Five Year Forecast Financial Report

Transcription

1 Five Year Forecast Financial Report October, 2017 Mark Astorino, Treasurer/CFO 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 Other Objects Total Other Financing Uses 19 Forecast Compare 20 Five Year Forecast 21 Enrollment Projections 22 Variance in State Funding Projections 23 Forecast Purpose/Objectives Ohio Department of Education's purposes/objectives for the five year forecast are: To engage the local board of education and the community in the long range planning and discussions of financial issues facing the school district. To serve as a basis for determining the school district's ability to sign the certificate required by O.R.C , commonly known as the "412 certificate." To provide a method for the Department of Education and Auditor of State to identify school districts with potential financial problems. 2

3 October, 2017 Executive Summary Ashtabula Area City Schools Five Year Forecast Simplified Statement Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Beginning Balance 11,368,264 8,833,416 5,389, ,817 (5,524,552) + Revenue 39,837,031 39,872,489 39,962,242 40,064,340 40,163,504 + Proposed Renew/Replacement Levies + Proposed New Levies Expenditures (42,371,879) (43,316,249) (44,730,081) (46,210,709) (47,755,709) = Revenue Surplus or Deficit (2,534,848) (3,443,761) (4,767,839) (6,146,370) (7,592,206) Ending Balance 8,833,416 5,389, ,817 (5,524,552) (13,116,758) Revenue Surplus or Deficit w/o Levies (2,534,848) (3,443,761) (4,767,839) (6,146,370) (7,592,206) Ending Balance w/o Levies 8,833,416 5,389, ,817 (5,524,552) (13,116,758) Summary: Minimal projected year over year increases in revenue and considerable increases projected in expenditures for the current and subsequent years have resulted in the district having a projected operating deficit for the current fiscal year and every subsequent fiscal year in the forecast period. An operating deficit is when the district is spending more than they are collecting in revenue. Beginning in the current fiscal year, the projected operating deficit begins to reduce the cash balance that has been accumulated over the past five years. By fiscal year 2021, the district's cash balance is completely eliminated, resulting in a negative general fund cash balance for the last two years of the forecast period. Based on current forecast projections, the operating deficit will reach $7.59 million by Should the district not be able to identify expenditure reductions in the near future, the district would be required to pass an 18.8 mill levy prior to November of 2019 just to avoid a cash deficit in Since this scenario is unlikely, the district will need to explore ways to significantly reduce anticipated expenditures, as well as look at opportunities to increase available resources to ensure fiscal stability. Fluctuations in enrollment could either negatively or positively impact the forecasted numbers above. This will need to be monitored closely to ensure accurate state funding calculations. $50,000,000 Revenue, Levies, Expenditures, and Cash Balance $40,000,000 $30,000,000 $20,000,000 $10,000,000 -$10,000, Actual 2016Actual 2017Actual 2018Proj. 2019Proj. 2020Proj. 2021Proj. 2022Proj. Total Revenue Replace/Renew Levies New Levies Total Expenditures Cash Balance 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 0.20% 0.77% 1.23% 0.52% 0.70% 0.66% 0.47% Public Utility 6.19% 3.76% 2.80% 2.13% 1.71% 1.68% 2.42% Income Tax n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% State Funding 0.65% 2.15% 0.18% 0.48% 0.53% 0.31% 0.73% Restricted Aid % 8.04% 0.15% 3.49% 3.99% 2.48% 3.57% Restr Federal SFSF n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Property Tax Alloc 1.56% 0.59% 0.47% 0.21% 0.41% 0.41% 0.42% All Other Operating 9.20% 12.33% 10.27% 0.92% 1.05% 1.07% 3.91% Total Revenue 2.13% 0.22% 0.25% 0.23% 0.26% 0.25% 0.24% Total Other Sources 72.85% 38.45% 17.51% 0.00% 0.00% 0.00% 11.19% Total Rev & Other Srcs 1.76% 0.36% 0.09% 0.23% 0.26% 0.25% 0.09% Over the past five years, operating revenue has increased by an average rate of 2.13% annually. Over the