Five Year Forecast Financial Report

Transcription

1 LOGO SOUTHERN LOCAL SCHOOL DISTRICT - - MEIGS COUNTY Five Year Forecast Financial Report May,

2 Table of Contents Table of Contents 2 Executive Summary 3 PAGE # Revenue Overview General Property Tax (Real Estate) Public Utility Personal Property Income Tax Unrestricted Grants-in-Aid & Restricted Grants-in-Aid Property Tax Allocation All Other Operating Revenues Total Other Financing Sources 12 Expenditures Overview Personnel Services Employee Benefits Purchased Services Supplies and Materials Capital Outlay Intergovernmental & Debt Other Objects Total Other Financing Uses 21 Forecast Compare 22 Five Year Forecast 23 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 May, 2018 Executive Summary Five Year Forecast - Simplified Statement Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Beginning Balance 2,233,400 2,734,674 2,808,918 2,997,495 3,034,248 + Revenue 8,463,064 8,340,659 8,389,191 8,575,032 8,761,724 + Proposed Renew/Replacement Levies - 73, , , ,481 + Proposed New Levies Expenditures (7,961,789) (8,340,124) (8,348,691) (8,687,593) (9,010,045) = Revenue Surplus or Deficit 501,274 74, ,577 36,754 (97,841) Ending Balance 2,734,674 2,808,918 2,997,495 3,034,248 2,936,407 Revenue Surplus or Deficit w/o Levies 501, ,500 (112,561) (248,322) Ending Balance w/o Levies 2,734,674 2,735,208 2,775,708 2,663,148 2,414,826 Summary: Introduction to the Five Year Forecast All schools 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 2018 (July 1, 2017-June 30, 2018) is the first year of the five year forecast and is considered the baseline year. Forecast Purpose The forecast is like a "painting of the future based upon a snapshot of today". The forecast is viewed as a key management tool and is intended to assist the school district in the financial management of its resources. The forecast will provide trend information to help determine local tax levy needs, union negotiations, program resource allocation, and overall effort to balance the district's budget. The forecast is also intended to provide insight into the future, rather than reaction to the past. It encourages districts to examine future years' projections and identify when challenges will arise and helps management to be proactive in meeting those challenges. Many events ultimately impact the latter years of the forecast, such as state budget, enrollment, property valuation, tax levies, negotiated agreements, just to name a few. This report includes information regarding key revenue and expenditure assumptions as well as the resulting implications. An emphasis should be placed on line of the forecast. Particular attention should be given to not only the relationship of expenditures to revenue, but the rate of any trend (expenditures exceeding revenue). Cash balance reserves should not be treated as a revenue source to support ongoing operations. In the forecast, the numbers only tell a small part of the story, the assumptions to the financial forecast make the numbers meaningful. As with any forecast, the assumptions drive the data. The assumptions are very important to understanding the rationale of the numbers. Additionally, the further out in the forecast, the likelihood for variances is increased. The forecast changes often and will need to be updated as actual information becomes available. It is crucial that the forecast is updated periodically. $10,000,000 $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 Revenue vs. Expenditures $7,961,789 $8,340,124 $8,348,691 $8,687,593 $9,010,045 $8,463,064 $8,340,659 $8,389,191 $8,575,032 $8,761, 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 0.02% 1.68% -3.22% 2.69% 0.67% 0.66% 0.49% Public Utility 6.00% 16.73% 1.79% 0.98% 0.98% 0.98% 4.29% Income Tax n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% State Funding 5.15% 1.11% 0.17% 1.41% 3.07% 3.10% 1.77% Restricted Aid % % -5.83% 0.43% 0.05% -2.05% -3.49% Restr Federal SFSF n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Property Tax Alloc -0.77% 0.78% -0.92% 0.26% 0.24% -0.19% 0.03% All Other Operating 3.76% -6.12% -0.52% 0.09% 0.09% 0.10% -1.27% Total Revenue 3.65% 1.21% -0.58% 1.46% 2.20% 2.16% 1.29% Total Other Sources 57.57% % 0.00% 0.00% 0.00% 0.00% -7.62% Total Rev & Other Srcs 3.46% 1.02% -0.58% 1.46% 2.19% 2.15% 1.25% Over the past several years, school districts have experienced formula changes in state funding. Historically, funding formulas have been inconsistent and calculated using various formulas and components, but have maintained that Ohio s school funding formula is centered on the needs of students. FY18, the baseline year of the forecast retained the states biennium budget (HB49) and new funding formula (FY18-FY19). The goal of this funding is to work with the existing formula enacted under HB64 and provisions of HB49 that govern the calculation of the foundation formula. The component Capacity Aid is where the district continues to receive the biggest increase in funding. The funding is very similar to former aims to manage low property wealth and in the past this funding has not been sustained. Forecasted years FY18 through FY22 reflect a continuation of this components funding, however the district must consider its sustainability within future biennial budgets Income Real Estate 17.2% 16.0% Tax Public Utility 5.5% 5.5% Public Income Tax Utility State State Funding 5.5% 68.4% Funding70.5% Prop Tax Alloc 2.5% 68.4% 2.4% All Othr Op Re 6.0% 5.3% Real Estate 17.2% Othr Sources 0.5% 0.3% Public Utility 5.5% Income Tax Real Estate 16.0% 2022 State Funding 70.5% Othr Sources All 0.5% Othr Op Rev 6.0% Prop Tax Alloc 2.5% Othr Sources 0.3% All Othr Op Rev 5.3% Prop Tax Alloc 2.4% 4

