Forecast Provided By Trotwood-Madison City School District Treasurer's Office Janice Allen, Treasurer

Transcription

1 Trotwood-Madison City School District Montgomery County SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE FISCAL YEARS ENDED JUNE 30, 2011, 2012 and 2013 ACTUAL FORECASTED FISCAL YEARS ENDING JUNE 30, 2014 THROUGH 2018 Forecast Provided By Trotwood-Madison City School District Treasurer's Office Janice Allen, Treasurer Updated October 17, 2013

2 Page 1 of 1 2/27/2014 Trotwood-Madison Five Year Forecast for Fiscal Year 2014 District Type: City IRN: County: Montgomery Date Submitted: 10/21/2013 Date Processed: 10/21/2013 Actual Forecasted Line General Property (Real Estate) 8,155,839 7,775,495 6,596,800 7,315,118 7,029,924 6,737,145 6,701,403 6,571, Tangible Personal Property Tax 414, , , , , , , , Unrestricted Grants-in-Aid 20,305,007 21,194,501 21,233,193 22,621,378 24,605,139 24,603,889 24,602,639 24,601, Restricted Grants-in-Aid 215,256 79, ,428 86,963 89,343 89,343 89,343 89, Restricted Federal Grants-in-Aid - SFSF 2,046, , Property Tax Allocation 2,039,476 1,430,234 1,273,169 1,276,754 1,235,192 1,193,744 1,192,292 1,173, All Other Operating Revenue 619,901 1,169, , , , , , , Total Revenue 33,796,467 32,668,493 30,349,443 32,360,896 34,068,767 33,748,942 33,726,209 33,592, Operating Transfers-In 858,992 48,692 2, Advances-In 2,484, , ,017 95, , , , , All Other Financial Sources 247, , , , , , , , Total Other Financing Sources 3,590, , , , , , , , Total Revenues and Other Financing Sources 37,387,282 33,615,541 30,964,816 32,691,123 34,318,767 33,998,942 33,976,209 33,842, Personnel Services 15,700,334 14,585,360 12,242,230 12,809,744 13,907,905 14,434,016 14,904,384 15,392, Employees' Retirement/Insurance Benefits 4,400,968 4,258,400 4,241,484 4,624,266 5,040,168 5,344,015 5,569,897 5,888, Purchased Services 8,741,213 9,473,267 8,406,846 9,220,695 10,076,598 10,786,163 11,406,834 12,155, Supplies and Materials 635, , ,723 1,059,657 1,022,851 1,086, , , Capital Outlay 233, , , , , , , , Other Objects 1,280,168 1,577,536 1,148,995 1,932,010 1,966,001 2,000,997 2,037,028 2,074, Total Expenditures 30,991,907 30,928,131 26,921,818 29,886,992 32,258,954 33,901,838 34,873,524 37,085, Operational Transfers - Out 1,054, , , , , , , , Advances - Out 749, ,513 95, , , , , , All Other Financing Uses 1, Total Other Financing Uses 1,805, , , , , , , , Total Expenditure and Other Financing Uses 32,797,664 31,739,485 27,386,275 30,376,992 32,748,954 34,391,838 35,363,524 37,575, Excess Rev & Oth Financing Sources over(under) Exp & Oth Financing 4,589,618 1,876,056 3,578,541 2,314,132 1,569,813 (392,896) (1,387,315) (3,733,331) Beginning Cash Balance 9,278,434 13,868,052 15,744,108 19,322,649 21,636,781 23,206,594 22,813,698 21,426, Ending Cash Balance 13,868,052 15,744,108 19,322,649 21,636,781 23,206,594 22,813,698 21,426,383 17,693, Outstanding Encumbrances 106,604 60,511 30, , , , , , Fund Balance June 30 for Certification of Appropriations 13,761,448 15,683,597 19,291,794 21,536,781 23,106,594 22,713,698 21,326,383 17,593, Fund Bal June 30 for Cert of Contracts,Salary Sched,Oth Obligations 13,761,448 15,683,597 19,291,794 21,536,781 23,106,594 22,713,698 21,326,383 17,593, Unreserved Fund Balance June 30 13,761,448 15,683,597 19,291,794 21,536,781 23,106,594 22,713,698 21,326,383 17,593,052 Notes to the Five Year Forecast Please visit the Ohio Department of Education Web site at ftp://ftp.ode.state.oh.us/geodoc/5-yrforecast/ to see the complete forecast assumptions file. Copyright ODE, Site developed and hosted by SSDT