next five years, the district is anticipating very little changes in revenue collections, averaging an increase of only 0.24% annually. An area of concern, not modeled in this forecast, lies in the district's restricted aid (line 1.040) revenue. It is uncertain if the state will continue to use the district's federal school wide allowance rather than the actual number of identified students for the economically disadvantaged funding calculation. Using the school wide percentage for economically disadvantaged funding has increased revenue to the district; cuts to this revenue source by the state would be damaging. The district's two largest funding categories, real estate revenue and state aid are expected to have minimal changes over the next five years, even with the changes in the new state funding formula and updated real estate valuations. The following pages will detail the projections for each line of the revenue in the five year forecast Real Estate 20.3% 20.6% Public Utility Public Utility 4.1% 4.6% 4.1% Income Tax State Funding 68.3% 68.7% State Prop Tax Allo 3.1% 3.2% Funding Real Estate All Othr Op Re 2.8% 68.3% 2.2% 20.3% Othr Sources 1.5% 0.8% Public Utility 4.6% Real Estate 20.6% 2022 State Funding 68.7% Othr Sources 1.5% All Othr Op Rev 2.8% Prop Tax Alloc 3.1% Othr Sources 0.8% All Othr Op Rev 2.2% Prop Tax Alloc 3.2% 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 Projected General Property RevRenewal Tax (Real Levy Estate) Revenue Actual and Projected Total Revenue $9,000, $7,842,341 $1 FY 2017 Rea $8,000, $7,968, $7,000, $7,866,892 $6,000, $8,047, % $5,000, $8,097,470 $4,000, $8,035,300 $3,000,000 $2,000, $8,133,826 $1,000,000 $7,842,341 $7,968,240 $7,866,892 $8,047,358 $8,097, $8,176, $8,233, $8,287, Projected Revenue Renewal Levy Revenue $8,035,300 $8,133,826 $8,176,061 $8,233,602 $8,287,862 Over the past five years the district has averaged a 97.7% annual gross collection rate of real estate taxes. The gross collection rate for tax years is projected to increase slightly to 98.3% due to increasing collection rates for class I (residential and agriculture) and class II (business) property. During the 2014 county wide triennial update, the district's overall real property valuation decreased by $16.1 million. Every property classification had a decrease in value of over 7.2% except for agriculture property values. However, agriculture property only represents 6% of the overall property value in the district. The district will have a property revaluation occur in Based on historical trends, current market data and information released by the Ohio Department of Taxation, residential property values are expected to increase by 4% in However, due to changes in state law regarding how the valuation of Current Agricultural Use Value (CAUV) is assessed, agricultural land is expected to decrease by 0.47%. Commercial and Industrial property are expected to continue to have decreases in values in subsequent years % of Total Real Estate 32.73% of Total Real Estate Revenue Revenue Gross Effective Effective Collection Real Property Year Over Year Residential Year Over Year Business Year Over Year Rate Tax Year Valuation Change Tax Rate Change Tax Rate Change All Taxes ,027, % Actual ,901,240 (16,125,840) % Actual ,600,310 (300,930) % Actual ,330,330 (269,980) % Actual ,547,703 11,217, (0.66) % Projected ,678, , % Projected ,808, , % Projected ,519,467 6,710, (0.36) % Projected ,666, , % Projected *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 $2,000, $1,177,135 $1,177, % $1,500,000 $1,000,000 $500, $1,310,092 $1,310, $1,447,734 $1,447, $1,579,902 $1,579, $1,623,998 $1,623, $1,685,020 $1,685, $1,732,240 $1,732,240 $1,177,135 $1,310,092 $1,447,734 $1,579,902 $1,623, $1,769,095 $1,769, $1,799,320 $1,799, $1,829, $1,829, Projected Revenue Renewal Levy Revenue $1,685,020 $1,732,240 $1,769,095 $1,799,320 $1,829,545 Public Utility Personal Property tax revenue generates 4.1% of the district overall revenue. Over the past five years, the district has experienced an average annual increase in these values of 9.1%, increasing the annual revenue collection