked specifically to support schools with a voter approved tax by residents of the school district; separate from federal, state and municipal income taxes. FY 2017 Income Tax as a % Projected RevRenewal Income Tax Actual Levy and Revenue Projected FY 2017 of Inco Total Revenue 0 $10,000, ,296,230 $8,000, ,631, ,348,266 $6,000, ,345, ,706, % $4,000, ,156, ,321,314 $2,000, ,489, ,662, ,838, Projected Revenue Renewal Levy Revenue $3,296,230 $5,631,076 $6,348,266 $6,345,830 $6,706,959 $ $7,156,504 $ $7,321,314 $ $7,489,831 $ $7,662,140 $ $7,838,326 Clearly, the above graph illustrates the impact of the 1.5% replacement earned income tax passed in The issue replaced a continuing 0.75% traditional income tax levy. FY15 represents full collection of the new 1.5% tax. Since 2012, collections have more than doubled despite the fact the tax now only applies to "earned" income. This demonstrates the income strong growth that has occurred within the District since Annual growth is forecasted to continue at rates between 2% and 3% per year (FY2019 FY2022) Year over Year Revenue Trend Year over Actual 5 YeProjected 5 Year Average % 19.95% % 19.95% % 19.95% % 19.95% % 19.95% % 3.18% % 3.18% % 3.18% 19.95% % 3.18% % 3.18% 3.18% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies 7

8 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 0 $25,000,000 $20,000,000 Unrestricted Grants in Aid Actual and Projected 50.3% $15,000,000 $10,000,000 $5,000,000 $15,886,684 $16,509,406 $17,790,935 $18,533,192 $19,150,718 $20,246,195 $20,349,640 $21,157,212 $21,924,281 $22,795,520 The state retained the basic framework of the school funding formula in its current budget covering FY2018 & FY2019. However, the per pupil funding increases were limited to only $10 per pupil (or 0.167%) each year of the biennial. These levels are significantly lower than increases included in the prior two budgets. The formula calculates the funding it sends to schools by multiplying the per pupil funding amount (FY2018 = $6,010) times the district s enrollment multiplied by a district s individual state share percentage. The state share percentage is a determined by the district s relative wealth per pupil compared to other districts. Teays Valley s state share percentage has remained consistent at near 52%. The formula also contains additional targeted components that help a district like Teays Valley. For example, additional funds are directed to districts with large agricultural tax bases as well as districts that have lower population density. It is also important to note, the new state budget caps the maximum increase growing districts like ours (see Page 26 Enrollment Supplement) can receive at 5.5% and 6.0% respectively for FY2018 and 2019 (most districts are capped at a 3% level for these two years). Additionally, the formula guarantees each district receive no less than it did in FY2017, as long as enrollment did not drop more than 5% from FY2014 to FY2016. Given this framework, Teays Valley expects to receive nearly all of its full calculated formula funding (assuming a 4% cap limit) each year of the forecast. 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Year over Year Revenue Trend Year over YeaActual 5 Year Projected 5 Year Average % 4% % 4% % 4% % 4% % 4% % 4% % 4% % 4% % 4% 4% % 4% 4% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average 8

9 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 0.9% $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Restricted Grants in Aid Actual and Projected $249,352 $443,740 $402,876 $398,203 $333,355 $410,463 $368,853 $368,853 $370,520 $371,841 Projected funding in this category is comprised of career tech funding, catastrophic aid reimbursement (associated with high cost special needs students) and economic disadvantaged funding. Sources receipted here are restricted in use to only their intended purpose. Combined these revenue sources are projected to supply approximately $365,000 to $370,000 of revenue annually Year over Year Revenue Trend 2.76% 5.36% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average 9