5 $1,342,998 $1,353,489 $1,468,612 $1,450,853 $1,437,090 $1,461,238 $1,381,198 $1,386,347 $1,395,989 $1,405,234 $32,950 $65,796 $65,865 $66, 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 Real Estate as a % of Total Revenue $1,600,000 Projected General Property RevRenewal Tax (Real Levy Estate) Revenue Actual and Projected 2013 $1,342,998 $1 FY Rea $1,400, $1,353, $1,200, $1,468,612 $1,000, $1,450, % $800, $1,437,090 $600, $1,461,238 $400, $1,381,198 $32,950 $200, $1,386,347 $65, $1,395,989 $65, $1,405, $66, Projected Revenue Renewal Levy Revenue For Southern Local, general property taxes account for nearly 17.2% of our total general fund revenue. Meigs County underwent a reappraisal in 2016 and will have an update in The district received the real estate valuations from the county auditor and residential values increased from $35,514,070 to $38,571,130. Agricultural values increased from $19,250,010 to $19,317,830. The forecast projects continued valuation increases TY18-TY22 in Residential, Class II, and Personal Property, but projects a valuation decrease in Agricultural beginning TY19. Under current law, CAUV (Current Agricultural Use Value) values declined statewide in For some districts, the phase in may have yielded a change in the 25% range in 2017 and projects another similar drop in Calendar year 2019 will be a triennial update in valuation and the forecast reflects a decrease in Agricultural values. The district's Current Agricultural Use Value (CAUV) percentage is key to the calculation of Supplemental Targeted Assistance Funds. Currently, the district has the following millage: Inside Millage mills Outside (voted) Millage Current Expense Continuous 1982 Current Expense Continuous 1991 Current Expense 4.0 mills (renews every five years) The 1991 Current Expense 4.0 will expire with tax year 2018 and is up for renewal. If you look at FY19 through FY22 of the forecast, Line you will see the cash balance without levy renewal and line is the cash balance with levy renewal. In collection year 2017, the district's actual combined collection rate for Class I and Class II was 93.1%. Historically, the district has a collection rate between 90-94% and that is projected throughout the remainder of the forecast % 6.0% 4.0% 2.0% -2.0% -4.0% -6.0% -8.0% 0.02% Year-over-Year Revenue Trend Year-over- Actual 5-YeProjected 5-Year Average % 0.02% % 0.02% % 0.02% % 0.02% % 0.02% % 0.49% % 0.49% % 0.49% % 0.49% % 0.49% 0.49% Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average *Projected % trends include renewal levies 5

