Five Year Forecast Financial Report

Transcription

1 May, 2018 RIVERSIDE LOCAL SCHOOL DISTRICT - - LAKE COUNTY Five Year Forecast Financial Report 1

2 Table of Contents Table of Contents 2 Executive Summary 3 PAGE # Revenue Overview General Property Tax (Real Estate) Public Utility Personal Property Income Tax Unrestricted Grants-in-Aid & Restricted Grants-in-Aid Property Tax Allocation All Other Operating Revenues Total Other Financing Sources 12 Expenditures Overview Personnel Services Employee Benefits Purchased Services Supplies and Materials Capital Outlay Intergovernmental & Debt Other Objects Total Other Financing Uses 21 Forecast Compare 22 Five Year Forecast 23 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 5,367,589 8,002,676 8,499,196 8,187,574 6,296,764 + Revenue 46,507,435 45,696,304 46,530,933 46,815,343 47,158,906 + Proposed Renew/Replacement Levies Proposed New Levies Expenditures (43,872,347) (45,199,784) (46,842,555) (48,706,153) (50,564,503) = Revenue Surplus or Deficit 2,635, ,520 (311,622) (1,890,810) (3,405,596) Ending Balance 8,002,676 8,499,196 8,187,574 6,296,764 2,891,168 Revenue Surplus or Deficit w/o Levies 2,635, ,520 (311,622) (1,890,810) (3,405,596) Ending Balance w/o Levies 8,002,676 8,499,196 8,187,574 6,296,764 2,891,168 Summary: The purpose of the five year forecast is to engage the local board of education and community in long range planning and discussions of the financial issues facing the district. Various board policies establish the fiscal oversight of the board of education in regards to the five year forecast. Board policy 6231 states, "The board shall adopt a spending plan (also known as a forecast) as prescribed by statute." Board policy 6810 emphasizes the importance of the board of education recognizing its responsibility to the taxpayers of the district to be sure that public monies are utilized in a manner that ensures full value to the taxpayers. Board policy 6210 states the budget should reflect the objectives of the board of education for the education of the children of the district. The board of education considers these objectives when discussing the five year forecast with the administration. The five year forecast is prepared based on the best information available at the time the forecast is prepared. School districts are encouraged to update their forecasts with the Ohio Department of Education when events take place that will significantly change their forecast. The Riverside Local School district is at a pivotal time in its history. In November 2016, the district passed a $38,500,000 bond issue to build two new elementary schools that would result in the closing of four existing elementary schools. The new facilities are expected to open in August 2019 (FY2020). The district also passed a 4.9 mill operating levy in May 2017 generating nearly $4.8 million annually beginning in the second half of FY2018. The passage of this levy resulted in the restoration of transportation services for all grade levels, the reinstatement of certain elementary level programming, and reduced pay to participate fees. The five year forecast presents three fiscal years of historical financial information plus five years of projected financial information including the current fiscal year 2018 that runs July 1, 2017 through June 30, The five year forecast includes the entire general fund as required by law. It also includes the joint financing district fund since this is a major revenue stream for the district providing funding for teacher salaries in core subjects at the high school level. The five year forecast does not include the permanent improvement fund, building construction fund, debt retirement fund, or any other funds of the district. $60,000,000 $50,000,000 Revenue vs. Expenditures $43,872,347 $45,199,784 $46,842,555 $48,706,153 $50,564,503 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $46,507,435 $45,696,304 $46,530,933 $46,815,343 $47,158, 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 0.69% 13.96% 6.43% 2.96% 0.95% 1.13% 5.09% Public Utility 5.55% 48.12% % 50.43% 2.62% 2.53% 11.98% Income Tax n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% State Funding 6.05% -2.79% -0.73% -4.77% -0.04% -0.04% -1.67% Restricted Aid % 9.57% -2.66% -2.68% -2.66% -2.85% -0.25% Restr Federal SFSF % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Property Tax Alloc -7.96% -5.23% 1.43% 1.50% 0.96% 1.12% -0.04% All Other Operating -2.43% 29.74% % -4.48% -1.24% -1.23% 1.35% Total Revenue 0.48% 11.18% -0.25% 1.83% 0.61% 0.73% 2.82% Total Other Sources % % % 0.00% 0.00% 0.00% % Total Rev & Other Srcs -1.10% 12.52% -1.74% 1.83% 0.61% 0.73% 2.79% Property (real estate) tax revenue is the largest and most significant revenue stream for the district. In 2017, property tax revenue made up 54.7% of the total revenues for the district. All of the district's operating levies are in place for a continuous period of time, making this a fairly stable revenue stream. The second largest revenue stream for the district is Unrestricted Grants-in-Aid (state funding). This made up 22.1% of total revenues, which includes the state funding formula, casino tax revenue, and HB64 TPP supplement payments. The state funding formula and casino tax revenue are based on enrollment, which has been declining in recent years. Also, the state funding formula is revised with each state biennium budget, which is currently set through the end of the fiscal year Therefore, the state funding is estimated in fiscal year 2020 and beyond based on the current biennium budget and historical information. The third largest revenue stream is no longer Property Tax Allocation due to the aggressive phase out of TPP reimbursements, which causes a significant loss of revenue to the district as explained on page 10. Therefore, Other Revenue is now the third largest revenue stream (9.6%) due to the inclusion of revenue from the Joint Financing District. Please review the following pages for more detailed information for each revenue stream for the district. Othr Sources 0.3% Public Utility Real Estate 54.7% 61.1% 3.4% Public Utility 3.4% 4.0% Income Income Tax Tax Real Estate State Funding 23.1% 18.7% 54.7% Prop Tax Alloc 8.9% 7.8% All Othr Op Re 9.6% 8.5% State Othr Sources 0.3% Funding All 23.1% Othr Op Rev 9.6% Prop Tax Alloc 8.9% Othr Sources Real Estate 61.1% All Othr Op Rev 8.5% 2022 Prop Tax Alloc 7.8% State Funding 18.7% Public Utility 4.0% Income Tax 4