10 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 $1,400,000 FY 2017 Pro $972,836 Revenue $1,200, $992,967 $1,000, $1,044, $1,089, % $800, $1,100,601 $600, $1,135,331 $400, $1,177,536 $200,000 $972,836 $992,967 $1,044,048 $1,089,437 $1,100, $1,198, $1,226, $1,255, Projected Revenue Renewal Levy Revenue $1,135,331 $1,177,536 $1,198,032 $1,226,605 $1,255,993 The state provides property tax reimbursements to qualifying Class I (residential and agricultural) property owners. All Class I taxpayers in Teays Valley are provided a 10% rollback on their taxes which is picked up by the State. An additional 2.5% tax incentive or rollback is provided to owner occupied dwellings and certain other tax payers qualify for an additional Homestead credit from the State. Since property valuations are expected to steadily rise through the forecasted period, state paid property tax reimbursements are also expected to trend upward. It is noteworthy, agricultural property valuation increases fueled overall collection growth in this category in the past. However, beginning with the 2017 reappraisal, agricultural property values are expected to decline. Therefore, future growth is primarily attributable to residential property increases and associated rollbacks which are expected to more than offset the declining agricultural component. Year over Year Revenue Trend 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 2.72% Year over Actual 5 YeProjected 5 Year Average % 2.72% % 2.72% % 2.72% % 2.72% % 2.72% % 2.68% % 2.68% % 2.68% % 2.68% % 2.68% 2.68% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies 10

11 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 0 Revenue $2,500,000 $2,000,000 All Other Operating Revenue Actual and Projected 4.2% $1,500,000 $1,000,000 $500,000 $1,234,698 $1,175,353 $1,413,391 $1,735,369 $1,616,376 $1,954,243 $1,892,676 $1,921,918 $1,954,074 $1,986,619 Revenue dipped slightly in 2014 because of the reduction in the District's pay to participate fees. Revenue would have exhibited a larger decrease if it were not for two Medicaid reimbursements totaling $147,000 received during that particular year. The District received another $150,000 in reimbursement in FY2015 and two more Medicaid reimbursements in FY2016 totaling $263,000. In FY2017, the District only received one Medicaid reimbursement totaling $108,911, and explains the dip in revenue from the inflated FY2016 levels which included the doubled payments. Absent the timing of the estimated Medicaid reimbursements this category would reflect a slow but steady growth pattern. Base collections in FY2108 and beyond anticipate a 2% inflationary increase and a pick up in interest earnings. 3 Year over Year Revenue Trend 25.0% % 1 5.0% 11.34% 4.53% 5.0% 1 Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average 11

12 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 Oth Revenue 0.1% $120,000 $100,000 $80,000 $60,000 Other Operating Financing Sources Actual and Projected $40,000 $20,000 $9,823 $90,066 $106,676 $57,158 $22,779 $91,216 $18,000 $18,000 $18,000 $18,000 Both FY2014 and FY2015 were impacted by two consecutive refunds received from the Bureau of Workers' Compensation. Each refund totaled slightly more than $80,000. FY2016 includes $32,681 of advance returns. FY2018 includes another $71,294 Workers Compensation refund. Future years anticipate a nominal amount of activity related to non operating issues Year over Year Revenue Trend 44.03% % Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 12

13 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 2.45% 7.42% 6.04% 3.81% 3.92% 3.87% 5.01% Benefits 1.79% 9.89% 16.46% 7.06% 7.18% 7.16% 9.55% Purchased Services 8.82% 0.92% 4.56% 3.30% 3.34% 3.34% 2.72% Supplies & Materials 8.65% 4.03% 3.00% 3.00% 3.00% 3.00% 1.59% Capital Outlay 8.91% % 84.94% 0.00% 0.00% 0.00% 5.55% Intergov n/a n/a n/a n/a n/a n/a n/a Debt n/a n/a n/a n/a n/a n/a n/a Other Objects 12.47% 2.63% 1.15% 5.74% 5.29% 7.06% 2.26% Total Expenditures 2.77% 7.19% 6.17% 4.45% 4.45% 4.57% 5.36% Total Other Uses % n/a % 35.49% 79.59% 12.39% % Total Exp & Other Uses 2.76% 7.23% 12.08% 2.33% 1.63% 4.62% 5.58% Overall expenditures are projected to increase, on average, at a rate of 5.58% per year. Salary and Benefit spending is anticipated to increase in conjunction with additional staff aimed at improving instructional services. Each expenditure note goes into further detail about the year over year change. Spending also reflects the goals and objectives approved in the District's latest capital spending plan. Any funding shortfalls necessary to fulfill the approved capital spending plan are covered by General Fund dollars (the District s Permanent Improvement Fund or Maintenance Set Aside Fund are used first). Previously, supplemental contributions required of the General Fund were reflected as expenditures from the Capital Outlay category. Beginning in FY2019, any supplements to bridge shortfall s in capital spending will be recorded as transfers and reflected on Line Total Other Uses line item of the forecast instead of direct expenses reflected in Line Capital Outlay. Regardless of the accounting change, it is important to keep in mind transfers planned to support the capital spending plan can be scaled back if finances deteriorate between now and the start of a given capital project. Othr Uses Othr Objects Intergov 1.2% & Debt Capital Outlay 0.9% Salaries 60.2% 58.7% Benefits 19.8% 23.8% Purch Serv Salaries 14.2% 12.4% Supp & 60.2% Mat 3.7% 3.1% Capital Outlay 0.9% 0.2% Intergov & Deb Othr Objects 1.2% Benefits 1.0% Othr Uses 19.8% 0.7% Purch Serv 14.2% Supp & Mat 3.7% Othr Uses 0.7% Othr Objects Intergo 1.0% v & Debt 00% Capital Outlay 0.2% Salaries 58.7% Purch Serv 12.4% Supp & Mat 3.1% 2022 Benefits 23.8% 13