6 $353,031 $359,659 $368,501 $381,785 $460,341 $537,358 $506,259 $470,528 $475,160 $479,838 $40,715 $81,831 $82,636 $83, Public Utility Personal Property Revenue generated from public utility personal property valuations multiplied by the district's full voted tax rate. FY Public Utility as a Projected Tangible RevRenewal Personal Property Levy Tax Revenue Actual and Projected FY 2017 %- Pub of Total Revenue $600, $353,031 $353, % $500,000 $400,000 $300,000 $200,000 $100, $359,659 $359, $368,501 $368, $381,785 $381, $460,341 $460, $537,358 $537, $506,259 $40,715 $546, $470,528 $81,831 $552, $475,160 $82,636 $557, $479, $83, $563, Projected Revenue Renewal Levy Revenue Public Utility Personal Property represent 5.5% overall percentage of total revenue for the district's general fund. In 2004, legislation (HB 66) was approved by the General Assembly to eliminate the general tangible tax paid by business on equipment and inventory. Tangible personal property taxes are based on the commercial, industrial, and public utility base of the District and the effective tax rate applied. The district experienced an increase of values from $14,451,140 to $19,644,650 in Public Utilities without land in TY16 resulting in an increase of revenue. This increase was primarily a result of new electric transmission lines installed by AEP within our district. TY17 valuations increased from $19,644,650 to $20,159,110. Again, the 1991 Current Expense 4.0 will expire with tax year 2018 and is up for renewal. If not renewed, the district will experience a reduction in PUPP revenue. 25.0% % 1 5.0% 6.00% Year-over-Year Revenue Trend Year-over- Actual 5-YeProjected 5-Year Average % 6.00% % 6.00% % 6.00% % 6.00% % 6.00% % 4.29% % 4.29% % 4.29% % 4.29% % 4.29% 4.29% Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average *Projected % trends include renewal levies 6

7 $- $- $- $- $ Income Tax Revenue collected from income tax earmarked specifically to support schools with a voter approved tax by residents of the school district; separate from federal, state and municipal income taxes. FY Income Tax as a % Projected Income RevRenewal Tax Actual Levy and Revenue Projected FY 2017 of - Inco Total Revenue 0 $ $ $ Projected Revenue Renewal Levy Revenue The district has no revenue collected from income tax % Year-over-Year Revenue Trend Year-over- Actual 5-YeProjected 5-Year Average 2013 n/a #DIV/0! 2014 n/a #DIV/0! 2015 n/a #DIV/0! 2016 n/a #DIV/0! 2017 n/a #DIV/0! % 0.00% % 0.00% % 0.00% % 0.00% % 0.00% 0.00% Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average *Projected % trends include renewal levies 7

8 $4,327,759 $4,161,737 $4,118,644 $4,937,792 $5,423,513 $5,483,481 $5,492,862 $5,570,296 $5,741,185 $5,919, Unrestricted Grants-in-Aid Funds received through the State Foundation Program with no restriction. FY Unres State Aid as a % of Total Revenue FY Unr 0 $7,000,000 $6,000,000 $5,000,000 $4,000,000 Unrestricted Grants-in-Aid Actual and Projected $3,000, % $2,000,000 $1,000,000 HB 64, the State's biennial budget passed for FY16 and FY17. The new funding model provided new funding components for Ohio schools. Major components of this formula were Opportunity Grant (capped), Targeted Assistance (capped), K-3 Literacy (capped), Limited English Proficiency (capped), Gifted Education (capped), Transportation (capped), and Special Education Funding (capped). HB 49 maintained these primary aid categories used in the existing formula. Opportunity Grant per pupil funding increased to $6,010 in FY18 and to $6,020 in FY19. Targeted Assistance primarily targets additional funding to school districts that do not raise enough local revenue beyond the local share of the foundation formula and is targeted to districts that are below a certain threshold of wealth in the state. Tier Two Targeted Assistance provides additional funds to districts with more than 10% of their real property value in agricultural land. The district s current agricultural targeted percentage is 19.0%, but is projected to gradually decrease FY19-FY22. Special Education is calculated using per pupil categorical amounts in each fiscal year. K-3 Literacy is calculated using two per-pupil amounts in each fiscal year. Transportation funding is calculated using an approach in which two sets of calculations are done for each district based on different parameters. The approach that yields the higher amount is provided to the district. To allocate resources accordingly and distinguish between the higher and lower wealth districts, the state share index is used as the mechanism for the formula to work. The state share index is applied to elements of the foundation formula and provides for measuring the wealth of the district in terms of property tax base and the residents ability to pay. With HB49 provisions, the new components of the formula have been moved inside the cap calculation and include Capacity Aid (funding for districts where the income generated for one mill of property tax is below the state median), Graduation Bonus (bonus based on high school graduation rate), Third Grade Reading Bonus (bonus on third grade reading guarantee results), and a Transportation Supplement (funding based on rider density and the number of miles driven). Capacity Aid is where the district received the biggest increase of funding. The district yield per mill is $94,721 and the statewide median yield per mill is $231,776, allowing direct additional resources due to low capacity. In overall, the percentage of total revenue of Unrestricted Grants-in-Aid is 64.7% of total revenue. The forecast projects state funding for FY18 and beyond based on the formula established under HB49 and applying projected enrollment. It assumes the formula will stay in place during FY18 through FY22. However, due to the funding cap that is applied to the total funding after all of the funding components of the foundation formula are calculated and summed up, the district may experience limited distribution of state funds through the foundation formula and could receive no more funding than the limitation base allows. 25.0% % 1 5.0% -5.0% Year-over-Year Revenue Trend Year-over-YeaActual 5-Year Projected 5-Year Average % 5% % 5% % 5% % 5% % 5% % 2% % 2% % 2% % 3% 2% % 2% 2% -1 Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average 8

