Five Year Forecast Financial Report

Transcription

1 Five Year Forecast Financial Report October, 2017 Greg Slemons, CPA Chief Financial Officer 1

2 Table of Contents PAGE # Table of Contents 2 Executive Summary 3 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 Enrollment Supplement #1 23 Enrollment Supplement #2 24 Cash Reserves Supplement 25 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 October, 2017 Executive Summary Five Year Forecast Simplified Statement Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Beginning Balance 24,112,229 20,657,636 19,421,274 17,322,390 14,948,326 + Revenue 119,165, ,337, ,303, ,497, ,669,864 + Proposed Renew/Replacement Levies 2,698,058 5,428,534 + Proposed New Levies Expenditures (122,620,588) (121,573,977) (124,402,464) (127,569,678) (130,895,558) = Revenue Surplus or Deficit (3,454,593) (1,236,362) (2,098,884) (2,374,064) (2,797,160) Ending Balance 20,657,636 19,421,274 17,322,390 14,948,326 12,151,166 Revenue Surplus or Deficit w/o Levies (3,454,593) (1,236,362) (2,098,884) (5,072,122) (8,225,694) Ending Balance w/o Levies 20,657,636 19,421,274 17,322,390 12,250,268 4,024,574 Summary: The district's forecasted trend is limited increases in revenue that is surpassed with a larger inflationary growth in expenditures for the current and subsequent fiscal years. This results in a revenue shortfall of $3,454,593 in the current fiscal year then averages around $2,126,618 through the final four years of this forecast period. During this time, the district will also need to renew a fixed sum emergency levy. Should this levy not be renewed, the district's revenue would begin to be impacted in FY 2021, with the full impact being realized in FY Failure to renew this levy would result in a significant decrease in the district's cash balance, and would cause the district's revenue shortfall to grow to $8,225,694 by FY The district's enrollment presents challenges to its viability. Significant numbers of the district's students attend school elsewhere. However, beginning in the current fiscal year, the district has seen a reduction in the overall number of students opting to enroll in school choice options outside of the district. A detailed enrollment summary is included in the supplement of this report. These reductions in enrollment levels for various school choice options result in reductions in overall tuition expenses for the district as well. It will be important for the district to closely monitor building enrollment levels, as well as, school choice enrollment levels and make adjustments in the forecast should any significant variances occur from the current year projected enrollment levels. $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 Revenue vs. Expenditures $122,620,588 $121,573,977 $124,402,464 $127,569,678 $130,895,558 $119,165,995 $120,337,615 $122,303,579 $122,497,556 $122,669, 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 1.08% 2.34% 0.38% 0.09% 0.24% 0.36% 0.25% Public Utility 5.53% 6.89% 2.91% 3.04% 2.94% 3.06% 3.77% Income Tax n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% State Funding 1.08% 0.71% 1.23% 2.18% 3.12% 2.97% 2.04% Restricted Aid 2.87% 4.14% 0.55% 0.13% 0.31% 0.71% 0.76% Restr Federal SFSF % % 0.00% 0.00% 0.00% 0.00% 20.00% Property Tax Alloc 2.55% 9.55% 3.65% 1.21% 1.04% 0.89% 1.81% All Other Operating 7.50% 7.54% 1.85% 1.04% 1.05% 1.05% 1.25% Total Revenue 2.04% 0.33% 1.08% 1.64% 2.37% 2.33% 1.42% Total Other Sources % 98.27% 21.24% 0.00% 0.00% 0.00% 23.90% Total Rev & Other Srcs 6.74% 19.71% 0.98% 1.63% 2.36% 2.32% 2.48% In FY 2017, revenue was artificially boosted by over $27 million because of transfers within the General Fund. Since the same level of non operational transfers are not anticipated in FY 2018, overall revenue reflects a significant drop from the FY 2017 levels. Absent the advance issue, FY 2018 operational revenue is expected to remain consistent with FY The average annual increase to operational revenue growth moving forward is expected to be 1.42%. Since state funding is responsible for two thirds of the District s overall revenue, it is a major factor in the