5 $21,897,301 $21,868,078 $22,234,521 $22,838,698 $22,589,528 $25,742,704 $27,397,001 $28,207,517 $28,476,860 $28,799, 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 % Projected General Property Rev Renewal Tax (Real Levy Estate) Revenue Actual and Projected of Total Revenue $35,000, $21,897,301 $1 FY Rea $30,000, $21,868, $25,000, $22,234,521 $20,000, $22,838, $22,589,528 $15,000, $25,742, % $10,000, $27,397,001 $5,000, $28,207, $28,476, $28,799, Projected Revenue Renewal Levy Revenue Property tax revenue was $22,589,528 or 54.7% of the district's total revenue in FY2017. Class I (Residential and Agriculture) made up 89.38% of this revenue while Class II (Commercial and Industrial) made up 10.62%. Total valuation for tax year 2016 (Collection year 2017) was $982,022,270, which has grown from the 2005 total valuation of $939,723,848. Small valuation increases are expected throughout the projected forecast years. Increases in valuation results in additional property tax revenue only on the district's inside millage of 4.80 mills and the substitute levy of 4.59 mills (new construction valuation only) since these levies are exempt from house bill 920. The remaining operating levies of the district are not exempt from house bill 920, and the tax rates of these levies are reduced (known as the effective tax rate) as valuations increase. This ensures the district only receives a certain dollar amount from the applicable levies and does not realize gains as valuations increase. Collection rates are projected at 97.7% for Class I and 94% for Class II based on current trends and historical information. All of the district's operating levies are in place for a continuous period of time. The forecast is prepared based only on the existing property tax levies of the district. Revenue from the 4.9 mill operating levy passed in May 2017 is reflected in the second half of FY2018 with the full amount reflected in FY2019 due to taxes being collected on a calendar year basis while the district is on a fiscal year basis beginning each July 1. Also, a spike is seen in FY2018 due to a change in collection split attributed to the change in federal tax laws. Approximately 54.1% of tax year 2017 (collection year 2018) revenue was received in FY2018 as opposed to the historical 52.5% in prior years. This trend is expected to reverse itself in FY % 14.0% 12.0% 1 8.0% 6.0% 4.0% 2.0% -2.0% 0.69% Year-over-Year Revenue Trend Year-over-YActual 5-YeProjected 5-Year Average % 0.69% % 0.69% % 0.69% % 0.69% % 0.69% % 5.09% % 5.09% % 5.09% % 5.09% % 5.09% 5.09% Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average *Projected % trends include renewal levies 5