3 TROTWOOD MADISON LOCAL CITY SCHOOL DISTRICT Montgomery County Schedule og Revenues, Expenditures and Changes in gund Balances gor the giscal Years Ended June 30, 2011, 2012, 2013 Forecasted Fiscal Year Ending June 30, 2014 through 2018 Actual Forecasted Fiscal Year Fiscal Year Fiscal Year Average Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Change Revenues General Property Tax (Real Estate) 8,155,839 7,775,495 6,596, % $7,315,118 7,029,924 6,737,145 6,701,403 6,571, Tangible Personal Property 414, , , % $480, , , , , Income Tax % $ Unrestricted State Grants-in-Aid 20,305,007 21,194,501 21,233, % $22,621,378 24,605,139 24,603,889 24,602,639 24,601, Restricted State Grants-in-Aid 215,256 79, , % $86,963 89,343 89,343 89,343 89, Restricted Fed. SFSF Fd. 532 FY10&11/Ed Jobs Fd.504 FY12 2,046, , % $ Property Tax Allocation 2,039,476 1,430,234 1,273, % $1,276,754 1,235,192 1,193,744 1,192,292 1,173, All Other Revenues 619,901 1,169, , % 580, , , , , Total Revenues 33,796,467 32,668,493 30,349, % 32,360,896 34,068,767 33,748,942 33,726,209 33,592,304 Other Financing Sources Proceeds from Sale of Notes % State Emergency Loans and Advancements (Approved) % Operating Transfers-In 858,992 48,692 2, % Advances-In 2,484, , , % 95, , , , , All Other Financing Sources 247, , , % $235, , , , , Total Other Financing Sources 3,590, , , % 330, , , , , Total Revenues and Other Financing Sources 37,387,282 33,615,541 30,964, % 32,691,123 34,318,767 33,998,942 33,976,209 33,842,304 Expenditures Personal Services $15,700,334 $14,585,360 $12,242, % $12,809,744 $13,907,905 $14,434,016 $14,904,384 $15,392, Employees' Retirement/Insurance Benefits 4,400,968 4,258,400 4,241, % $4,624,266 5,040,168 5,344,015 5,569,897 5,888, Purchased Services 8,741,213 9,473,267 8,406, % $9,220,695 10,076,598 10,786,163 11,406,834 12,155, Supplies and Materials 635, , , % 1,059,657 1,022,851 1,086, , , Capital Outlay 233, , , % 240, , , , , Intergovernmental % Debt Service: Principal-All (Historical Only) % Principal-Notes % Principal-State Loans % Principal-State Advancements % Principal-HB 264 Loans % Principal-Other % Interest and Fiscal Charges % Other Objects 1,280,168 1,577,536 1,148, % $1,932,010 1,966,001 2,000,997 2,037,028 2,074, Total Expenditures $30,991,907 30,928,131 26,921, % 29,886,992 32,258,954 33,901,838 34,873,524 37,085,634 Other Financing Uses Operating Transfers-Out 1,054, , , % $390, , , , , Advances-Out 749, ,513 95, % 100, , , , , All Other Financing Uses 1, % Total Other Financing Uses 1,805, , , % 490, , , , , Total Expenditures and Other Financing Uses 32,797,664 31,739,485 27,386, % 30,376,992 32,748,954 34,391,838 35,363,524 37,575, Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses 4,589,618 1,876,056 3,578, % 2,314,132 1,569,813 (392,896) (1,387,315) (3,733,331) Cash Balance July 1 - Excluding Proposed Renewal/Replacement and New Levies 9,278,434 13,868,052 15,744, % 19,322,649 21,636,781 23,206,594 22,813,698 21,426, Cash Balance June 30 13,868,052 15,744,108 19,322, % 21,636,781 23,206,594 22,813,698 21,426,383 17,693, Estimated Encumbrances June ,604 60,511 30, % 100, , , , ,000 Reservation of Fund Balance Textbooks and Instructional Materials % Capital Improvements % Budget Reserve % DPIA % Fiscal Stabilization % Debt Service % Property Tax Advances % Bus Purchases % Subtotal % Fund Balance June 30 for Certification of Appropriations 13,761,448 15,683,597 19,291, % 21,536,781 23,106,594 22,713,698 21,326,383 17,593,052 10/5/2013 Trotwood Madison

4 TROTWOOD MADISON LOCAL CITY SCHOOL DISTRICT Montgomery County Schedule og Revenues, Expenditures and Changes in gund Balances gor the giscal Years Ended June 30, 2011, 2012, 2013 Forecasted Fiscal Year Ending June 30, 2014 through 2018 Revenue from Replacement/Renewal Levies Income Tax - Renewal % Property Tax - Renewal or Replacement % Cumulative Balance of Replacement/Renewal Levies % Fund Balance June 30 for Certification of Contracts, Salary Schedules and Other Obligations 13,761,448 15,683,597 19,291, % 21,536,781 23,106,594 22,713,698 21,326,383 17,593,052 Revenue from New Levies Income Tax - New 0.0% Property Tax - New 0.0% Cumulative Balance of New Levies % Revenue from Future State Advancements - 0.0% Unreserved Fund Balance June 30 13,761,448 15,683,597 19,291, % 21,536,781 23,106,594 22,713,698 21,326,383 17,593,052 10/5/2013 Trotwood Madison