expected increases. Annual growth in that particular revenue source is estimated at 2.04%. Moving forward state funding is expected to comprise a growing portion of the District s overall revenue through FY Income Tax Public Utility 2.5% Real Estate 12.7% 12.1% Public Utility 2.5% 3.0% State Income Tax Funding State Funding 61.0% 80.9% Prop Tax Allo 2.6% 2.2% All Othr Op Re 1.4% 1.6% Real Estate Othr Sources 19.8% 0.3% 12.7% Income Tax Public Utility 3.0% Real Estate 12.1% 2022 State Funding 80.9% Othr Sources 19.8% All Othr Op Rev 1.4% Prop Tax Alloc 2.6% Othr Sources 0.3% All Othr Op Rev 1.6% Prop Tax Alloc 2.2% 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 % of Total Revenue $25,000,000 Projected General Property RevRenewal Tax (Real Levy Estate) Revenue Actual and Projected 2013 $20,180,288 $1 FY 2017 Rea 2014 $17,425,163 $20,000, $18,359, % $15,000, $18,366, $18,790,219 $10,000, $18,351, $18,420,754 $5,000,000 $20,180,288 $17,425,163 $18,359,789 $18,366,753 $18,790, $18,437, $16,646,003 $1,835, $14,850, $3,696, Projected Revenue Renewal Levy Revenue $18,351,039 $18,420,754 $18,437,777 $1,835,201 $16,646,003 $3,696,077 $14,850,986 First, it is important to note that overall real estate property taxes generate less than 15% of the District s total revenue. As such, it is very challenging to address operational needs solely upon the ability to generate revenue though local taxation. Notwithstanding, property tax revenue peaked in FY Since that time values have consistently declined, weighing on overall tax collection revenue. Moving forward, little new construction is expected. Despite a return to positive reappraisal and update revaluations (occurring in 2017 and 2020 respectively), overall property values are expected to remain stagnate. The forecast assumes district taxpayers will continue to pay their tax obligations at historic levels of approximately a 92% 93%% gross collection rate. The green shaded column below indicates historic and projected collection rates. Finally the forecast anticipates the renewal of the District s $6.5 million emergency levy (approximately 11.5 mills) in The proceeds from that renewal are reflected as "reserved" and appear as the green shaded area of the bar chart above % 5.0% % Year over Year Revenue Trend Year over Actual 5 YeProjected 5 Year Average % 1.08% % 1.08% % 1.08% % 1.08% % 1.08% 1.08% % 0.25% % 0.25% % 0.25% % 0.25% % 0.25% 0.25% 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 % of Pub Total Revenue $5,000, % $4,000,000 $3,000,000 $2,000,000 $1,000, $3,224,769 $3,224, $3,638,184 $3,638, $3,590,436 $3,590, $3,773,271 $3,773, $4,033,150 $4,033, $4,150,638 $4,150, $4,276,635 $4,276, $3,964,499 $437,967 $4,402, $3,640, $896, $4,537, Projected Revenue Renewal Levy Revenue $3,224,769 $3,638,184 $3,590,436 $3,773,271 $4,033,150 $4,150,638 $4,276,635 $437,967 $3,964,499 $896,208 $3,640,969 Public Utility Personal Property includes such items as power transmission lines and substations, as well as natural gas lines and similar public utility assets. Unlike Real Estate values, Public Utility Values are taxed at the full unreduced tax rate. Values in this class of property have grown approximately $18.6 million over the past 5 years, which has resulted in a steadily increasing revenue stream. Based upon the recent historic trend, the forecast assumes values will grow another $10 million over the next 5 year period from 2017 to Forecasted collections are expected to be paid at a 55% / 45% split, and assume a 100% collection rate. While the growth is welcome, this category only supplies a little more than 2.5% of the District s overall operational revenue. As mentioned in the real estate category, the proceeds associated with the emergency levy renewal are reflected as "reserved" and appear as the green shaded area in the bar chart above. 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% 2.0% 4.0% 5.53% Year over Year Revenue Trend Year over Actual 5 YeProjected 5 Year Average 2013 n/a 5.53% 2014 n/a 5.53% % 5.53% % 5.53% % 5.53% % 3.77% % 3.77% % 3.77% % 3.77% % 3.77% 3.77% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies 6