14 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 % $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Personnel Services Actual and Projected $17,752,295 $17,885,556 $18,712,511 $19,523,134 $20,795,813 $22,338,812 $23,688,929 $24,590,526 $25,554,595 $26,543,543 The Board and TVCTA ratified an agreement to increase base wages in FY2017 FY2019 (base salaries were increased 2.5% in FY2017, 2.0% in FY2018, and are scheduled to increase another 2.0% in FY2019). The District returned salaries of seven technology and maintenance staff to the General Fund in FY2016. These positions had previously been funded by Permanent Improvement dollars. The District added five teaching staff, one additional guidance position, two additional bus drivers and an additional ½ custodial position in FY2017. Six more teachers, an additional secondary special education administrator and bus driver were added in FY2018 and another five teaching positions and a bus driver are planned in FY2019. Future years assume two additional teaching staff per year to address student to teacher ratios. The additional teaching staff are a direct result of growing enrollment, replacing positions lost during recent the economic crisis, and last but certainly not least the desire to improve instruction and overall educational program offered students. 8.0% Year over Year Expenditure Trend 6.0% 5.01% 4.0% 2.0% 2.45% 2.0% 4.0% 6.0% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 14

15 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 % $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Employees' Benefits/Insurance Benefits Actual and Projected $6,500,870 $6,399,874 $6,574,024 $6,891,140 $6,829,629 $7,504,756 $8,739,903 $9,357,048 $10,029,021 $10,746,950 Effective January 1, 2014, the District implemented a high deductible health insurance program combined with a health savings account (HSA) for employees. Changes to the health insurance plan have had a tremendously positive impact on the District s overall budget. Since implementing the plan, the District has enjoyed stable insurance premiums and maintained healthy reserves. Beginning in FY2018, premiums increased by more typical trends, although the increases were applied to greatly reduced base levels. The forecast assumes future premiums will increase at industry wide trends, but the District s insurance consortium continues to look for new opportunities to promote health and wellness and provide incentives to help mitigate those trend increases. Beginning in January 2017 and ending June 2018 (impacting half of FY17 and full year of FY18), the forecast reflects Board share HSA contributions to be funded out of the accumulated District reserves. The forecast assumes Board share HSA contributions will return to the General Fund in FY % 16.0% 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% 2.0% 4.0% Year over Year Expenditure Trend 9.55% 1.79% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 15

16 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 FY 2017 Pur Expenditures % $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Purchased Services Actual and Projected $3,320,146 $4,697,234 $4,860,104 $4,804,312 $4,913,841 $4,868,510 $5,090,548 $5,258,516 $5,434,022 $5,615,402 Beginning in FY2014, the District changed the way it accounts for Pickaway Educational Service Center expenses explaining the increase noted in the above graph from FY2013. Previously, these expenses appeared in the All Other Expenditure category. Since these costs are related to the delivery of instructional services (many of which include special education services), the classification changes more accurately represent their intended purpose. This category also accounts for a variety of other expenses including: special education tuition, utilities, transportation charges, rentals, as well as outgoing student enrollment charges. Typical inflationary trends are applied to the base year of FY2018 to produce future estimates. 45.0% % % % 1 5.0% 5.0% Year over Year Expenditure Trend 2.72% 8.82% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 16