during that time period by $466,000. Public utility values are expected to continue to grow over the next five years, but at a lower rate than that experienced in the past five fiscal years. Year over Year Revenue Trend 12.0% 1 8.0% 6.0% 4.0% 2.0% 2.0% 6.19% Year over Actual 5 YeProjected 5 Year Average % 6.19% % 6.19% % 6.19% % 6.19% % 6.19% % 2.42% % 2.42% % 2.42% % 2.42% % 2.42% 2.42% 4.0% 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 0 $30,000,000 $25,000,000 $20,000,000 Unrestricted Grants in Aid Actual and Projected 59.2% $15,000,000 $10,000,000 $5,000,000 $23,412,031 $22,171,985 $22,427,924 $23,933,013 $23,674,802 $24,184,511 $24,227,622 $24,344,324 $24,473,157 $24,550,122 State funding represents the majority of the district's general fund revenue. Enrollment impacts the level of funding the district receives. Monitoring enrollment is essential to detecting funding variances quickly. By implementing all day, every day kindergarten in FY 2016, the district changed their funded enrollment (formula ADM) since kindergarteners are now counted as a full time student. This resulted in additional revenue for the district. During FY17, the district experienced the smallest enrollment class (255 students) in over the past twenty years. Based on changes in programs and student opportunities, the district believed that the incoming kindergarten class would begin to increase starting in FY18. However, based on enrollment information from the beginning of the FY18 school year, the current kindergarten class enrollment dropped to 219 students, almost 15% less than the FY17 kindergarten class. The district has calculated estimated state funding levels for the current and subsequent years based on the most current enrollment trends. This includes lower kindergarten enrollment numbers for FY19 to FY22, in comparison to the levels projected in the May 2017 forecast. Based on these calculations, the district will be a formula district in FY18 and FY19, which means they will receive the funding level the state funding formula calculates they should receive. Starting in FY20, the district is estimated to be placed on the funding guarantee, which means the funding formula calculates that they will receive less in funding than they did the year before. As a result, the district is estimating that the funding guarantee will permit the district to receive 100% of funding that was received in the previous year. Should the state legislature include in the next biennium budget a funding guarantee that is below 100%, the district's funding would be reduced accordingly. The FY20 FY22 state funding projections are calculated using the current state funding formula. 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% % 1% % 1% % 1% % 1% 1% % 1% 0.73% 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 9.1% $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Restricted Grants in Aid Actual and Projected $76,589 $1,800,374 $3,634,381 $3,487,409 $3,635,192 $3,343,086 $3,348,236 $3,231,534 $3,102,701 $3,025,736 The Ohio Department of Education requires that the district classify a portion of the per pupil formula funding as restricted. This is funding for economic disadvantaged, career technical programs and catastrophic special education reimbursements. The restricted state funding category is 9.1% of the district's total revenue. In FY 2015 the district adopted a school wide classification of economically disadvantaged that elevated funding to almost 90% of district enrollment. It is not known if the state will continue to allow this school wide designation as the funding threshold. The forecast assumes the state will maintain the current funding method through FY However, if the funding designation is changed, the forecasted annual funding could be reduced by approximately $600,000 from the modeled amounts above. An increase in the statewide student poverty level for FY18 and the district's declining enrollment that is modeled in the forecast also causes this funding level to decrease annually through Catastrophic special education reimbursements are expected to average $130,000 annually over the next five years and career technical funding is estimated to average $24,500 annually. 