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 % $100,000,000 $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 Unrestricted Grants in Aid Actual and Projected $78,432,886 $75,806,766 $83,367,054 $84,347,050 $83,622,582 $84,216,623 $85,254,053 $87,109,705 $89,829,165 $92,495,709 FY 2018 represents the first year of a new biennial. The framework of the past two biennials is retained in the new formula, but only includes $10 per pupil funding increases each of the next two years. The core formula relies upon a state share calculation (determined by a combination of per pupil valuation and median income) multiplied by the state per pupil funding amount ($6,010 and $6,020 respectively). Since Youngstown s calculated state share percentage is expected to remain at the maximum 90% level through the forecasted period, the primary factor in determining overall state funding is related to enrollment. Despite an overall declining resident student base, funded enrollment for Youngstown schools is anticipated to remain stable, to slightly increasing, through the forecasted period. This is due to the expectation of a reduced number of students leaving through school choice options (Open Enrollment, Community/Charter Schools and Vouchers). The enrollment outlook employs recent trend data for both students educated in the District and those leaving through one of the school choice options. Please refer to the Enrollment Supplement data located at the end of this report for additional detail. Given the updated enrollment outlook, the District s state formula funding is expected to steadily increase through FY 2022, transitioning from a Guarantee funding status in FY 2018, to Formula status in FY Funding is expected to remain formula based or near cap limits through the end of the projection period (FY 2022). Cap limits are modeled at 3% for the forecast period, meaning the district would only be able to recieve a 3% growth on the prior years' funding amount. Nevertheless, it is clear that small fluctuations in the District s resident student enrollment can impact the District s calculated state funding levels. Since State funding represents over 56% of the District s overall revenue, it is critical these trends are closely monitored, and adjustments incorporated as updated data becomes available. 12.0% 1 8.0% 6.0% 4.0% 2.0% 2.0% 4.0% Year over Year Revenue Trend Year over YeaActual 5 Year Projected 5 Year Average % 1% % 1% % 1% % 1% % 1% % 2% % 2% % 2% % 2% % 3% 2% 2% 6.0% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average 7

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 4.7% $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Restricted Grants in Aid Actual and Projected $7,603,290 $7,623,505 $7,040,932 $6,955,218 $6,666,618 $6,630,230 $6,621,502 $6,641,741 $6,688,676 Restricted State Aid is comprised of funding for economic disadvantaged and career technical programs, which have been reduced from the calculated state funding amount in the prior note. Beginning in FY 2014, the forecast categorizes these sources as Restricted Aid. Previously all state funding was categorized as Unrestricted State Aid. This explains the spike reflected in this category s revenue in FY Of course, FY 2013 total funding was included in the Unrestricted category. Funding from both sources (economic disadvantaged and career tech) are projected to remain stable though the end of the projection period. Funding in this category represents less than 5 percent of the District s overall projected revenue. 2 Year over Year Revenue Trend 0.76% % Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average 8

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 $4,500,000 FY 2017 Pro $3,771,436 $424,890 Revenue $4,000,000 $836, $3,363,852 $3,500, $3,841,720 $3,000, $3,490, % $2,500, $3,838,766 $2,000, $3,472,005 $1,500, $3,598,686 $1,000, $3,555,029 $500, $3,093,324 $424, $2,650, $836, Projected Revenue Renewal Levy Revenue $3,771,436 $3,363,852 $3,841,720 $3,490,417 $3,838,766 $3,472,005 $3,598,686 $3,555,029 $3,093,324 $2,650,564 Property tax allocation (PTA) is comprised of two types of revenue. The first of the two types of PTA revenue is related to state reimbursements for local real estate taxes. In essence, local residential real estate taxes are reduced by rollback (12.5% for owner occupied houses) and also for homestead (disabled, senior citizens, etc.). This revenue reimbursement is about $3.7 million of the PTA total. The proceeds from state reimbursements associated with the emergency levy renewal are reflected as "reserved" and appear in the green shaded area of the bar chart above (see Real Estate and Public Utility Property Tax notes for further detail). The other type of revenue included in the PTA category is for the state's reimbursement of local tangible personal property (TPP) tax revenue losses resulting from statewide tax policy changes in The district receives reimbursement for a small portion ($186,000 in FY 2017) of its emergency levy. This reimbursement will be phased out starting in FY 2018, and the county auditor will make slight adjustments to millage to compensate for the loss of state revenue. Year over Year Revenue Trend % 1 5.0% 5.0% % 2.55% Year over Actual 5 YeProjected 5 Year Average % 2.55% % 2.55% % 2.55% % 2.55% % 2.55% % 1.81% % 1.81% % 1.81% % 1.81% % 1.81% 1.81% 2 Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average *Projected % trends include renewal levies 9