17 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 3.7% $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Supplies & Materials Actual and Projected $960,302 $967,548 $1,020,600 $1,111,495 $1,278,307 $1,226,826 $1,263,631 $1,301,540 $1,340,586 $1,380,804 FY2017 includes the impact of providing additional resources to building and departmental budget allocations. Supply spending in FY2018 is expected to end below FY2017 levels. FY2019 spending and beyond incorporate a 3% inflationary trend estimate utilizing FY2018 as the base. 2 Year over Year Expenditure Trend 15.0% 1 5.0% 8.65% 1.59% 5.0% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 17

18 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 0.9% $700,000 $600,000 $500,000 $400,000 Capital Outlay Actual and Projected $300,000 $200,000 $100,000 $265,820 $260,925 $312,225 $664,052 $100,000 $100,000 $100,000 $100,000 The Board approved a resolution in August of 2007 to allocate a portion of the District s inside mills to Permanent Improvements beginning in Calendar year In December 2014, the Board approved a Capital Spending plan, which was much more comprehensive than anything previously in place. The plan is revisited annually and addresses not only bus and facility needs, but also educational, safety and technology purchases within the District. Since the plan requires more funds than the Permanent Improvement Fund supplies on an annual basis, a portion of capital spending was returned to the General Fund beginning in FY2015 and that continued through FY2018. Beginning in FY2019, supplements required to fulfill the capital plan are planned to be transferred from the General Fund instead of spent from this category. The $100,000 of estimated spend reflected in this category after FY2018 is for purchases required to meet career tech spending obligations. 15 Year over Year Expenditure Trend % 5.55% 10 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 18

19 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 $1 $1 $1 $1 $1 $1 Intergovernmental & Debt Service Actual and Projected N/A % Year over Year Expenditure Trend 0.00% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 19

20 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 1.2% $1,200,000 $1,000,000 $800,000 $600,000 Other Objects Actual and Projected $400,000 $200,000 $982,280 $391,741 $286,625 $364,286 $421,798 $432,902 $437,897 $463,013 $438,534 $469,475 As mentioned previously, a large majority of this category s expenses were related to the Pickaway ESC shared service contract. Beginning in FY14 these expenses were reclassified and now are reflected in the Purchased Service category. The majority of this category s remaining expenses are related to County Auditor and Treasurer fees. Estimates for these expenses consider the timing and collection of county fees leading up to property reappraisals Year over Year Expenditure Trend 2.26% 12.47% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 20

21 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 $2,500,000 $2,000,000 Other Financing Uses Actual and Projected $1,500,000 $1,000,000 $500,000 $197,500 $32,681 $6,642 $400,000 $15,000 $2,206,818 $1,423,552 $290,552 $326,552 The spike reflected in 2016 is related to the transfer of $400,000 to the District's PI fund to supplement a $1,993,206 energy conservation project. The remainder of the project was funded with savings generated from refinancing the District's outstanding 2005 bonds. The energy savings achieved from the project since its completion are on track to be repay the initial capital outlay in 8 years. Beginning in FY2019, this category also reflects the General Fund s commitment to bridge any funding shortfall necessary to accomplish the adopted Capital Spending plan (the District s Permanent Improvement Fund or Maintenance Set Aside Fund are used first). However, this spending plan can be scaled back if finances deteriorate between now and the start of a given capital project. Outside of these limited purposes, advances and transfers are used sparingly and only when other spending categories do not appropriately capture the essence of a transaction. Nominal other activity is expected Year over Year Expenditure Trend % % Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 21