9 $41,964 $307,326 $642,563 $289,013 $310,202 $279,038 $262,775 $263,916 $264,041 $258, & Restricted Grants-in-Aid Funds received through the State Foundation Program or other allocations that are restricted for specific purposes. FY Rest State Aid as a % of Total Revenue FY Res 0 3.7% $700,000 $600,000 $500,000 $400,000 Restricted Grants-in-Aid Actual and Projected $300,000 $200,000 $100,000 Of particular note for the district is the economic disadvantaged category. FY18, the K-8 qualified and is participating in the Community Eligibility Provision (CEP). Participation in this program impacts the districts economic disadvantaged ADM; and changes in the numbers of students and their needs, those who are economically disadvantaged impacts the amount of funding each district receives. Participation in the CEP inflates a districts percentage of economically disadvantaged students and shows a higher FRP (Free and Reduced Price) percentage than their "true" FRP percentage. Due to anticipated adjustments to formula numbers in an effort to resolve the "true" count of economically disadvantaged students in CEP districts, rather than the CEP inflated figure, the forecast reflects no increase in funding. Currently, for FY18, the district s Economic Disadvantaged ADM is and our percentage is 62.80%. The statewide economic disadvantaged percentage is 48.59%. In future years, the district must make sure to have all families/students that are eligible complete necessary paperwork for classification. Another funding component is Career-Tech funding. 70 Year-over-Year Revenue Trend Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average 9

10 $198,329 $205,598 $210,315 $208,842 $206,630 $208,246 $206,282 $206,418 $206,542 $206, Property Tax Allocation Includes funds received for Tangible Personal Property Tax Reimbursement, Electric Deregulation, Homestead and Rollback. FY Prop Tax Property Tax Allocation Actual and Projected Projected RevRenewal Levy Revenue Allocation as a % of Total $250,000 FY Pro Revenue $198,329 $200, $205, $210,315 $150, $208, % 2017 $206,630 $100, $208, $206,282 $45 $50, $206,418 $450 $45 $450 $813 $ $206,542 $ $206, $ Projected Revenue Renewal Levy Revenue Around 2.5% of overall revenue comes from this category. State law grants relief in the form of a ten percent reduction in real property tax bills. In addition, a two and one-half percent rollback is granted to residential property taxes. Tax relief is also granted to qualified elderly and disabled homeowners based on their income. The state reimburses the district for the loss of real property taxes as a result of the rollback and homestead programs. The district currently receives around $208,000 from the program and the funding is calculated based upon the projected property valuations. As previously mentioned, the 1991 Current Expense 4.0 will expire with tax year 2018 and is up for renewal. If not renewed, the district will experience a reduction in Property Tax Allocation revenue. Year-over-Year Revenue Trend 6.0% 4.0% 2.0% -2.0% -4.0% -6.0% -8.0% -0.77% Year-over- Actual 5-YeProjected 5-Year Average % -0.77% % -0.77% % -0.77% % -0.77% % -0.77% % 0.03% % 0.03% % 0.03% % 0.03% % 0.03% 0.03% -1 Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average *Projected % trends include renewal levies 10

11 $496,416 $433,805 $472,989 $526,406 $499,268 $468,703 $466,282 $466,685 $467,115 $467, All Other Operating Revenues Operating revenue sources not included in other lines; examples include tuition, fees, earnings on investments, rentals, and donations. FY Other Operating Revenue as a % of Total FY Oth Revenue 0 6.0% $600,000 $500,000 $400,000 $300,000 All Other Operating Revenue Actual and Projected $200,000 $100,000 All other revenue consists of tuition, open enrollment, interest on investments, Ohio Medicaid School Program, and other smaller sources of revenue. Open Enrollment (IN) is the major source of revenue in this category. The forecast projects a gradual decrease to open enrollment into the district FY19-FY22. Administration will closely monitor the effects of open enrollment upon the district. 2 Year-over-Year Revenue Trend 15.0% 1 5.0% % % Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average 11