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 1.4% $3,500,000 $3,000,000 $2,500,000 $2,000,000 All Other Operating Revenue Actual and Projected $1,500,000 $1,000,000 $500,000 $2,833,286 $3,175,088 $1,299,690 $1,736,768 $2,075,260 $1,918,694 $1,883,254 $1,902,932 $1,922,825 $1,942,959 Generally, revenue reflected in this category represents tuition payments, revenue for incoming open enrollment students, class fees, and interest earnings. Other Operating Revenue represents 1.4% of total revenue for the General Fund. The largest component of this category is Medicaid reimbursement, which totaled $1 million in FY 2017 and is expected to generate $736,000 in FY The second largest component is open enrollment (in) and other tuition, which is expected to total $455,113 in FY 2018, which is consistent with the FY 2017 revenue level. Transportation fees are expected to total approximately $200,000 in FY 2018, and investment earnings are projected to total $180,000. FY 2018's anticipated revenue levels serve as the basis for the projected years. 4 Year over Year Revenue Trend % 1.25% Year over Year Revenue Variance Actual 5 Year Average Projected 5 Year Average 10

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 Oth Revenue $35,000,000 $30,000,000 $25,000,000 Other Operating Financing Sources Actual and Projected 19.8% $20,000,000 $15,000,000 $10,000,000 $5,000,000 $736,955 $666,101 $1,471,351 $6,593,330 $29,367,873 $507,866 $400,000 $400,000 $400,000 $400,000 This category accounts for miscellaneous non operational receipts which include dollars transferred or advanced back to the General Fund from other funds the District operates (such as federal funds, cafeteria funds, athletics, student managed accounts, etc). At the end of FY 2017, the district completed an intrafund transfer of $27,474,210 to consolidate separate general fund accounts. This accounting transaction artificially increased Other Financing Sources and also Other Financing Uses (expenditures), with no net impact on the district's cash balance. The district also made $1.6 million in temporary loans to other funds at the end of FY This $1.6 million was returned to the general fund in early FY Only $107,866 was made in temporary loans at the end of FY 2017, therefore a much smaller amount is being returned to the General Fund in FY 2018 compared to FY The plan now is to request the federal funds before year end to cover known expenditures; thus eliminating the need for advances or temporary loans to these funds in future years. As a result, starting in FY 2019 and beyond, the district is only reflecting $400,000 annually for other financing sources, which is the typical amount received from prior year adjustments, etc Year over Year Revenue Trend % 23.90% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 11