5 Trotwood-Madison City School District Montgomery County Notes to the Five Year Forecast General Fund Only October 17, 2013 Introduction to the Five Year Forecast All school districts in Ohio are required to file a five (5) year financial forecast by October 31, and May 31, in each fiscal year (FY). The five-year forecast includes three years of actual and five years of projected general fund revenues and expenditures. Fiscal year 2014 (July 1, 2013-June 30, 2014) is the first year of the five year forecast and is considered the baseline year. Our forecast is being updated to reflect the most current economic data for the October 2013 filing. Economic Environment Affecting Forecast Variables State Economy It is important in long range forecasting to consider the economic framework in which projections of revenues are made. We will offer a sampling of statewide economic data that suggests that the economy for the FY14-18 period is growing moderately and is recovering from the recession. It is important to consider the statewide economic data for two important reasons. One, our state funding is directly affected by state revenue collections. The effects of the recession on the economy at the state level created a budget deficit which required the State of Ohio to make nearly $8 Billion in reductions in the FY12-FY13 state biennium budget which translated into flat funding and/or funding reductions for nearly every school district in Ohio. The second reason is that the same economic forces which are driving the recovery of state tax revenues are also likely affecting the underlying economics of most communities in Ohio affecting the ability to collect local tax revenue. Generally speaking local school district economic viability is tied to the same fundamental economics that drive the state. As noted in the graphs below State of Ohio Revenues through FY13 have recovered and exceeded FY08 total tax revenue levels. The two significant contributors to the economic recovery as noted in the graph on the right are personal income taxes and sales and use taxes. The recovery of the labor market will continue to be a significant factor to watch in determining if the recovery of the last two fiscal years will continue. Source: Ohio Legislative Budget Office Source: Ohio Legislative Budget Office The above State revenue is a clear indication that the economy has recovered and that there is economic growth in the state. Another indication that the State of Ohio has achieved solid footing economically is the accumulation of reserves in the State Rainy Day Fund (RDF). The graph below shows the ten year history of the Rainy Day Fund balance. The recession depleted the RDF in FY09. FY11 began the recovery of the economy and enabled the state to contribute excess revenues to the RDF. As noted the RDF balance in FY13 has reached an all time record high deposit of $1.478Billion. This cushion should help ensure that funding for schools approved in the recent state biennium budget HB59 will be met through FY15 and could be continued into the future if a brief pull back in the economy occurs over the next few years. A final note on the overall state economy is the unemployment rate. This is a significant measure to monitor for continued economic viability of the recovery. As noted above personal income taxes and sales tax are highly correlated and have been two major drivers of the recent recovery. As of July 2013 the unemployment rate in Ohio stood at 7.2%, which is unchanged from July The 7.2% rate is much lower than the 10.5% rate in 2009 but it has a long way to go to reach the 5.5% rate of In Montgomery County the rate was 8.1% at July

6 Source: Ohio Legislative Budget Office Source: Bureau of Labor Market Information Overall, we believe the economic recovery is stable and the economy is improving. This should provide a stable basis for which to make projections of State revenues to the district as noted in HB59 through FY15 and continuing through FY18. The improving labor market should also provide a basis for a recovery in property tax collections in this forecast by: 1) stabilizing declining property values; 2) increasing current property tax collections; and, 3) increasing prior delinquent tax collections. Forecast Risks and Uncertainty: Our financial forecast is laden with risks and uncertainty due to the economic climate and volatility of the legislative changes that are happening very fast and with little time to plan. The items below give a short description of the current issues and how they may affect our forecast long term: Trotwood-Madison City School District went through a reappraisal update in tax year 2011 to collect in FY12. A complete reappraisal update will occur in tax year 2014 for collection in FY15. Real estate values are predicted to fall -10% for residential and commercial property for the reappraisal in 2014 as recent sale data suggest a decline in value is likely. An appraisal update will occur in 2017 for collection in FY18 and we are calling for a drop of -5% for residential and commercial property at that time. We do not feel the district is at a high risk for sharper declines than what we have projected at this time. The state budget represents 74% of district revenues in FY14. It is clearly an area of on-going risk to the current level of revenue. The risk comes in FY16 and beyond if the state economy worsens or if future state budgets radically reduce funding to our district. Future uncertainty in both the state foundation funding formula and the state s economy makes this area an elevated risk to district funding long term. There are many provisions in the current state budget bill HB59 that will increase the district expenditures in the form of expanded EdChoice Scholarships in the school years and the new Income Base-Based Voucher Program in FY14. The Peterson special education voucher and the new Autism voucher which began in FY13 cost the district $52,353 in FY13. These are examples of new choice programs in the prior state budget that cost the district money and these new voucher programs could increase costs as well. Expansion of programs such as these could expose the district to new expenditures that are not currently in the forecast. We are monitoring any new threats to our state aid and increased costs very closely. Patient Protection and Affordable Care Act (PPACA) This program was approved March 23, 2010 along with the Health Care and Education Reconciliation Act. Many of the provisions of this federal statute were supposed to be implemented January 1, 2014 but were delayed by the IRS on July 2, 2013 until January 1, We are aware of additional taxes that will be assessed on the district January 1, 2015 which could increase costs by as much as 2%. There is the additional risk that costs will go up as additional employees are added to our health care rolls. Rules for the PPACA are in flux at this time and we are tracking them closely. Future uncertainty over rules and implementation of PPACA is an elevated risk to district costs. We continue to monitor the rules and implementation as this significant change to health care evolves. Labor relations in the district have been very amicable with all parties working for the best interest of students. We believe as the district moves forward a strong working relationship will continue. The major Lines of reference for the forecast are noted below in the headings to make it easier to relate the assumptions made for the forecast item and refer back to the forecast. It should be of assistance to the reader to review the assumptions noted below in understanding the overall financial forecast for our district. If you would like further information please feel free to contact Janice Allen, Treasurer/CFO of Trotwood-Madison City School District at