250 Year over Year Revenue Trend % 3.57% 50 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 $1,400,000 FY 2017 Pro Revenue $1,246,787 $1,200, $1,264,755 $1,000, $1,292, $1,279, % $800, $1,241,473 $600, $1,248,847 $400, $1,254,756 $200,000 $1,246,787 $1,264,755 $1,292,528 $1,279,235 $1,241, $1,257, $1,262, $1,267, Projected Revenue Renewal Levy Revenue $1,248,847 $1,254,756 $1,257,374 $1,262,514 $1,267,666 Property tax allocation (PTA) represents 3.1% of the district's overall general fund revenue and is comprised of two types of revenue homestead and rollback reimbursements from the state. Homestead and rollback reimbursements are state reimbursements for local real estate tax credits (deductions). Local residential real estate taxes are reduced by rollback (12.5% for owner occupied houses) and also for homestead (disabled, senior citizens, etc.). Rollback reimbursements are projected to total $772,640 in FY18 and homestead reimbursements are expected to total $475,246. Year over Year Revenue Trend 4.0% 2.0% 2.0% 4.0% 6.0% 1.56% Year over Actual 5 YeProjected 5 Year Average % 1.56% % 1.56% % 1.56% % 1.56% % 1.56% % 0.42% % 0.42% % 0.42% % 0.42% % 0.42% 0.42% 8.0% 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 2.8% $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 All Other Operating Revenue Actual and Projected $791,865 $1,228,659 $1,603,562 $1,384,926 $1,107,007 $970,521 $870,809 $878,854 $888,046 $897,573 Other operating revenue represents 2.8% of the district's total revenue, with the largest portion of this revenue coming from open enrollment, other tuition payments and federal Medicaid reimbursements. Tuition revenue represents 57% of revenue collected for this revenue line, with open enrollment being the largest form of tuition. Open enrollment tuition revenue is projected to increase by 1% in FY18 to total $321,186. Other tuition revenue has fluctuated over the past three years due to the timing of when the Ohio Department of Education (O.D.E.) pays semi annual tuition payments from other districts. In FY17, the O.D.E. did not make a SF14 (court placed/foster placed) or SF14H (handicap court placed/foster placed) tuition payment in the second half of the year. As a result, the district is anticipating the collection of the second half tuition payment from the previous year, and the first and second half tuition payments for the current year will all be collected during FY18. Federal Medicaid revenue payments have stayed fairly consistent over the past four years and are expected to remain at the current level of $156,000 for the forecast period. The district also had a one time receipt of income related to the sale of assets, totaling $175,335 in FY17. 6 Year over Year Revenue Trend % 3.91% 3 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 1.5% $700,000 $600,000 $500,000 $400,000 $300,000 Other Operating Financing Sources Actual and Projected $200,000 $100,000 $429,663 $55,880 $267,477 $242,734 $600,739 $369,746 $305,000 $305,000 $305,000 $305,000 Other sources includes $347,191 in current year return of advances and $300,000 in return advances to the general fund for subsequent years. These advances are the return of temporarily loaned dollars to other funds such as federal grants awaiting funding. The advances returned reflected here correlate with the advances out in the other uses expenditure note. $22,555 in refunds of prior year expenses are also projected to be posted to this revenue line for FY17. Subsequent fiscal year's refunds are budgeted at $5,000 annually. 