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 0.32% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Benefits 0.46% 3.87% 13.44% 4.98% 5.04% 5.10% 4.94% Purchased Services 5.41% 1.15% 2.82% 1.92% 2.19% 2.18% 0.92% Supplies & Materials 5.15% 15.57% 2.72% 1.80% 2.86% 2.87% 4.45% Capital Outlay % 1.42% 8.39% 2.81% 2.89% 0.00% 2.53% Intergov n/a n/a n/a n/a n/a n/a n/a Debt 17.13% 0.03% % n/a n/a n/a 50.02% Other Objects 1.73% 15.00% 0.63% 1.75% 1.75% 1.56% 3.88% Total Expenditures 2.08% 1.00% 1.09% 2.34% 2.56% 2.62% 1.92% Total Other Uses % 89.67% 82.46% 0.00% 0.00% 0.00% 34.42% Total Exp & Other Uses 6.84% 16.11% 0.85% 2.33% 2.55% 2.61% 1.90% Over the past five years, the district's operating expenditures have increased by an average annual rate of 2.08%. The projections contained in this forecast calculate that total operating expenditures will grow at an average annual rate of 1.92% over the next five years. Salary projections include increases in expense levels due to inflationary growth, as well as, a reduction in FY 2017 and FY 2018 due to one time stipend payments made to employees in prior years not reoccurring. Benefits initially are expected to decline due to one time premium holidays occurring in the current fiscal year, followed by projected increases in annual health insurance premiums for FY 2019 to FY Salary related fringe benefits are also expected to grow in line with the inflationary growth in salary expenses. Purchased services is the district's largest expense line in the forecast. Due to an anticipated reduction in the number of students receiving their education from outside of the district, the projected average annual increase for total purchased services is expected to be less than the historical trends. One time, intra fund transfers within the General Fund caused Other Financing Uses to increase to a very high level in FY With the exception of a one time transfer to the P.I. fund for improvements to the building that will house the Youngstown Early College, only transfers to the athletic fund are planned for FY 2019 FY Purch Serv 2022 Salaries 35.2% 29.3% 36.1% Benefits 13.0% 18.4% Purch Serv Benefits 35.2% 41.1% 13.0% Supp & Mat 1.3% 1.8% Capital Outlay 1.3% 1.3% Salaries Intergov & Deb 0.3% 29.3% Othr Objects 0.7% 1.0% Othr Uses 18.9% 0.4% Othr Uses 0.4% Salaries 36.1% 2022 Benefits 18.4% Purch Serv 41.1% Othr Uses 18.9% Othr Objects 0.7% Intergo v & Debt 0.3% Supp & Mat 1.3% Capital Outlay 1.3% Othr Objects 1.0% Intergo v & Debt 00% Capital Outlay 1.3% Supp & Mat 1.8% 12

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 $40,551,433 $40,146,770 $41,066,332 $42,824,637 $42,796,730 $43,652,664 $44,525,718 $45,416,232 $46,324,557 $47,251,048 Personnel Services is the district's second largest expenditure and represents 29.3% of the overall budget. During the previous fiscal year, the two most significant changes in this expense line where increases in substitute teacher expenses of $581,670 or 31%, in comparison to lower than average substitute costs in FY Classified sub costs also increased by $103,878 or 11% during FY 2017, while overtime costs increased by $152,048 or 30%. Regular certified salary expenses decreased during FY 2017 compared to the previous fiscal year due to a $900,000 reduction in one time stipend expenses that were incurred in the prior year. Classified severance also decreased $148,900, and a onetime classified stipend expense from the previous year caused a reduction in FY 2017 salaries of $160,000. Current year and subsequent year substitute expenses, overtime costs, and severance payments are anticipated to remain at the FY 2017 level. Additional classified stipend reductions of $383,000 are anticipated to be experienced during the current fiscal year. Based on historic trends, the district has included an increase of 2% in total salary expenses as an inflationary benchmark. 6.0% Year over Year Expenditure Trend 4.0% 2.0% 2.00% 2.0% 0.32% 4.0% 6.0% 8.0% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 13

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 $18,500,920 $18,478,109 $21,028,496 $20,184,879 $19,016,857 $18,280,036 $20,737,077 $21,769,740 $22,867,142 $24,033,665 Employees' benefit costs are the district's third largest expense category at 13% of the overall budget. For the third consecutive year the district is anticipating that overall benefit costs will be less than the amount expended in the previous fiscal year. A significant portion of this decrease for the current fiscal year is due to the district anticipating that it will have two premium holidays during the year. These premium holidays result in a one time reduction in benefit expenses of $1.42 million, and offset the current year increase in annual premium levels of 5.4%. During the previous fiscal year, the district experienced a $1.46 million reduction in medical premium expenses due to the district moving to a new health care consortium. The district has budgeted inflationary growth in health insurance expenses in future year's of 7% as a budgetary benchmark. This is consistent with market and historic trends. 15.0% Year over Year Expenditure Trend 1 5.0% 4.94% 0.46% 5.0% 1 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 14