12 $205,643 $16,554 $7,405 $29,196 $40,379 $25,000 $25,000 $25,000 $25,000 $25, 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 Other Financing Sources as a % of Total FY OthRevenue $250,000 $200,000 Other Operating Financing Sources Actual and Projected 0.5% $150,000 $100,000 $50,000 This includes proceeds from sales 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 Year-over-Year Revenue Trend Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 12

13 Expenditures Overview Prev. 5-Year PROJECTED 5-Year Avg. Annual Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Avg. Annual Change Change Expenditures: Salaries 2.44% 5.52% 2.85% 2.95% 2.84% 2.55% 3.34% Benefits 1.22% -0.63% 4.69% 6.58% 6.66% 6.67% 4.80% Purchased Services 3.92% 1.48% 3.16% 0.23% 1.71% 2.38% 1.79% Supplies & Materials 6.41% -6.56% 41.08% % 22.31% % 4.40% Capital Outlay % 37.49% 38.63% % 0.90% % 42.77% Intergov n/a n/a n/a n/a n/a n/a n/a Debt % % 0.00% 0.00% 0.00% 0.00% 20.00% Other Objects -4.71% 8.81% -0.41% 14.16% 2.26% 2.28% 5.42% Total Expenditures 2.14% 2.89% 5.20% 1.50% 4.39% 3.77% 3.55% Total Other Uses 9.50% 32.08% -6.72% % % 0.00% -5.46% Total Exp & Other Uses 1.02% 3.75% 4.75% 0.10% 4.06% 3.71% 3.27% Othr Uses 2.9% Othr Objects 1.4% Intergov & Debt 0.1% Salaries 44.6% 44.8% Benefits 24.4% 26.3% Purch Serv 21.5% 2 Supp Salaries & Mat 4.4% 4.1% 44.6% Benefits Capital Outlay 0.6% 24.4% 1.5% Intergov & Deb 0.1% 0.2% Othr Objects 1.4% 1.6% Othr Uses 2.9% Purch Serv 1.6% 21.5% Capital Outlay 0.6% 2017 Supp & Mat 4.4% Othr Uses 1.6% Othr Objects 1.6% Intergov & Debt 0.2% Salaries 44.8% Benefits 26.3% Capital Outlay 1.5% 2022 Purch Serv 2 Supp & Mat 4.1% 13

14 $3,229,560 $3,203,278 $3,184,678 $3,318,505 $3,422,762 $3,611,763 $3,714,563 $3,824,201 $3,932,665 $4,032, Personnel Services Employee salaries and wages, including extended time, severance pay, supplemental contracts, etc. FY Salaries as a % of Total Expenditures FY Sala % $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Personnel Services Actual and Projected Personal services represent the salaries and wages to certified staff, classified staff, administrative staff, exempt staff, substitutes, tutors, and board members. It also includes extended time, severance pay, supplemental contracts, leave bonuses, one time and waive payments, and overtime. All employees are paid on a bi-weekly basis. Salaries are significant to the district budget, making up of 44.6% of the total budget. The district currently has negotiated agreements in effect for both certified and classified unions for the period of July 1, June 30, The forecast estimates include step and base increases based on the current negotiated agreements, on historic trends, and in relationship with insurance adjustments. Going forward, the forecast assumes projected severance pay and savings through retirement. Due to future teacher turnover/retirements, the district may continue savings due to the hiring of less experienced staff members and attrition. This will need to be monitored by administration and the board in the future in order to hold expenditures within budget availability. Lastly, federal grants such as Title I, IDEA, and Title IIA continue to decrease shifting a portion of the expense to the general fund. This trend is expected to continue throughout the forecast. 7.0% Year-over-Year Expenditure Trend 6.0% 5.0% 4.0% 3.0% % 1.0% % -2.0% Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 14