50 Year over Year Revenue Trend % 11.19% 20 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 0.91% 4.79% 3.03% 2.66% 2.66% 2.66% 3.16% Benefits 2.24% 9.25% 4.19% 6.03% 6.10% 6.17% 6.35% Purchased Services 5.87% 8.29% 0.35% 1.99% 2.00% 1.95% 2.78% Supplies & Materials 0.50% 40.70% 2.50% 2.53% 2.57% 2.60% 10.18% Capital Outlay % % 0.00% 0.00% 0.00% 0.00% % 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 2.24% 3.58% 2.17% 2.17% 2.17% 2.08% 2.43% Total Expenditures 1.47% 7.99% 2.31% 3.30% 3.34% 3.38% 4.06% Total Other Uses 42.32% 24.14% 5.13% 0.00% 0.00% 0.00% 3.80% Total Exp & Other Uses 1.45% 8.15% 2.23% 3.26% 3.31% 3.34% 4.06% Over the past five years, the district's operating expenditures have inreased by an average of 1.47% annually. For the next five years, the district is projecting that operating expenses will increase by 4.06% annually. The increase in current year expenses have a large impact on the five year average increase. The district has moved expenses that were formerly paid out of other funds (P.I. fund and federal grant funds) to the General Fund during the current fiscal year and increased the annual spending threshold for other General Fund expenses. Furthermore, the timing of when some large tuition payments were deducted by the O.D.E. also impacts the increase in spending for the current year. The following pages will detail the projections for each line of the expenditures in the five year forecast. Other Uses 1.0% Other Objects 1.0% Salaries 43.7% 41.9% Benefits 24.1% 26.9% Purch Serv 28.3% 26.5% Supp Salaries & Mat 1.9% Benefits 2.4% Capital 43.7% Outlay 24.1% 0.4% Intergov & Deb Other Objects 1.0% 0.9% Other Uses 1.0% Purch Serv 1.0% 28.3% Capital Outlay 2017 Supp & Mat 1.9% Other Uses 1.0% Other Objects 0.9% Salaries 41.9% Capital Outlay 0.4% 2022 Supp & Mat 2.4% Purch Serv 26.5% Benefits 26.9% 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 0 $25,000,000 $20,000,000 Personnel Services Actual and Projected $15,000, % $10,000,000 $5,000,000 $16,353,794 $15,851,008 $16,039,521 $16,500,881 $17,128,368 $17,949,455 $18,492,737 $18,983,785 $19,487,871 $20,005,342 The salaries expense category represents 43.7% of the overall budget, and is the district's largest expense category. For the current fiscal year, the district replaced 8 tutors that were formerly paid out of federal grant funds with 8 teachers that will be paid out of the General Fund, as well as moved an additional three teachers, a paraprofessional and a principal from federal/state grant funds to the General Fund. In addition, eight teachers retired/resigned and were replaced with seven new teachers that were lower on the salary schedule. The district also did not replace the business manager's position after it was vacated, replaced several classified and administrative positions that were open at the end of FY17 and added a nursing position, a speech/language clinician, a central registration position and a maintenance position in FY18. All of these changes noted above resulted in an increase of $444,410 to salary expenditures that will be incurred during FY18 and the first two month of FY19. For FY 2018 to FY 2021, changes in the salary line item have been projected using estimated increases resulting from staff progression on the salary schedule, steps and degree changes, as well as increases to the base salaries per the terms of both the certified and classified negotiated agreements. 6.0% 4.0% 2.0% Year over Year Expenditure Trend 3.16% 2.0% 4.0% 0.91% 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 % $14,000,000 $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 $7,931,411 $7,166,583 $7,445,417 $8,447,313 $9,459,943 $10,335,014 $10,768,523 $11,418,076 $12,114,561 $12,861,598 Prior to 2013, benefits and retirement related expenses had always been the district's second largest expense. However, since 2013 this expense category is now the third largest General Fund expense and represents 24.1% of the overall budget. For the past two consecutive years, medical insurance premiums have increased significantly, going up 14% in FY16 and an additional 15% in FY17. In addition, the vision premiums increased by 23% in FY17 and dental premiums increased by 10%. The district did not have a increase in insurance premiums for FY18, however, overall health insurance costs increased due to the district hiring additional staff and/or moving staff from federal grant funds to the general fund. For FY19, a 5% increase in medical premiums have been projected and FY20 through FY22 healthcare premiums include an annual increase of 8%. Retirement