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 FY 2017 Pur Expenditures 0 $60,000,000 $50,000,000 $40,000,000 Purchased Services Actual and Projected 35.2% $30,000,000 $20,000,000 $10,000,000 $41,865,155 $44,392,088 $46,042,928 $45,661,236 $51,451,297 $52,043,024 $50,573,279 $51,546,507 $52,673,643 $53,822,448 Purchased Services is the largest expenditure category of the district's General Fund budget, representing 35.2% of overall expenditures. Tuition related expenses represent 77.8% or $40.2 million of all purchased services expenditures. The largest type of tuition related expense that the district incurs is for students attending charter schools, totaling $20.1 million in FY Based on the projected charter school enrollment numbers for the current fiscal year, charter school expenses will decrease for the third consecutive year, with an estimated decrease in annual expenses of 5.5%. Based on current district enrollment provided by the Ohio Department of Education, open enrollment tuition and scholarship expenses are also expected to decrease for the current fiscal year. As a result, total tuition expenses for FY 2018 are projected to decrease by $514,000. This is a significant change from the $2.5 million increase that was experienced for tuition expenses from FY 2016 to FY Due to a number of new programs the district implemented with local partnerships and organizations during FY 2017, as well as, staff professional development initiatives, contracted service expenses increased $1.8 million. An additional increase of $738,000 is anticipated for the current fiscal year. Beginning in FY 2020, these costs are expected to decrease by $2.4 million, to total $1.8 million in annual expenses through FY % Year over Year Expenditure Trend 12.0% 1 8.0% 6.0% 4.0% 2.0% 2.0% 5.41% 0.92% 4.0% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 15

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 1.3% $1,500,000 $1,000,000 $500,000 $2,211,547 $1,769,108 $1,545,199 $1,857,407 $1,861,477 $2,151,392 $2,209,934 $2,170,232 $2,232,339 $2,296,309 The district's supply projections represent just 1.3% of the overall General Fund budget. The district made the first major textbook adoption in recent years during FY 2016, increasing expenses for these types of purchases from $37,000 (FY 2015) to $446,000 (FY 2016). The district did not complete as many textbook adoptions in FY 2017, with textbook purchases only totaling $218,908. For the current fiscal year, these expenses are expected to increase to $469,000. Future year budget projections assume that the district will continue a textbook replacement cycle that is consistent with the 2018 level of expenses. Instructional and general office supply costs increased from $720,198 in FY 2016 to $907,016 in FY These expenses are expected to grow by 3% for FY A budgetary inflation benchmark equal to a 3% annual increase has been included with future year projections. 25.0% % 1 5.0% 5.0% % % Year over Year Expenditure Trend 4.45% 5.15% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 16

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 $2,500,000 $2,000,000 Capital Outlay Actual and Projected 1.3% $1,500,000 $1,000,000 $500,000 $176,188 $545,668 $1,207,672 $927,707 $1,915,797 $1,943,000 $1,780,000 $1,730,000 $1,680,000 $1,680,000 The district's capital spending ended significantly higher in FY 2017 due to an increased investment in technology related purchases, school buses and replacement equipment. The district increased school bus replacement allocations from $331,000 (FY 2016) to $528,000 (FY 2017). $560,000 has been budgeted for FY 2018 to FY 2022 to further updates and improvements related to the district's fleet. Technology related purchases only totaled $131,000 in FY The district increased these expenditure levels to $765,000 in FY 2017 and will maintain that expenditure level in FY Beginning in FY 2019, these expenditure levels will be reduced to $600,000 in FY 2019, followed by an annual budget of $500,000 for FY 2020 through FY Beginning in FY 2018, replacement equipment has been budgeted at $620,000 annually. 140 Year over Year Expenditure Trend % 2.53% 20 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 17

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 0.3% $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Intergovernmental & Debt Service Actual and Projected $1,342,337 $860,443 $859,625 $860,399 $444,764 $444,620 The district will make the last debt payment for school buses purchased in FY 2012 this fiscal year. There are no additional debt expenses anticipated after that loan is paid off. 2 Year over Year Expenditure Trend % 20.01% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 18

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 0.7% $1,400,000 $1,200,000 $1,000,000 $800,000 Other Objects Actual and Projected $600,000 $400,000 $200,000 $792,466 $916,011 $1,015,309 $961,629 $1,092,054 $1,255,853 $1,247,971 $1,269,754 $1,291,998 $1,312,089 Other Object expenditures represent 0.7% of the overall General Fund budget and are projected to total $1,255,853 in FY A majority of Other Object spending is related to County Auditor and Treasurer fees which are expected to total $765,000 for the current fiscal year, or 60.9% of total Other Object expenditures. The district will also start charging a portion of the annual insurance costs to this expense line item in FY 2018, increasing annual Other Object expenditures by $80,000. As well as begin reflecting $230,000 for County ESC Services % 1 5.0% 5.0% % % 3 Year over Year Expenditure Trend 3.88% 1.73% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 19