15 $1,826,369 $1,729,299 $1,821,713 $1,865,477 $1,876,287 $1,864,503 $1,951,927 $2,080,355 $2,218,945 $2,367, Employees' Benefits Retirement for all employees, Workers Compensation, early retirement incentives, Medicare, unemployment, pickup on pickup, and all health-related insurances. FY Benefits as a % of Total Expenditures FY Ben 0 $2,500,000 $2,000,000 Employees' Benefits/Insurance Benefits Actual and Projected $1,500, % $1,000,000 $500,000 Components of this line include insurance, retirement, and other salary driven fringe benefits. Benefits represent 24.4% of total expenditures. Total annual cost for all components in FY17 was $1,876,287. Currently, all full-time employees pay 10% of their medical/prescription premium. Beginning FY17, negotiated agreements for both certified and classified unions introduced health insurance plan options; PPO and HDHP. In January 2017, the board offered insurance coverage through a high deductible insurance plan, including prescription drug coverage, with an associated health savings account. Exempt staff also had plan options. FY18, the district experienced a 3% increase to the medical/prescription plans. FY19, the district will experience a 6.23% increase. However, going forward the forecast assumes an average yearly increase of 9%. Insurance related costs account for approximately 64% of the total employee benefits costs. Management and Labor, along with the insurance committee must maintain efforts to discuss continued changes to insurance plan design and healthcare costs and prevent meeting the criteria for the current Federal Affordable Care Act (ACA) "Cadillac Tax" on high cost plans. Of note, as of today it appears that the district will meet criteria for the "Cadillac Tax" for family and single plans this forecast. The current ACA tax threshold will be met and the district will experience costly penalties without plan design changes. This assumption must be monitored and no estimated tax has been projected in this forecast. Any additional increases may be material to the forecast. Outside the health plan, the district has a vision, dental, and life insurance program for employees. The board pays 100% of the premium for those insurance offerings. Lastly, Retirement (STRS and SERS-14%), Medicare contributions, Workers Compensation, and Unemployment are driven by salary and projected increases are included in the forecast. This forecast reflects minimal change due to current negotiated agreements (plan options), but will be revisited in the May update after optional plan enrollments are determined. 8.0% Year-over-Year Expenditure Trend 6.0% % 2.0% % -4.0% -6.0% Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 15

16 $1,335,585 $1,482,973 $1,394,754 $1,529,434 $1,646,783 $1,671,168 $1,723,953 $1,727,955 $1,757,495 $1,799, 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 Purchased Services as a % of Total FY Pur Expenditures % $2,000,000 $1,800,000 $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Purchased Services Actual and Projected Outside of salary and benefits, this category represents the largest expenditure line item for the district. This category is wide ranging from open enrollment (students leaving the school district), community schools (on-line academic institutions), excess cost tuition (ESC), tuition costs (resident students attending other districts or colleges), HVAC services, travel/professional development, legal fees, utilities, and any contracted service. FY 14, the district entered into an agreement with Direct Energy for energy management and that agreement remains thru June FY18, the district entered into a Preventative Maintenance/Control Energy Management Agreement with Limbach and FY17 entered into a energy efficiency service agreement with Energy Optimizers for cost savings. Open enrollment historically has been a negative adjustment to the district. More students are open enrolling out of the district than coming into the district. Community Schools historically have also been a negative adjustment to the district. Overall, purchased services represent 21.5% of the overall operating budget. Going forward the district must monitor these areas for continued and new agreements that will lower expenses and enrollment projections. 12.0% 1 8.0% 6.0% 4.0% 2.0% -2.0% -4.0% -6.0% -8.0% Year-over-Year Expenditure Trend Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 16

17 $379,681 $298,366 $251,114 $324,590 $338,207 $316,007 $445,808 $353,396 $432,243 $371, Supplies & Materials Expenditures for general supplies, instructional materials including textbooks and media material, bus fuel and tires, and all other maintenance supplies. FY Supplies & Materials as a % of Total FY Sup Expenditures 0 4.4% $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Supplies & Materials Actual and Projected This line item consists of education workbooks/textbooks, computer software/supplies, custodian supplies and bus supplies, including fuel. FY17, the district purchased a large textbook series and the forecasted years project additional textbook replacements (FY19 and FY21). The forecasted years also project additional instructional improvements by a more constant amount. Inflationary increases are built in for all other supplies. 5 Year-over-Year Expenditure Trend Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 17

18 $17,398 $160,864 $31,638 $245,576 $48,963 $67,318 $93,326 $48,147 $48,580 $138, 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 Capital Outlay as a % of Total Expenditures FY Cap 0 0.6% $300,000 $250,000 $200,000 $150,000 Capital Outlay Actual and Projected $100,000 $50,000 This line includes expenditures for items having at least five-year expectancy, such as land, buildings, improvements of grounds, equipment, computers/technology, furnishings, and buses. The forecast projects a bus purchase (FY22), and computer/technology instructional enhancement purchases throughout the forecast. 100 Year-over-Year Expenditure Trend Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 18