and other salary driven fringe benefits are anticipated to increase by more than $138,000 during the current fiscal year due to changes in existing employee salaries and the additional employees added to the general fund. 15.0% Year over Year Expenditure Trend 1 5.0% 6.35% 2.24% 5.0% % 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 Expenditures FY 2017 Pur % $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Purchased Services Actual and Projected $8,386,758 $9,294,378 $9,742,768 $10,210,574 $11,072,909 $11,990,459 $11,948,636 $12,186,284 $12,429,529 $12,672,317 Purchased services represents 28.3% of FY17 total general fund expenditures and is the second largest general fund expense category. Tuition related expenses totaled $6,605,519 in 2017 and are expected to increase by $386,844, or 5.8% by the end of A portion of this increase is caused by the O.D.E. not charging the district for a portion of the 2017 SF14 and SF14H tuition expenses during the second half of Therefore, the district anticipates that it will incur the costs of the tuition expenses that should have been charged in the second half of 2017, in addition to all of the 2018 SF14 and SF14H tuition costs in FY18, causing a one time increase in overall purchased services of $393,671. A similar timing issue with excess cost tuition that occurred last year will result in a decrease in excess cost tuition expenses of $218,000 for the current year. Private facility tuition expenses are projected to increase by $ in FY18. During FY17, repair and maintenance costs more than doubled, increasing from $311,990 (2016) to $794,995 (2017). Based on conversations with the Business Service Department, these expenses are expected to increase to $1,000,000 in FY18 and subsequent fiscal years. These increases are due to the district moving expenses that were paid out of the permanent improvement fund to the general fund. Professional Services/Contracted Services are anticipated to increase $265,813 during the current fiscal year. $180,000 of this increase is due to additional student technology services being purchased for the current year. 12.0% Year over Year Expenditure Trend 1 8.0% 6.0% 4.0% 2.0% 5.87% 2.78% 2.0% 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 1.9% $1,400,000 $1,200,000 $1,000,000 $800,000 Supplies & Materials Actual and Projected $600,000 $400,000 $200,000 $627,299 $662,838 $651,753 $711,410 $734,802 $1,033,865 $1,059,732 $1,086,586 $1,114,467 $1,143,421 Supplies and materials represents 1.9% of the total General Fund budget. The general supply costs for the district has increased over the last two years expenses increased by 24.2% ($39,000) and an additional 4.6% ($10,767) in The district also saw maintenance/custodial supply costs increase by 10.2% (21,896) in FY16 and an additional 11.8% ($25,717) in the current fiscal year. Transportation supply costs have decreased over the past two years. For the current fiscal year, these costs are expected to increase by 11.3% or $27,499. The current FY18 budget for all supply costs in the general fund totals an increase of 40.70% over the amount expended in the previous fiscal year. This increase is attributed to the district increasing the instructional supply/textbook line items, as well as, increasing maintenance/custodial costs to pay for items that were formerly paid out of the permeant improvement line. For fiscal years , the district is anticipating total supply costs to increase by an average annual rate of 2.55%. 5 Year over Year Expenditure Trend % % 2 3 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 $200,000 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Capital Outlay Actual and Projected $7,985 $2,564 $8,609 $1,213 $10,061 $182,000 $182,000 $182,000 $182,000 $182,000 For FY17 and prior fiscal years, capital outlay expenses represented a minimal percentage of the district's overall General Fund budget. Beginning in FY18, the district has allocated $182,000 annually out of this expense line to pay for new and replacement equipment purchases Year over Year Expenditure Trend % % Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 17