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 % $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Other Financing Uses Actual and Projected $680,037 $1,184,149 $7,312,099 $1,751,086 $27,582,076 $2,850,000 $500,000 $500,000 $500,000 $500,000 At the end of FY 2017, the district completed an intra fund transfer of $27,474,210 to consolidate separate general fund accounts. These accounting transactions artificially increased Other Financing Sources (see revenue notes) and Other Financing Uses, with no net impact on the district's cash balance. For the current fiscal year, $2 million has been allocated to be transferred to the permanent improvement fund for improvements to the building that will house Youngstown Early College. In addition, $850,000 has been allocated to be transferred to the Athletic Fund for FY 2018, and $500,000 annually for FY 2019 to FY Year over Year Expenditure Trend % 34.42% 20 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 20

21 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: 5/30/ /26/2017 Current Current 1 Real Estate & Property Allocation $22,078,868 $21,823,044 $255, % 2 Public Utility Personal Property $4,033,150 $4,033,150 3 Income Tax n/a 4 State Foundation Restricted & Unrestricted $91,719,346 $90,883,241 $836, % 5 Other Revenue $1,621,672 $1,918,694 $297, % 6 Other Non Operating Revenue $1,000,000 $507,866 $492, % 7 Total Revenue $120,453,036 $119,165,995 $1,287, % Expenditures: 8 Salaries $43,916,235 $43,652,664 $263, % 9 Fringe Benefits $19,960,677 $18,280,036 $1,680, % 10 Purchased Services $51,246,237 $52,043,024 $796, % 11 Supplies, Debt, Capital Outlay & Other $5,077,649 $5,794,864 $717, % 12 Other Non Operating Expenditures $2,850,000 $2,850,000 n/a 13 Total Expenditures $120,200,799 $122,620,588 $2,419, % 14 Revenue Over/(Under) Expenditures $252,237 $3,454,593 $3,706, %* 15 Ending Cash Balance $23,834,199 $20,657,636 $3,176, %* *Percentage expressed in terms of total expenditures Overall FY 2018 revenue projections are 1.1% less than the amount projected in May A majority of this reduction is due to overall funded enrollment (average daily membership) being less than the amount projected in May, causing a reduction in state funding levels. In addition, the district did not have the anticipated amount of advances out of the General Fund at the end of FY 2017, therefore, return of advances were less for FY FY 2018 expenditure projections are 2% higher than the amount projected in the May 2017 forecast. Fringe benefits are projected to be 8.4% lower than the May 2017 forecast due to the district anticipating two premium holidays for health insurance that is estimated to save the district $1.48 million. Purchased Services projections have increased $796,786 from the May 2017 forecast due to additional professional development services being anticipated for the current fiscal year. Increases in school bus replacement budgets (Capital Outlay), instructional supplies (Supplies) and Count ESC Services (Other) increased these expenditure lines from the May 2017 forecast. The transfer of funds for the Youngstown Early College building improvements and the athletic fund increased Other Non Operating Expenditures $2.85 million for FY 2018 from the amount projected in the May 2017 forecast. As mentioned previously, decisions to maintain the annual operational balance will be key to achieving financial sustainability. 21