6 $1,158,644 $1,208,731 $1,328,893 $1,351,584 $1,420,598 $2,104,217 $1,182,537 $1,778,878 $1,825,409 $1,871, 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 Rev Personal Renewal Property Levy Revenue Tax Actual and Projected FY of Pub Total Revenue $2,500, $1,158,644 $1,158,644 $2,000, $1,208,731 $1,208, $1,328,893 $1,328, % 2016 $1,351,584 $1,351,584 $1,500, $1,420,598 $1,420,598 $1,000, $2,104,217 $2,104, $1,182,537 $1,182,537 $500, $1,778,878 $1,778, $1,825,409 $1,825, $1,871, $1,871, Projected Revenue Renewal Levy Revenue Public Utility Tangible Personal Property Tax was $1,420,598 or 3.4% of the district's total revenue in FY2017. This consists of revenue generated from public utility property valuations multiplied by the district's full voted tax rate. Collection rates are historically between 95% and 100% and are projected at 98% in the forecasted years. Total valuation of public utility tangible personal property tax is expected to increase around 2% per year. The projection for FY2018 is based on the actual amounts received from the county auditor. The increases seen in FY2018 and beyond are due to the passage of a 4.9 mill operation levy in May A spike also occurred in FY2018 due to a change in collection split attributed to the change in federal tax laws. Approximately 82.22% of tax year 2017 (collection year 2018) revenue was received in FY2018 as opposed to the historical 50% received in prior years. This trend is expected to reverse itself in FY2019. Year-over-Year Revenue Trend % Year-over-YActual 5-YeProjected 5-Year Average % 5.55% % 5.55% % 5.55% % 5.55% % 5.55% % 11.98% % 11.98% % 11.98% % 11.98% % 11.98% 11.98% -6 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 Rev Income Renewal Tax Actual Levy and Revenue Projected FY 2017 of - Inco Total Revenue 0 $ $1 $ Projected Revenue Renewal Levy Revenue The district does not levy an income tax % Year-over-Year Revenue Trend Year-over-YActual 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 $6,742,209 $7,402,370 $8,038,398 $8,741,560 $9,125,898 $8,871,076 $8,806,759 $8,386,657 $8,383,632 $8,380, 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 $10,000,000 $8,000,000 Unrestricted Grants-in-Aid Actual and Projected 22.1% $6,000,000 $4,000,000 $2,000,000 Unrestricted State Aid was $9,125,898 or 22.1% of the district's total revenue in FY2017. This revenue line includes funding based on the state foundation program, as well as casino revenue and TPP supplement payments based on HB64. The state foundation program is based on the current state biennium budget which covers FY2018 and FY2019. In FY2018, the current funding formula starts with an allocation of $6,010 per student, but is then reduced based on various indexes such as the district's property tax valuation per pupil and the median income of taxpayers in the district compared to state averages. Therefore, the district actually only receives approximately 21.05% or $1,265 per regular education student. Higher funding amounts are received for special education students. The district has experienced declining enrollment in recent years, which is expected to continue. Due to declining enrollment, this revenue is expected to decline even though the per pupil allocation is expected to increase. The district also receives casino tax revenue at approximately $49.50 per student, which is also projected to decline due to declining enrollment. HB64 provides that no school district should receive less in FY2016 than it did in FY2015 in terms of total state education aid plus any current expense reimbursement for TPP phase-out and/or public utility deregulation. The district received $91,468 in TPP supplement in FY2016 and $161,328 in FY2017. The Ohio Department of Education has recalculated the remaining amount owed for FY2017 now that the final #3 calcuation of FY2017 funding was completed in December. The district will reportedly receive $69,693.08, which is projected to be recieved in FY2018 but may be delayed to FY2019. There is no provision for this revenue stream to continue in the current state biennium budget, so this revenue stream will end. 12.0% 1 8.0% 6.0% 4.0% 2.0% -2.0% -4.0% -6.0% Year-over-Year Revenue Trend Year-over-YeaActual 5-Year Projected 5-Year Average % 6% % 6% % 6% % 6% % 6% % -3% -2% % -2% % -2% % -2% % -2% -2% Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average 8