7 General Fund Revenue, Expenditure and Ending Cash Balance: $40,000,000 General Fund Revenue, Expenditures & Cash Balance $35,000,000 $30,000,000 $25,000,000 $20,000,000 State and Federal Revenue Cuts FY12 $15,000,000 $10,000,000 $5,000,000 $- Act Act Act Est Est Est Est Est Revenue Expenditures Ending Bal. Estimated General Fund Revenue for FY14 Revenue Assumptions General Fund Revenues Estimated 2014 $ 32,360,896 Other State 4% Local Sources 25.9% Real Estate Taxes 23% Tang. Tax 1% Other Local 2% State Foundation 70% State Sources 74.1% 5

8 Real Estate Value Assumptions Line # Property Values are established each year by the County Auditor based on new construction, demolitions, Board of Revision (BOR)/Board of Tax Appeals (BTA) activity and complete reappraisal or updated values. District values have fallen from 2010 $283.8 million to $237.2 million in This represents a drop of $46.6 million or (-16.4%) in two years. Due to HB920 provisions, tax rates will adjust up so losses would be limited; however, the district s 8.15 and 7.8 mill fixed rate levies can never exceed the 8.15 and 7.8 mill amounts. Any further drop in Assessed Values (AV) will result in lower taxes as most of the district s levies cannot adjust upward. The district s property values were updated in The next reappraisal will be completed in A complete reappraisal update will occur in tax year 2014 for collection in FY15. Real estate values are predicted to fall -10% for residential and commercial property for the reappraisal in 2014 as recent sales data suggest a decline in value is likely. A appraisal update will occur in 2017 for collection in FY18 and we are calling for a drop of -5% for residential and commercial property at that time. Real estate values make up 24% of the district s General Fund revenue. We will update values as more information is available. In 2011 Tangible Personal Property (TPP) values were reduced to $-0- as a result of HB 66 that took effect July 1, This began a systematic phase-out of this tax base statewide to be replaced by a Commercial Activities Tax (CAT) which revenue was to fully reimburse school districts for TPP losses through FY18 based on 2004 property values. HB153 effective July 1, 2011 eliminated the TPP reimbursement for Trotwood-Madison City School District in FY12. These reimbursements were to fully compensate the district for the TPP taxes that were based on calendar year 2004 property values, through ESTIMATED ASSESSED VALUE (AV) BY COLLECTION YEARS Estimated Estimated Estimated Estimated Estimated TAX YEAR 2013 TAX YEAR 2014 TAX YEAR 2015 TAX YEAR 2016 TAX YEAR 2017 Classification COLLECT 2014 COLLECT2015 COLLECT2016 COLLECT 2017 COLLECT 2018 Res./Ag. $163,653,850 $146,913,465 $146,538,465 $146,163,465 $138,480,292 Comm./Ind. 58,660,360 51,994,324 51,194,324 50,394,324 47,074,608 Public Utility (PUPP) 10,582,250 10,782,250 10,982,250 11,182,250 11,382,250 Tangible Personal Property (TPP) Total Assessed Value $232,896,460 $209,690,039 $208,715,039 $207,740,039 $196,937,150 ESTIMATED REAL ESTATE TAX (Line #1.010) As noted earlier under Local Funding, FY13 taxes will be lower as a result of the reduction of ($687,933) in net refunds deducted from our February 2013 settlement for commercial property. The large refunds in February we believe were from large BTA cases that resulted in tax refunds to several large businesses that filed for reductions but continued to pay taxes current while the cases were being decided. If values are found to be lowered by the BTA in these cases then a refund for several years is due and deducted from current tax collections. We are requesting data from the Montgomery County Auditor s Office as to the detail of the refunds issued so we can determine the likelihood of future refunds. We believe the backlog and overhang from older BTA cases in the future will be diminished as these claims become resolved and normal tax collections will begin to stabilize in FY14. Future years are based on calculated taxes based on anticipated reductions in the tax base as noted above for reappraisal and updates. Est. General Property Taxes Line #1.010 $7,315,118 $7,029,924 $6,737,145 $6,701,403 $6,571,871 Property tax levies are estimated to be collected at 97.8% of the annual amount. In general 50% of the new Res/Ag. and Comm/Ind. Is expected to be collected in February tax settlements and 50% collected in August tax settlements. Public Utility tax settlements (PUPP taxes) are estimated to be received 50% in February and 50% in August settlement from the Montgomery County Auditor. As previously noted, TPP ceased to be collected after FY11. New Tax Levies Line # No new levies are modeled in this forecast. Estimated Tangible Personal Tax Line#1.020 The phase out of TPP taxes as noted earlier began in FY06. HB66 was adopted in June 2005 and the provisions of the legislation have estimated the tangible personal property tax would be eliminated after FY11. Any TPP revenues received in FY13 and beyond are 6