22 Actual FORECASTED Fiscal Year: Revenue: General Property Tax (Real Estate) 18,790,219 18,351,039 18,420,754 18,437,777 16,646,003 14,850, Public Utility Personal Property 3,773,271 4,033,150 4,150,638 4,276,635 3,964,499 3,640, Income Tax Unrestricted Grants in Aid 83,622,582 84,216,623 85,254,053 87,109,705 89,829,165 92,495, Restricted Grants in Aid 6,954,218 6,666,618 6,630,230 6,621,502 6,641,741 6,688, Restricted Federal Grants SFSF 1, Property Tax Allocation 3,838,766 3,472,005 3,598,686 3,555,029 3,093,324 2,650, All Other Operating Revenues 2,075,260 1,918,694 1,883,254 1,902,932 1,922,825 1,942, Total Revenue 119,055, ,658, ,937, ,903, ,097, ,269,864 Other Financing Sources: Proceeds from Sale of Notes State Emergency Loans and Adv Operating Transfers In 27,367, Advances In 1,697, , All Other Financing Sources 303, , , , , , Total Other Financing Sources 29,367, , , , , , Total Rev & Other Sources 148,423, ,165, ,337, ,303, ,497, ,669,864 Expenditures: Personnel Services 42,796,730 43,652,664 44,525,718 45,416,232 46,324,557 47,251, Employee Benefits 19,016,857 18,280,036 20,737,077 21,769,740 22,867,142 24,033, Purchased Services 51,451,297 52,043,024 50,573,279 51,546,507 52,673,643 53,822, Supplies and Materials 1,861,477 2,151,392 2,209,934 2,170,232 2,232,339 2,296, Capital Outlay 1,915,797 1,943,000 1,780,000 1,730,000 1,680,000 1,680, Intergovernmental Debt Service: Principal All Years 416, Principal Notes 430, Principal State Loans Principal State Advances Principal HB264 Loan Principal Other Interest and Fiscal Charges 28,764 14, Other Objects 1,092,054 1,255,853 1,247,971 1,269,754 1,291,998 1,312, Total Expenditures 118,578, ,770, ,073, ,902, ,069, ,395,558 Other Financing Uses Operating Transfers Out 27,474,210 2,850, , , , , Advances Out 107, All Other Financing Uses Total Other Financing Uses 27,582,076 2,850, , , , , Total Exp and Other Financing Uses 146,161, ,620, ,573, ,402, ,569, ,895, Excess of Rev Over/(Under) Exp 2,262,138 (3,454,593) (1,236,362) (2,098,884) (5,072,122) (8,225,694) Cash Balance July 1 (No Levies) 21,850,091 24,112,229 20,657,636 19,421,274 17,322,390 12,250, Cash Balance June 30 (No Levies) 24,112,229 20,657,636 19,421,274 17,322,390 12,250,268 4,024, Estimated Encumbrances June ,631 1,279,285 1,000,000 1,000,000 1,000,000 1,000, Reservations Subtotal Fund Bal June 30 for Cert of App 23,115,598 19,378,351 18,421,274 16,322,390 11,250,268 3,024,574 Rev from Replacement/Renewal Levies & Income & Property Tax Renewal 2,698,058 5,428, Cumulative Balance of Levies 2,698,058 8,126, Fund Bal June 30 for Cert of Obligations 23,115,598 19,378,351 18,421,274 16,322,390 13,948,326 11,151,166 Revenue from New Levies & Income & Property Tax New Cumulative Balance of New Levies Unreserved Fund Balance June 30 23,115,598 19,378,351 18,421,274 16,322,390 13,948,326 11,151,166 22

23 Enrollment Supplement #1 Head Count Summary/Analysis Prior Year Actual/Estimated Enrollment (October Count) 4,849 4,659 4,497 4,391 4,370 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) 4,659 4,497 4,391 4,370 4,303 District Head Count Grade K Total Can Differ by Rounding 4,659 4,497 4,391 4,370 4,303 Year Over Year Percentage Change 3.92% 3.48% 2.36% 0.48% 1.53% Historic vs. Projected Enrollment 9,000 8,000 7,000 6,000 8, , ,849 7,542 6,903 6,516 6,097 5,544 5,301 5,197 5, P 2019 P 2020 P 2021 P 2022 P 4,913 4,849 4,659 4,497 4,391 4,370 4,303 5,000 4,000 4,849 4,303 3,000 2,000 1, P 2019 P 2020 P 2021 P 2022 P 23

24 Enrollment Supplement #2 Although students educated within the District are anticipated to continue to decline, the rate of decline is expected to slow significantly. This assumption is based upon trend data that incorporates a three year mobility factor combined with birth data obtained from the Ohio Department of Health. The three year mobility factor was selected because it most closely reflects recent trends. Further, despite the continued decline in enrollment, the District s formula funded student count used in the state funding formula takes into consideration a lower outlook for students leaving the District through school choice options. Therefore, the District s formula funded enrollment is expected to remain relatively stable as mentioned in the Unrestricted State Aid narrative. 24

25 Cash Reserves Supplement 25