19 $5,906 $62,956 $80,346 $220,051 $7,934 $15,869 $15,869 $15,870 $15,869 $15, 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 Intergov & Debt as a % of Total Expenditures FY Inte 0 $250,000 $200,000 Intergovernmental & Debt Service Actual and Projected 0.1% $150,000 $100,000 $50,000 In FY17 the district entered into an energy efficiency service agreement with Energy Optimizers for cost savings. Remaining agreement payments are spread over a ten year agreement period and the forecast reflects future payments. 120 Year-over-Year Expenditure Trend Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 19

20 $112,133 $114,629 $125,515 $112,054 $108,139 $117,661 $117,178 $133,768 $136,794 $139, 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 Other Objects as a % of Total Expenditures FY Oth 0 1.4% $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 Other Objects Actual and Projected This category includes County Auditor and Treasurer Fees, audit costs, and other miscellaneous items. The district has entered into an agreement with a private firm for fiscal audit costs savings for FY15 through FY17. The Auditor of the State s office contacted the district and allowed an additional year with the private firm for FY18 audit. The state will allow ten (10) years out and then the district must go back to the Auditor of the State. The forecast reflects this return and assumes a 3% annual percentage change as tax collection fees are based on local property tax collections. 2 Year-over-Year Expenditure Trend 15.0% 1 5.0% % % % Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 20

21 $205,158 $110,650 $69,317 $79,975 $225,238 $297,500 $277,500 $165,000 $145,000 $145, Total Other Financing Uses Operating transfers-out, advances out to other funds, and all other general fund financing uses. FY Other Financing Uses as a % of Total FY Oth Expenditures 0 2.9% $350,000 $300,000 $250,000 $200,000 Other Financing Uses Actual and Projected $150,000 $100,000 $50,000 This line item consists primarily of transfers out, advances out to other funds, any refunds from prior year receipts that would be required, and all other general fund financing uses. The forecast assumes in FY18 and throughout a transfer of $100,000 to cover continued deficits in food service operations. In addition, FY18 and throughout the forecast includes a transfer out to Capital Improvement and Maintenance Fund for infrastructure and operational costs, in addition to advances to cover federal funds and future retirements. 20 Year-over-Year Expenditure Trend Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 21

22 Forecast Compare Comparison of Previous Forecast Amounts to Current Forecasted Numbers F.Y Column A Column B Column C Column D Previous Current Dollar Percent Forecast Forecast Difference Difference Amounts For Amounts For Between Between F.Y F.Y Previous Previous Prepared on: Prepared on: and and Revenue: 11/6/2017 5/22/2018 Current Current 1 Real Estate & Property Allocation $1,633,422 $1,669,484 $36, % 2 Public Utility Personal Property $533,058 $537,358 $4, % 3 Income Tax n/a 4 State Foundation Restricted & Unrestricted $5,817,954 $5,762,519 -$55, % 5 Other Revenue $455,687 $468,703 $13, % 6 Other Non Operating Revenue $35,000 $25,000 -$10, % 7 Total Revenue $8,475,121 $8,463,064 -$12, % Expenditures: 8 Salaries $3,679,113 $3,611,763 -$67, % 9 Fringe Benefits $1,867,027 $1,864,503 -$2, % ### Purchased Services $1,746,651 $1,671,168 -$75, % ### Supplies, Debt, Capital Outlay & Other $547,755 $516,855 -$30, % ### Other Non Operating Expenditures $242,500 $297,500 $55, % ### Total Expenditures $8,083,046 $7,961,789 -$121, % ### Revenue Over/(Under) Expenditures $392,075 $501,274 $109, %* ### Ending Cash Balance $2,625,475 $2,734,674 $109, %* *Percentage expressed in terms of total expenditures FY18 introduced the states biennium budget (HB49) and new procedures for calculating the state foundation formula funding (FY18-FY19). The amount of state funds that a district receives is based on a formula that takes into account the student enrollment and the property wealth of the district. The new component "Capacity Aid" is where the district received the biggest increase of funding. This funding is very similar to former aims to manage low property wealth and in the past this funding has not been sustained. Forecasted years FY18 through FY22 reflect a continuation of this components funding, however the district must consider its sustainability within the next biennial budget and funding formula. Economic Disadvantaged is another component the district must direct great attention to. Changes in the numbers of students and their needs, those who are economically disadvantaged, impacts the amount of funding received. The increase in expenditures is attributed to the need for instructional enhancements, infrastructure, and funds to cover operational costs. The line in which should be paid great attention is This line is Excess of Revenue and Other Financing Sources over (under) Expenditures. This line is used to get a good sense of a school district's fiscal health. Of course, a positive number reflects that the district spent within its revenue for that fiscal year and a negative number indicates the districts expenditures exceeded the revenue generated for that fiscal year resulting in a reduction to any surplus the district holds or deficit. The forecast projects in FY21 and FY22 the district will experience "overspending". Seeing deficits in future years is not uncommon given the uncertainty of future state budgets, local economic factors, state and federal mandates, etc... The district must focus on recognizing how these conditions relate to current operations and identify future year's deficits and engage in planning for those conditions prior to their arrival and eliminate the projected deficit. 22