9 delinquent TPP taxes. The amount remaining on Line is the public utilities personal property (PUPP) tax revenues from telephone, electric, and gas companies tangible personal property. Public Utility Pers Property $480,109 $522,789 $532,577 $542,365 $552,153 Other Local Revenues Line #1.060 Revenues from all other sources are based on historical growth patterns. This revenue largely consists of rental income, tuition payments, Medicaid reimbursements, and investment income. In FY12 the district received a $500,000 capital lease from PNC Bank for construction of a turf field. Good Samaritan Hospital donates $75,000 a year which the district uses toward payments on the lease. The PNC loan will be repaid by June The contribution of $75,000 is expected to continue through FY17. The large drop in other revenues from FY12 to FY13 is removing the onetime loan revenue received in FY12. These amounts are expected to grow by 1% a year. Tuition SF-14 & SF-14H $321,973 $325,193 $328,445 $331,729 $335,046 Interest 14,978 15,128 15,279 15,432 15,586 Donations, Rentals, PILOT, Medicaid, erate 243, , , , ,515 Total Line # $580,574 $586,380 $592,244 $598,166 $604,148 State Taxes Reimbursement/Property Tax Allocation Line a) Rollback and Homestead Reimbursement Rollback funds are reimbursements paid to the district from Ohio for tax credits given owner occupied residences equaling 12.5% of the gross property taxes charged residential taxpayers on tax levies passed prior to September 29, HB59 eliminated the 10% and 2.5% rollback on new levies approved after September 29, 2013 which is the effective date of HB59. HB66 the FY06-07 budget bill previously eliminated 10% rollback on Class II (commercial and industrial) property. Homestead Exemptions are also credits paid to the district from the state of Ohio for qualified elderly and disabled. In 2007 HB119 expanded the Homestead Exemption for all seniors over age 65 years of age or older or who are disabled regardless of income. Effective September 29, 2013 HB59 changes the requirement for Homestead Exemptions. Individual taxpayers who do not currently have their Homestead Exemption approved or those who do not get a new application approved for tax year 2013, and who become eligible thereafter will only receive a Homestead Exemption if they meet the income qualifications. Taxpayers who currently have their Homestead Exemption as of September 29, 2013 will not lose it going forward and will not have to meet the new income qualification. This will slow the growth of homestead reimbursements to the district, and as with the rollback reimbursements above, increase the taxes collected locally on taxpayers. Base Rollback & Homestead $1,276,754 $1,235,192 $1,193,744 $1,192,292 $1,173,399 Total Rollback & Homestead $1,276,754 $1,235,192 $1,193,744 $1,192,292 $1,173,399 b) Tangible Personal Property Reimbursements Fixed Rate The district no longer receives any fixed rate reimbursement. HB153, the previous state budget, dramatically changed this revenue as Trotwood-Madison City School District does not qualify as highly reliant. The district received $375,535 in FY11 and $35,012 in FY12. These were sharp reductions due to HB153. c) Tangible Personal Property Reimbursements Fixed Sum The district s fixed sum levy reimbursements were cut by HB153. The district received $395,543 in FY 11 and $119,040 in FY12; again this is another sharp reduction due to HB153. Summary of State Tax Reimbursement Line #1.050 Rollback and Homestead $1,276,754 $1,235,192 $1,193,744 $1,192,292 $1,173,399 TPP Reimbursement - Fixed Rate Cut By State TPP Reimbursement - Fixed Sum Cut By State Total Tax Reimb./Prop. Tax Allocations #1.050 $1,276,754 $1,235,192 $1,193,744 $1,192,292 $1,173,399 7

10 Comparison of Local Revenue and State Revenue: $30,000,000 General Fund Local Revenue Vs. State $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Act Act Act Est Est Est Est Est A= Actual E= Estimated Local Revenue State Revenue State Foundation Revenue Estimates The State funding for schools is based on several factors all of which are subject to deliberations and approval of the Ohio General Assembly. School funding is set as part of the State s biennial budget HB59 for FY The district s average daily membership (ADM), used to calculate state funding, is expected to remain stable. This funding represents 71% of Trotwood-Madison s total revenue and 70% of all general fund revenue from State sources. A) Unrestricted State Foundation & Casino Line #1.035 The amounts estimated for FY14 and FY15 for state funding is based on funding component computations from the most recent simulations of HB59 from the Legislative Service Commission (LSC) dated June 25, The current FY14-15 state budget HB59 includes an (increase, flat) funding for our district. We are using the LSC simulations we have been given by the state to project our state revenues until an actual modeling tool is officially released by the ODE. When an authoritative simulation tool is available we will revise our projections if a material difference is noted. In FY14-15 HB59 is using the fourth (4 th ) new funding formula for public education since The new funding formula is very complex and as noted above there is still no authoritative simulation tool released at this time. The new funding formula has a new method to measure a district s wealth and capacity to raise local revenue. The new wealth measure is called the State Share Index (SSI). There are three (3) components of the SSI: 1) Valuation Index that measures the district s average property value per pupil for tax year 2010, 2011 and 2012 compared to the statewide average valuation per pupil; 2) Median Income Index that uses tax year 2011 median income compared to statewide median income that is used to measure the ability of a district s residents to pay property taxes; 3) Wealth Index which uses two thirds (2/3) of the Valuation Index and one third (1/3) of the Median Income Index to compute the overall district Wealth Index. The three components taken together form the one (1) overarching State Share Index (SSI) which equalizes state funding based on wealth. In prior funding formulas the main tool to equalize wealth was a millage charge-off of 23 mills of adjusted valuation per pupil. If the SSI were reduced to a charge-off as in past formulas there would not be a uniform charge-off, rather a range of charge-off rates from 11.3 mills to 22.9 mills. 8