22 Forecast Compare Comparison of Previous Forecast Amounts to Current Forecasted Numbers F.Y Column A Column B Column C Column D Previous Current 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: 9/25/2017 4/9/2018 Current Current 1 Real Estate & Property Allocation $9,336,626 $9,753,176 $416, % 2 Public Utility Personal Property $1,069,478 $1,085,921 $16, % 3 Income Tax $7,031,255 $7,156,504 $125, % 4 State Foundation Restricted & Unrestricted $20,269,581 $20,656,657 $387, % 5 Other Revenue $1,750,245 $1,954,243 $203, % 6 Other Non Operating Revenue $91,216 $91,216 7 Total Revenue $39,548,401 $40,697,718 $1,149, % Expenditures: 8 Salaries $22,365,887 $22,338,812 $27, % 9 Fringe Benefits $7,385,197 $7,504,756 $119, % 10 Purchased Services $4,931,082 $4,868,510 $62, % 11 Supplies, Debt, Capital Outlay & Other $2,445,081 $2,323,781 $121, % 12 Other Non Operating Expenditures $15,000 $15, Total Expenditures $37,142,247 $37,050,858 $91, % 14 Revenue Over/(Under) Expenditures $2,406,154 $3,646,860 $1,240, %* 15 Ending Cash Balance $20,683,898 $21,924,603 $1,240, %* *Percentage expressed in terms of total expenditures Revenue estimates for FY2018 are up 2.9% from those filed this past fall. Improvement can be seen in all operational revenue line items. Local tax collections are up thanks in part to higher real estate values related to the 2017 Pickaway County reassessment of home values. Income tax collection have also outperformed original estimates by over $125,000 and finally state funding has been aided by enrollment levels that are approximately 50 students higher than estimates made at the beginning of the fiscal year. Spending in FY2018 has tracked very closely to those produced this past fall and have only been revised down by 0.2% or $91,388. Overall, the FY2018 forecast trend remains little changed from the fall forecast filing. 22

23 Actual FORECASTED Fiscal Year: Revenue: General Property Tax (Real Estate) 8,100,905 8,617,845 8,399,805 8,675,622 8,875,800 9,074, Public Utility Personal Property 1,066,845 1,085,921 1,072,860 1,062,131 1,051,510 1,040, Income Tax 6,706,959 7,156,504 7,321,314 7,489,831 7,662,140 7,838, Unrestricted Grants in Aid 19,150,718 20,246,195 20,349,640 21,157,212 21,924,281 22,795, Restricted Grants in Aid 333, , , , , , Restricted Federal Grants SFSF Property Tax Allocation 1,100,601 1,135,331 1,177,536 1,198,032 1,226,605 1,255, All Other Operating Revenues 1,616,376 1,954,243 1,892,676 1,921,918 1,954,074 1,986, Total Revenue 38,075,759 40,606,502 40,582,684 41,873,600 43,064,930 44,363,708 Other Financing Sources: Proceeds from Sale of Notes State Emergency Loans and Adv Operating Transfers In Advances In 18, All Other Financing Sources 4,650 91,216 18,000 18,000 18,000 18, Total Other Financing Sources 22,779 91,216 18,000 18,000 18,000 18, Total Rev & Other Sources 38,098,538 40,697,718 40,600,684 41,891,600 43,082,930 44,381,708 Expenditures: Personnel Services 20,795,813 22,338,812 23,688,929 24,590,526 25,554,595 26,543, Employee Benefits 6,829,629 7,504,756 8,739,903 9,357,048 10,029,021 10,746, Purchased Services 4,913,841 4,868,510 5,090,548 5,258,516 5,434,022 5,615, Supplies and Materials 1,278,307 1,226,826 1,263,631 1,301,540 1,340,586 1,380, Capital Outlay 312, , , , , , Intergovernmental Debt Service: Principal All Years Principal Notes Principal State Loans Principal State Advances Principal HB264 Loan Principal Other Interest and Fiscal Charges Other Objects 421, , , , , , Total Expenditures 34,551,613 37,035,858 39,320,908 41,070,643 42,896,758 44,856,173 Other Financing Uses Operating Transfers Out 2,191,818 1,408, , , Advances Out 15,000 15,000 15,000 15,000 15, All Other Financing Uses Total Other Financing Uses 15,000 2,206,818 1,423, , , Total Exp and Other Financing Uses 34,551,613 37,050,858 41,527,726 42,494,195 43,187,310 45,182, Excess of Rev Over/(Under) Exp 3,546,925 3,646,860 (927,042) (602,595) (104,380) (801,017) Cash Balance July 1 (No Levies) 14,730,819 18,277,744 21,924,603 20,997,561 20,394,966 20,290, Cash Balance June 30 (No Levies) 18,277,744 21,924,603 20,997,561 20,394,966 20,290,586 19,489, Estimated Encumbrances June 30 1,068, , , , , , Reservations Subtotal Fund Bal June 30 for Cert of App 17,209,308 21,524,603 20,597,561 19,994,966 19,890,586 19,089,569 Rev from Replacement/Renewal Levies & Income & Property Tax Renewal Cumulative Balance of Levies Fund Bal June 30 for Cert of Obligations 17,209,308 21,524,603 20,597,561 19,994,966 19,890,586 19,089,569 Revenue from New Levies & Income & Property Tax New Cumulative Balance of New Levies Unreserved Fund Balance June 30 17,209,308 21,524,603 20,597,561 19,994,966 19,890,586 19,089,569 23