18 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 1.0% $600,000 $500,000 $400,000 $300,000 Other Objects Actual and Projected $200,000 $100,000 $485,518 $371,209 $313,103 $370,576 $380,451 $394,087 $402,621 $411,351 $420,281 $429,032 Other objects are about 1% of the total expenditures, with the largest components being the County Auditor and Treasurer fees for the collection of local property taxes ($220,468), annual audit costs ($55,686) and county board of education expenses ($23,510). 25.0% % 1 5.0% 5.0% % % 3 Year over Year Expenditure Trend 2.43% 2.24% Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 18

19 5.040 Total Other Financing Uses Operating transfers out, advances out to other funds, and all other general fund financing uses. FY 2017 Other Financing Uses as a % of Total FY 2017 Oth Expenditures 0 1.0% $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 Other Financing Uses Actual and Projected $92,454 $256,212 $571,995 $805,917 $392,306 $487,000 $462,000 $462,000 $462,000 $462,000 Other uses include year end advances (temporary loans) in the amount of $300,000 (projected FY18), to grant funds that will be repaid, and also fund to fund transfers to the district's employee severance fund (035) of $150,000, and to the athletic fund of $37,000 for the five year forecast period. 20 Year over Year Expenditure Trend % 3.80% 5 10 Year over Year Expenditure Variance Actual 5 Year Average Projected 5 Year Average 19

20 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: 05/23/ /19/2017 Current Current 1 Real Estate & Property Allocation $9,317,051 $9,284,147 $32, % 2 Public Utility Personal Property $1,671,031 $1,685,020 $13, % 3 Income Tax n/a 4 State Foundation Restricted & Unrestricted $28,199,976 $27,527,598 $672, % 5 Other Revenue $892,356 $970,521 $78, % 6 Other Non Operating Revenue $305,000 $369,746 $64, % 7 Total Revenue $40,385,414 $39,837,031 $548, % Expenditures: 8 Salaries $17,871,372 $17,949,455 $78, % 9 Fringe Benefits $10,203,499 $10,335,014 $131, % 10 Purchased Services $11,289,719 $11,990,459 $700, % 11 Supplies, Debt, Capital Outlay & Other $1,170,212 $1,609,952 $439, % 12 Other Non Operating Expenditures $487,000 $487, Total Expenditures $41,021,802 $42,371,879 $1,350, % 14 Revenue Over/(Under) Expenditures $636,388 $2,534,848 $1,898, %* 15 Ending Cash Balance $10,674,371 $8,833,416 $1,840, %* *Percentage expressed in terms of total expenditures Overall, revenue projections for the current forecast are 1.4% less than the projections provided in the May 2017 forecast. This variance is primary due to state funding. State Funding The actual headcount for the current school year was less than the enrollment estimates in the May 2017 forecast. The majority of this variance was in kindergarten enrollment levels. Future kindergarten enrollment estimates have also been reduced for upcoming fiscal years, compared to what was included in the May 2017 forecast. An increase in the statewide student poverty level also had a negative impact on the district's restricted state funding Expense projections have increased 1.9% since the October 2016 forecast was approved. Expenditure projections are 3.3% higher than the amount projected in the May 2017 forecast. The three largest factors that caused this variance are purchased services, supplies and capital outlay. Purchased Services As noted on page 15, a timing issue with when the O.D.E. deducted tuition expenses caused a onetime increase in FY18 purchased services totaling $250,000. In addition, projected increases in private facility tuition increased $231,000 and the professional services/contract services budget increased by $170,000 compared to the amount projected in the last forecast. Supplies/Capital Outlay The increase in the budget level for instructional supplies and maintenance/custodial supplies has resulted in current forecast projections being $247,961 above the May 2017 forecast, and the establishment of a general fund equipment purchase and replacement budget also increased projections $182,000 from the May 2017 forecast. 20