11 The SSI, or one or more of the other three (3) indexes, are applied in determining need on the nine separate components that constitute state aid in FY14 and FY15. The nine (9) components of the new funding model are: 1) Opportunity Grant Per pupil amount of $5,745 in FY14 and $5,800 in FY15 2) Targeted Assistance Tier I based on wealth and Tier II based on percentage of district agricultural assessed value 3) Special Education Additional Aid Based on six (6) categories of disability 4) Limited English Proficiency Based on three (3) categories based on time student enrolled in schools 5) Economically Disadvantaged Aid- Based on number and concentration of economically disadvantaged students 6) K-3 Literacy Funds- Based on districts K-3 average daily membership and two Tiers 7) Gifted Funds Based on average daily membership at $5.00 in FY14 and $5.05 in FY15 8) Career-Technical Education Funds Based on career technical average daily membership and five (5) categories students enrolled in 9) Transportation Aid Funding based only on greater of per rider or per mile costs for each district. A supplemental payment for districts that have a SSI of.5 or greater and pupil density at or below the state median The current LSC simulations are using FY13 ADM and hold those numbers steady through FY15. We believe that these simulations are the most authoritative source of information available at this time and we feel it is reasonable to assume flat funding of state aid for FY On November 3, 2009 Ohio voters passed the Ohio casino ballot issue. This issue allowed for the opening of four (4) casinos one each in Cleveland, Toledo, Columbus and Cincinnati. As of March 4, 2013 all four (4) casinos are open for business and generating Gross Casino Tax Revenues (GCR). Thirty-three percent (33%) of the gross casino revenue will be collected as a tax. School districts will receive 34% of the total tax that will be paid into a student fund at the state level. These funds will be distributed to school districts on the 31 st of January and August each year beginning January The initial student payment to schools in January 2013 was $21.00 per pupil based on 1,816,000 pupils in Ohio. As more actual taxes are collected the state has indicated that the original 2009 estimates of $1.9 Billion of GCR may be closer to $900 million to $1.1 billion, as revenues from casinos are falling off. We are estimating statewide student enrollment to decline by ½ of 1% from the FY13 total to 1,808,000 students and school districts share of GCR to be $85 million resulting in FY14payments being $47 per pupil. For FY15-18 we estimated another ½ of 1% decline in pupils to 1,797,885 and GCR increasing to $90 million or $50 per pupil. We will increase estimates for out years when actual casino revenues increase. No official Ohio Department of Taxation projections have been updated for actual data and no further guidance has been given as to the exact amount of these payments. Our assumptions are based on revenue reports produced monthly by the Ohio Casino Control Commission that the assumptions we have made are reasonable. Basic Aid-Unrestricted $22,271,691 $24,247,990 $24,247,990 $24,247,990 $24,247,990 Additional Aid Items 229, , , , ,649 Basic Aid-Unrestricted Subtotal 22,501,340 24,477,639 24,477,639 24,477,639 24,477,639 Ohio Casino Commission ODT 120, , , , ,750 Total Unrestricted State Aid Line # $22,621,378 $24,605,139 $24,603,889 $24,602,639 $24,601,389 B) Restricted State Revenues Line # The only item currently in restricted aid is Career Technical. Career funding is going to be continued in HB59. We have incorporated this amount into the restricted aid amount in Line # 1.04 for FY14-18, where the state has required it to be accounted in the past. We anticipate there may be other state component funds that are restricted but until further guidance is given we have included all other funds in the state Basic Aid line above.. Bus Allowance $0 $0 $0 $0 $0 Career Tech - Restricted 86,963 89,343 89,343 89,343 89,343 Total Restricted State Revenues Line #1.040 $86,963 $89,343 $89,343 $89,343 $89,343 C) Restricted Federal Grants in Aid line #1.045 The district does not expect to receive any federal unrestricted funds in the general fund FY

12 SUMMARY OF STATE FOUNDATION REVENUES Unrestricted Line # $22,621,378 $24,605,139 $24,603,889 $24,602,639 $24,601,389 Restricted Line # ,963 89,343 89,343 89,343 89,343 Fed. Grants - SFSF & Ed Jobs Line # Total State Foundation Revenue $22,708,341 $24,694,482 $24,693,232 $24,691,982 $24,690,732 Short-Term Borrowing Lines #2.010 & Line #2.020 A HB264 energy conservation project is planned in FY14 which will entail borrowing but that information is not final at this point. When this data is finalized we will include it in the forecast. Transfers In / Return of Advances Line #2.040 & Line #2.050 Returns of advances to other funds from the previous year are included in this area. Transfers In - Line $0 $0 $0 $0 $0 Advance Returns - Line , , , , ,000 Total Transfer & Advances In $95,227 $100,000 $100,000 $100,000 $100,000 All Other Financial Sources Line #2.060 & Line # Refunds from prior years are projected to be $235,000 in FY14 and remain stable at $150,000 in FY15 through FY18. Estimated General Fund Expenditures for FY14: Expenditures Assumptions General Fund Operating Expenditures FY14 $29,886,992 Capital 1% Other 6% Materials 4% Wages 43% Services 31% Benefits 15% Wages Line #3.010 In FY11 and FY12 the district has reduced staffing by over 100 employees. The district reduced staffing an additional eleven (11) employees in FY13 but has since recalled three (3) certified teaching and one (1) classified staff due to the increase in kindergarten and first grade enrollment which resulted in a wing of Westbrooke Elementary School being reopened this school year. The model reflects step increases of 2% negotiated for FY14 through 16 and for planning purposes includes steps for FY17 and 18. Base increases of 2% have been negotiated for FY14and FY15 and 1.5% for FY16. For planning purposes a 1.5% increase is included for FY17and FY18. The future of administrator and teacher pay may be tied to the new Ohio Teacher Evaluation System (OTES) and 10