23 Actual FORECASTED Fiscal Year: Revenue: General Property Tax (Real Estate) 1,437,090 1,461,238 1,381,198 1,386,347 1,395,989 1,405, Public Utility Personal Property 460, , , , , , Income Tax Unrestricted Grants-in-Aid 5,423,513 5,483,481 5,492,862 5,570,296 5,741,185 5,919, Restricted Grants-in-Aid 310, , , , , , Restricted Federal Grants - SFSF Property Tax Allocation 206, , , , , , All Other Operating Revenues 499, , , , , , Total Revenue 8,337,044 8,438,064 8,315,659 8,364,191 8,550,032 8,736,724 Other Financing Sources: Proceeds from Sale of Notes State Emergency Loans and Adv Operating Transfers-In Advances-In 16,623 5,000 5,000 5,000 5,000 5, All Other Financing Sources 23,756 20,000 20,000 20,000 20,000 20, Total Other Financing Sources 40,379 25,000 25,000 25,000 25,000 25, Total Rev & Other Sources 8,377,423 8,463,064 8,340,659 8,389,191 8,575,032 8,761,724 Expenditures: Personnel Services 3,422,762 3,611,763 3,714,563 3,824,201 3,932,665 4,032, Employee Benefits 1,876,287 1,864,503 1,951,927 2,080,355 2,218,945 2,367, Purchased Services 1,646,783 1,671,168 1,723,953 1,727,955 1,757,495 1,799, Supplies and Materials 338, , , , , , Capital Outlay 48,963 67,318 93,326 48,147 48, , Intergovernmental Debt Service: Principal-All Years 4, Principal - Notes Principal - State Loans Principal - State Advances Principal - HB264 Loan - 8,547 9,153 9,802 10,496 11, Principal - Other Interest and Fiscal Charges 3,875 7,322 6,716 6,068 5,373 4, Other Objects 108, , , , , , Total Expenditures 7,449,075 7,664,289 8,062,624 8,183,691 8,542,593 8,865,045 Other Financing Uses Operating Transfers-Out 225, , , , , , Advances-Out - 5,000 5,000 5,000 5,000 5, All Other Financing Uses Total Other Financing Uses 225, , , , , , Total Exp and Other Financing Uses 7,674,313 7,961,789 8,340,124 8,348,691 8,687,593 9,010, Excess of Rev Over/(Under) Exp 703, , ,500 (112,561) (248,322) Cash Balance July 1 (No Levies) 1,530,290 2,233,400 2,734,674 2,735,208 2,775,708 2,663, Cash Balance June 30 (No Levies) 2,233,400 2,734,674 2,735,208 2,775,708 2,663,148 2,414, Estimated Encumbrances June 30 5,000 50,000 50,000 50,000 50,000 50, Reservations Subtotal Fund Bal June 30 for Cert of App 2,228,400 2,684,674 2,685,208 2,725,708 2,613,148 2,364,826 Rev from Replacement/Renewal Levies & Income & Property Tax-Renewal - 73, , , , Cumulative Balance of Levies , , , , Fund Bal June 30 for Cert of Obligations 2,228,400 2,684,674 2,758,918 2,947,495 2,984,248 2,886,407 Revenue from New Levies & Income & Property Tax-New Cumulative Balance of New Levies Unreserved Fund Balance June 30 2,228,400 2,684,674 2,758,918 2,947,495 2,984,248 2,886,407 23