21 Actual FORECASTED Fiscal Year: Revenue: General Property Tax (Real Estate) 8,097,470 8,035,300 8,133,826 8,176,061 8,233,602 8,287, Public Utility Personal Property 1,623,998 1,685,020 1,732,240 1,769,095 1,799,320 1,829, Income Tax Unrestricted Grants in Aid 23,674,802 24,184,511 24,227,622 24,344,324 24,473,157 24,550, Restricted Grants in Aid 3,635,192 3,343,086 3,348,236 3,231,534 3,102,701 3,025, Restricted Federal Grants SFSF Property Tax Allocation 1,241,473 1,248,847 1,254,756 1,257,374 1,262,514 1,267, All Other Operating Revenues 1,107, , , , , , Total Revenue 39,379,941 39,467,285 39,567,489 39,657,242 39,759,340 39,858,504 Other Financing Sources: Proceeds from Sale of Notes State Emergency Loans and Adv Operating Transfers In Advances In 527, , , , , , All Other Financing Sources 72,905 22,555 5,000 5,000 5,000 5, Total Other Financing Sources 600, , , , , , Total Rev & Other Sources 39,980,681 39,837,031 39,872,489 39,962,242 40,064,340 40,163,504 Expenditures: Personnel Services 17,128,368 17,949,455 18,492,737 18,983,785 19,487,871 20,005, Employee Benefits 9,459,943 10,335,014 10,768,523 11,418,076 12,114,561 12,861, Purchased Services 11,072,909 11,990,459 11,948,636 12,186,284 12,429,529 12,672, Supplies and Materials 734,802 1,033,865 1,059,732 1,086,586 1,114,467 1,143, Capital Outlay 10, , , , , , 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 380, , , , , , Total Expenditures 38,786,534 41,884,879 42,854,249 44,268,081 45,748,709 47,293,709 Other Financing Uses Operating Transfers Out 45, , , , , , Advances Out 347, , , , , , All Other Financing Uses Total Other Financing Uses 392, , , , , , Total Exp and Other Financing Uses 39,178,840 42,371,879 43,316,249 44,730,081 46,210,709 47,755, Excess of Rev Over/(Under) Exp 801,841 (2,534,848) (3,443,761) (4,767,839) (6,146,370) (7,592,206) Cash Balance July 1 (No Levies) 10,566,423 11,368,264 8,833,416 5,389, ,817 (5,524,552) Cash Balance June 30 (No Levies) 11,368,264 8,833,416 5,389, ,817 (5,524,552) (13,116,758) Estimated Encumbrances June , , , , , , Reservations Subtotal Fund Bal June 30 for Cert of App 11,068,264 8,533,416 5,089, ,817 (5,824,552) (13,416,758) Rev from Replacement/Renewal Levies & Income & Property Tax Renewal Cumulative Balance of Levies Fund Bal June 30 for Cert of Obligations 11,068,264 8,533,416 5,089, ,817 (5,824,552) (13,416,758) Revenue from New Levies & Income & Property Tax New Cumulative Balance of New Levies Unreserved Fund Balance June 30 11,068,264 8,533,416 5,089, ,817 (5,824,552) (13,416,758) 21

22 Student Enrollment Supplement Ashtabula Area City Schools The district's enrollment has continued to decline over the past ten years. For the current fiscal year, the district experienced the smallest kindergarten class in recent history with an enrollment of 219 students. This is significantly lower than the 285 the district had modeled in the May forecast for the current year and subsequent fiscal years. The district had projected this higher level of enrollment due to the believe that additional programs and student opportunities would result in an increase in enrollment. For fiscal years 2019 through 2022, kindergarten enrollment levels have been projected using live birth data. Over the past four years, kindergarten enrollment levels have averaged 90 students less than the number of children that were born in the district. Therefore, this same average has been applied to calculate the kindergarten enrollment levels for subsequent fiscal years. A three year student mobility average has been used by grade level to determine the enrollment levels for all student enrollment projections. The student mobility average results in approx. 95 less students attending the district for grades 1 12 on an annual basis. Further reductions in enrollment levels are caused by higher enrollment grade levels graduating in the prior year and lower enrollment level kindergarten classes coming into the district. Current Year Estimated Enrollment (Simulated October C District Head Count Grade K Total Can Differ by Rounding 3,347 3,292 3,152 2,998 2,906 Year Over Year Percentage Change 4.26% 1.66% 4.24% 4.89% 3.07% 22