13 Ohio Principal Evaluation System (OPES) for Race to the Top Districts. We are not certain as to details of how these may relate to staff pay; however, we have assumed that these systems, while potentially different than the current step based pay system, will cost the district some additional resources annually to reward and retain our staff. In FY14 the district will reopen Madison Park Elementary and will require the addition of 1.0 FTE administrator and 2.0 FTE teachers. In FY15 we anticipate retaining our 1.5 FTE administrative support for the Race to the Top initiatives when that funding goes away. Also beginning in FY15 we will create an alternative program center at Westbrooke. This will increase staff by 10.0 FTE for teachers and 3.0 FTE for paraprofessional support. These amounts have been factored in the planning below for wages and benefits. Base Wages $11,431,778 $11,977,971 $13,063,497 $13,576,720 $14,033,942 Increases/ Merit Based Pay 228, , , , ,651 Steps & Training/Performance Based Pay 228, , , , ,534 Growth 136, ,055 83, Unfunded Recapture 0 112,200 10, Subs & Supplemental Costs 631, , , , ,851 Severance 200, , , , ,000 Staff Reductions ($47,745) Total Wages Line $12,809,744 $13,907,905 $14,434,016 $14,904,384 $15,392,978 Fringe Benefits Estimates Line 3.02 This area of the forecast captures all costs associated with benefits and retirement costs, with all except health insurance being directly related to the wages paid. The district pays 14% of each dollar paid in wages to either the State Teachers Retirement System or the School Employees Retirement System as required by Ohio law. A) STRS/SERS As required by law the BOE pays 14% of all employee wages to State Teachers Retirement System (STRS) or School Employees Retirement System (SERS). In addition, SERS announced on April 5, 2010 that they are going to require districts to pay SERS on a current fiscal year basis and not 6 months in arrears which has been the case since 1987 when districts moved from calendar year to fiscal year. We have taken the 1/6 additional costs per year for 6 years catch up provision. This cost is $72,450 each year through FY16. B) Insurance Beginning in FY13 the district has joined the Southwestern Ohio Educational Purchasing Council (EPC) health care umbrella which is a consortium of 23 school districts with a projected savings of approximately $400,000 or 16% in FY13. Medical trends indicate an 8% annual insurance increase in FY14 FY18 would be good for planning purposes. Patient Protection and Affordable Care Act (PPACA) Costs- the Patient Protection and Affordable Care Act (PPACA) commonly called Obamacare or the Affordable Care Act (ACA), is a United States federal statute signed into law by President Barack Obama on March 23, Together with the Health Care and Education Reconciliation Act, it represents the most significant regulatory overhaul of the country's healthcare system since the passage of Medicare and Medicaid in Many of the significant provisions of the PPACA that were scheduled to be implemented by employers on January 1, 2014 were delayed until January 1, 2015 by a July 2, 2013 ruling from the IRS. It is uncertain to what extent the implementation of PPACA will cost our district additional funds. There are numerous new regulations that potentially will require added staff time, at least initially due to increased demands, and it is likely that additional employees will be added to coverage that do not have coverage now. We are not certain what these added costs may be but there are taxes mandated by the act which we are aware of. The Transition Reinsurance fee due January 15, 2015, is a fee due the IRS for $5.25 per covered member per month for the prior year (2014).This will be $63 for each employee who had a full year of coverage in the prior year. This tax could equate to roughly a 2% annual increase in FY15. For fully insured plans an Insurer Fee of 2.46% of premium is due by the insurer January 1, This cost will be passed along in fully insured plans. Longer-term a significant concern is the 40% Cadillac Tax that will be imposed in 2018 for plans whose value of benefits exceed $10,200 for individual plans and $27,500 for family plans. The rules and implementation of the PPACA is an ongoing issue we are watching closely to evaluate the effect on our district. C) Workers Compensation & Unemployment Compensation Workers Compensation is expected to remain at about 1.25% of wages FY14 FY18. Unemployment is expected to remain at a very low level. The district is a direct reimbursement employer which means unemployment costs are only incurred and due if we have employees who are eligible and draw unemployment. 11