9 $135,276 $48,653 $786,370 $401,195 $425,517 $466,254 $453,874 $441,705 $429,970 $417, & 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 Rest 0 1.0% $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 Restricted Grants-in-Aid Actual and Projected Restricted Grants-in-Aid was $425,517 or 1.0% of the district's total revenue in FY2017. This revenue line is made up of Career Tech funding ($5,612), Economic Disadvantaged funding ($140,642), and Catastrophic Aid reimbursement ($320,000) from the Ohio Department of Education for FY2018. These revenues are projected to decline in future years based on declining enrollment. Catastrophic aid reimbursement is based on amounts historically received. Future projects are difficult as catastrophic aid reimbursment is based on a proportionate share of expenditures as reported by all 600+ school districts. Catastrophic aid reimbursement is typically received in June of the subsequent fiscal year from when the expenditures occurred. The spike seen in FY2015 was due to the Ohio Department of Education disbursing the FY2013 catastrophic cost reimbursement late. Therefore, the district received reimbursements for both FY2013 ($336,118.35) and FY2014 ($374,060.68) in FY Year-over-Year Revenue Trend % -0.25% Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average 9

10 $5,017,130 $5,077,612 $5,167,446 $4,447,770 $3,690,838 $3,497,941 $3,547,915 $3,601,161 $3,635,680 $3,676, 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 Rev Renewal Levy Revenue Allocation as a % of Total $6,000,000 FY Prop $5,017,130 Revenue $5,000, $5,077, $5,167,446 $4,000, $4,447, % $3,000, $3,690, $3,497,941 $2,000, $3,547,915 $1,000, $3,601, $3,635, $3,676, Projected Revenue Renewal Levy Revenue Property Tax Allocation was $3,690,838 or 8.9% of the district's total revenue in FY2017. This revenue line is made up of residential tax discounts (homestead and rollback) and tangible personal property tax reimbursements paid by the State of Ohio. Homestead and rollback projections are based on projected trends in property tax valuation. The 10% rollback is projected at 8.48% and the 2.5% rollback on owner occupied properties is projected at 1.73% based on historical data and current trends. Tangible personal property tax was eliminated in In order to help ease the loss in revenue for school districts, the state phased out the revenue and made tangible personal property tax loss reimbursements to school districts. In FY2012, the district received $2,366,917, but it was reduced to $1,644,808 in FY2013. The reimbursement was frozen at $1,644,808 for FY2014 and FY2015. However, the most recent state budget resumed the phase-out, reducing the tangible personal property tax reimbursements by 5/8 of property tax mill per year. Therefore, the district only received $947,309 in FY2016 and $188,307 in FY2017. In FY2018 and beyond, the district will no longer receive any tangible property tax reimbursements, which has a detrimental effect on the district's financial health. Year-over-Year Revenue Trend 5.0% -5.0% % -7.96% Year-over-YActual 5-YeProjected 5-Year Average % -7.96% % -7.96% % -7.96% % -7.96% % -7.96% % -0.04% % -0.04% % -0.04% % -0.04% % -0.04% -0.04% -2 Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average *Projected % trends include renewal levies 10

11 $4,222,686 $4,304,019 $4,091,882 $3,985,443 $3,954,237 $5,130,370 $4,308,218 $4,115,016 $4,063,792 $4,013, 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 Othe 0 Revenue $6,000,000 $5,000,000 All Other Operating Revenue Actual and Projected 9.6% $4,000,000 $3,000,000 $2,000,000 $1,000,000 Other revenue was $3,954,237 or 9.6% of the district's total revenue in FY2017. Other revenue includes numerous revenue streams as listed below. Material revenue streams in FY2018 include: Joint Financing District Levy: $2,261,403 - Projected to decrease around 5% next year due to a spike in collection the second half of this fiscal year that will revert the first half of next fiscal year and an additional 1% decrease per year based on history and declining enrollment. The forecast projects this five year levy will be renewed by If the levy is not renewed, Other Revenue would decrease by approximately $1 million in FY2021 and $2.1 million in FY2022. Pay to Participate Fees: $200,000 - Due to passage of the 4.9 mill operating levy in May 2017, revenue from pay to participate fees dropped significantly in FY2018 due to reduced fee amounts. Actual revenue in FY2017 was $318,655. Open Enrollment: $630,713 - Projected to decrease going forward due to declining enrollment. Classroom Fees: $170,000 - Projected to decrease 2% per year due to declining enrollment. SF14 Tuition and Excess Cost: $530,000 - Projected to decrease 2% per year due to declining enrollment. Medicaid Reimbursements: - Projected a one time spike in FY2018 due to long outstanding cost report settlements for FY2011 ($47,927), FY2012 ($21,954), FY2013 ($202,811), FY2014 ($240,022) and FY2015 ($158,754) received in FY2018 plus over $50,000 in interim claims received. Reimbursements expected to be around $192,000 in FY2019 and $150,000 per year in subsequent years. Other revenue streams not listed above include revenue from TIF agreements, field trips, tuition from all day kindergarten, shared services, interest, manufactured homes tax revenue, rentals, fines, and other revenues. Each revenue stream is assessed individually and projected based on prior history, current trends, and events known at this time. 4 Year-over-Year Revenue Trend % 1.35% -2 Year-over-Year Revenue Variance Actual 5-Year Average Projected 5-Year Average 11