24 Supplemental Page 1 FY2020 Cash Reserves Despite the small projected revenue shortfall in FY2020, the District s cash reserves are anticipated to remain comfortably above standard benchmark measures. The revenue shortfall projected for FY2020 signals a continued need to properly plan to avoid a less sustainable downward trend. Fortunately, Teays Valley has the ability to modify spending dedicated to capital projects if the need becomes pressing prior to considering more drastic operational cuts. 24

25 Supplemental Page 2 Forecast Changes: 3 Year View Dollar Dollar Dollar Difference Difference Difference Between Between Between Previous Previous Previous and and and Revenue: Current Current Current 1 Real Estate & Property Allocation $416,550 $6,387 $59,973 2 Public Utility Personal Property $16,443 $2,080 $2,059 3 Income Tax $125,249 $128,067 $130,949 4 State Foundation Restricted & Unrestricted $387,077 $259,339 $278,601 5 Other Revenue $203,998 $178,733 $187,308 6 Other Non Operating Revenue 7 Total Revenue $1,149,317 $561,834 $658,891 Expenditures: 8 Salaries $27,075 $270,549 $314,402 9 Fringe Benefits $119,559 $256,833 $279, Purchased Services $62,572 $5,015 $17, Supplies, Debt, Capital Outlay & Other $121,300 $2,016,727 $1,377, Other Non Operating Expenditures $2,191,818 $1,408, Total Expenditures $91,388 $697,458 $642, Revenue Over/(Under) Expenditures $1,240,706 $135,624 $16, Ending Cash Balance $1,240,706 $1,105,081 $1,121,359 Revenue: Line 1 Property tax collections have been increased related to slightly higher 2017 tax valuations than originally forecasted. Line 3 Income tax collections for first three quarterly distributions are up approximately $125,000. Subsequent annual estimates have been adjusted to consider the current year s results. Line 4 State aid estimates have been revised up due to higher resident enrollment levels coupled with lower outgoing open enrolled and community school students. Line 5 Improved investment earnings are the primary reason for the upward revision in estimates noted. Expenditures: Line 8 Beginning in FY2019 Salaries estimates have been increased to account for an additional staffing needs in response to enrollment demands (regular & special needs) and to improve instructional services offered. Line 9 Fringe Benefit estimates have been adjusted slightly higher primarily to account for additional employee health plans. Line 10 Purchased Services estimates have been decreased related to lower levels of outgoing open enrollment and community school students. Line 11 & Line 12 Beginning in FY2019, dollars needed to fulfill the District s Capital Spending Plan will be reflected as a Non Operating Transfer (Line 12) to the PI fund, as opposed to a General Fund operating expense (Line 11). 25

26 Supplemental Page 3 Enrollment Estimates Head Count Summary/Analysis Prior Year Actual/Estimated Enrollment (October Count) 3,935 4,006 4,049 4,047 4,098 Projected Changes to Prior Year Enrollment Net All Grade Level Mobility Factor (Change) to Prior Year Net Aggregate Manual Adjustments to Mobility Factor New Kindergartners In Loss of Seniors from Prior Year Net Change in Outgoing and Incoming Pupils Current Year Estimated Enrollment (Simulated October Count) 4,006 4,049 4,047 4,098 4,138 District Head Count Grade K Total Can Differ by Rounding 4,006 4,049 4,047 4,098 4,138 Year Over Year Percentage Change 1.81% 1.07% 0.05% 1.26% 0.98% Historic vs. Projected Enrollment 4,500 4,000 3,500 3,000 4,138 3, , ,327 3,490 3,580 3,600 3,659 3,684 3,733 3,757 3,786 3, P 2019 P 2020 P 2021 P 2022 P 3,983 3,935 4,006 4,049 4,047 4,098 4,138 2,500 2,000 1,500 1, P 2019 P 2020 P 2021 P 2022 P 26