14 D) Medicare Medicare will continue to increase at the rate of increases in wages. Contributions are 1.45% for all new employees to the district on or after April 1, These amounts are growing at the general growth rate of wages. Summary of Fringe Benefits Line #3.020 STRS/SERS $2,018,767 $2,180,893 $2,271,024 $2,272,321 $2,347,784 Insurance's 2,228,816 2,457,381 2,661,490 2,874,409 3,104,362 Workers Comp/Unemployment 185, , , , ,805 Medicare 180, , , , ,580 Other/Tuition 10,316 10,316 10,316 10,316 10,316 Total Line $4,624,266 $5,040,168 $5,344,015 $5,569,897 $5,888,847 Purchased Services Line #3.030 This category includes payments for contracted services, utilities, gas, electric, property insurance and transportation. Significant payments are made to Community Schools, Open Enrollment and the Educational Choice Voucher program. In FY13, $5.6 million dollars was transferred to 36 community schools that serve 725 Trotwood Madison students. An additional $113,755 is reduced from the district s state foundation dollars for 24 Ed Choice scholarships. In FY14 we are estimating 768 Community Schools; 114 Open Enrollment and 27 EdChoice voucher students leaving the district with a cost of $6.4 million which is equivalent to a 27.5 mill levy. Also included in this category in FY12 was $565,479 for the construction of the turf field. The capital lease payment of $108,529 annually is also paid back from these accounts and will drop off after June 2016 when the lease is fully paid. Utilities were increased by $25,000 in FY13 for costs associated with opening a wing at Westbrooke Elementary and another $50,000 has been added to utilities in FY14 in anticipation of opening Madison Park. We continue to look for cost savings in other areas through shared services, consortiums, and reduction of resources. Base Services $488,491 $503,146 $518,240 $533,787 $549,801 Legal, Network, Curriculum etc. 799, , , , ,751 Open Enrollment Deduction 615, , , ,012 1,111,872 Community School Deductions 5,678,092 6,321,412 6,813,688 7,320,733 7,842,989 Other Tuition Including Ed Scholarship 707, , , , ,145 Utilities 931, ,551 1,026,429 1,077,750 1,131,638 Budget Reserves or (Reductions) $0 $0 $0 $0 $0 Total Line $9,220,695 $10,076,598 $10,786,163 $11,406,834 $12,155,196 Supplies and Materials Line #3.040 Supplies and materials are expected to grow by 2% through FY18. In addition we are planning a curriculum updates with new material for various portions of our curriculum as follows: Language Arts in FY14, Social Studies in FY15, and, Science in FY15. Supplies $659,657 $ 672,851 $ 686,308 $ 700,034 $ 714,034 Textbook/Curriculum Updates 400, , , Total Line $1,059,657 $1,022,851 $1,086,308 $700,034 $714,034 Equipment Line # Capital replacement for district equipment according to the capital replacement program is estimated to be $150,000 in FY14 and grow at an inflationary rate of two percent each year. We estimate purchasing one new bus in each year of the forecast. In FY18 we have allocated $600,000 for anticipated field turf replacement. Capital Outlay $150,000 $153,000 $156,060 $159,181 $762,365 Replacement Bus Purchases 90,619 92,431 94,280 96,165 98,089 Budget Reserves or (Reductions) Total Line $240,619 $245,431 $250,340 $255,347 $860,454 12

15 Other Expenses Line #4.300 The category of Other Expenses consists primarily of the County ESC deductions for specialized services provided to the District and Auditor & Treasurer fees. Auditor and Treasurer Fees will fluctuate with real estate revenue collections. The County ESC costs are projected to increase by two percent each year. We have included a reasonable contingency for unforeseen expenses that could occur. The district is working on a plan to reduce the County ESC costs by decreasing the number of special needs students placed out of the district. County Auditor & Treasurer Fees $73,453 $74,188 $74,930 $75,679 $76,436 County ESC 985,408 1,014,970 1,045,420 1,076,782 1,109,086 Audit Fees/Liability Ins/Other 123, , , , ,604 Budget Reductions Contingency 750, , , , ,000 Total Line $1,932,010 $1,966,001 $2,000,997 $2,037,028 $2,074,125 Total Expenditure Categories Actual FY11 through FY13 and Estimated FY14through FY18 General Fund Operating Expenditures Actual FY2011 Through Estimated 2018 $40,000,000 $35,000,000 $30,000,000 Capital Material $25,000,000 Services $20,000,000 Benefits Wages $15,000,000 $10,000,000 $5,000,000 $0 Act Act Act Est Est Est Est Est Transfers Out/Advances Out Line# This account group covers fund to fund transfers and end of year short term loans from the General Fund to other funds until they have received reimbursements and can repay the General Fund. Advances are limited in impact to the General Fund as the amounts are repaid as soon as dollars are received in the debtor fund. We are transferring $365,000 each year to the Permanent Improvement Fund as part of a levy commitment. An additional $25,000 is budgeted to assist other funds that may need assistance during the forecast period. Operating Transfers Out Line #5.010 $390,000 $390,000 $390,000 $390,000 $390,000 Advances Out Line #5.020 $100,000 $100,000 $100,000 $100,000 $100,000 Total $490,000 $490,000 $490,000 $490,000 $490,000 13

16 Encumbrances Line#8.010 These are outstanding purchase orders that have not been approved for payment as the goods were not received in the fiscal year in which they were ordered. Estimates are based on historic trends. FY14 FY15 FY16 FY17 FY18 Estimated Encumbrances $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 Ending Unencumbered Cash Balance The Bottom-line Line# This amount must not go below $-0- or the district General Fund will violate all Ohio Budgetary Laws. Any multi-year contract which is knowingly signed which results in a negative unencumbered cash balance is a violation of , ORC punishable by personal liability of $10,000, unless an alternative 412 certificate can be issued pursuant to HB153 effective September 30, FY14 FY15 FY16 FY17 FY18 Ending Cash Balance $ 21,536,781 $ 23,106,594 $ 22,713,698 $ 21,326,383 $ 17,593,052 General fund ending cash balance General Fund Ending Cash Balance $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Act Act Act Est Est 2015 Est 2016 Est 2017 Est 2018 A = Actual E = Estimated 60 Day Cash Ratio Ending Cash Bal. Unencumbered Bal. 14