12 $2,014,273 $5,095 $6,059 $127,738 $694, 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 Othe Revenue $2,500,000 $2,000,000 Other Operating Financing Sources Actual and Projected 0.3% $1,500,000 $1,000,000 $500,000 The Total Other Financing Sources of $127,738 in FY2017 is due to the return of advances of $45,567 made to several federal grants at the end of FY2016. Also, the district received a refund of a prior year expenditure of $82,171 relating to an overpayment to the Mentor Cares program from FY2016. In FY2018, total other financing sources are projected to be $694,874. This includes a return of an advance made to the permanent improvement fund of $375,000 in September (See line Advances-Out). The district also received additional refunds from the Mentor Cares program totaling $178, for fiscal years 2012, 2013, 2014, and Also, advances of $137,763 to the district's grant funds in FY2017 were returned to the general fund in August Finally, $3, of unclaimed funds left unclaimed for a period of five years were reverted back to the general fund. No Other Financing Sources are projected in FY2019 and beyond at this time. 50 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 -0.29% 3.67% 3.36% 3.27% 3.65% 3.67% 3.52% Benefits 0.92% 3.38% 5.84% 5.86% 6.06% 6.12% 5.45% Purchased Services 6.00% 0.17% 3.85% 2.61% 2.59% 2.55% 2.35% Supplies & Materials 2.23% 2.22% 5.90% 2.35% 2.35% 2.27% 3.02% Capital Outlay 58.99% % 2.00% 2.00% 2.00% 2.00% -4.73% Intergov n/a n/a n/a n/a n/a n/a n/a Debt % 0.44% -0.04% -0.04% -0.05% -0.05% 0.05% Other Objects -3.84% 8.98% -9.38% 2.11% 11.79% -6.72% 1.36% Total Expenditures -0.42% 2.74% 3.91% 3.63% 3.98% 3.82% 3.62% Total Other Uses 79.28% % % n/a n/a n/a 27.46% Total Exp & Other Uses -0.36% 3.27% 3.03% 3.63% 3.98% 3.82% 3.54% Salaries and benefits made up approximately 72.5% of the district's total expenditures in fiscal year 2017, which is common among many school districts in Ohio. Purchased services are expected to only increase 0.17% and supplies are expected to increase 2.22% in FY2018. The increase in supplies is caused by the additional fuel, tires, and parts required by the restoration of transportation services. Capital outlay and debt decreased substantially from prior years due to the district utilizing its 2.5 mill permanent improvement levy for these expenditures. The 2.5 mill permanent improvement levy is accounted for in a separate fund and is not included in the district's five year forecast per requirements set forth by the Ohio Department of Education. See pages 14 through 21 for more detailed explanations of the district's expenditures Salaries 51.5% 51.5% Benefits 21.0% 23.0% Purch Salaries Serv 22.7% 21.4% Supp 51.5% & Mat 3.0% 3.0% Capital Outlay 0.2% Benefits 0.1% Intergov & Deb 0.2% 21.0% 0.2% Othr Objects 1.1% 1.0% Othr Uses 0.3% Salaries 51.5% 2022 Benefits 23.0% Othr Uses 0.3% Purch Serv 22.7% Othr Uses Purch Serv 21.4% Intergov & Othr Debt Objects0.2% 1.1% Capital Outlay 0.2% Supp & Mat 3.0% Intergov & Othr Debt Objects 0.2% Capital 1.0% Outlay 0.1% Supp & Mat

14 $20,501,392 $20,166,812 $20,911,928 $21,315,379 $21,884,160 $22,686,285 $23,448,190 $24,215,371 $25,098,076 $26,018, Personnel Services Employee salaries and wages, including extended time, severance pay, supplemental contracts, etc. FY Salaries as a % of Total Expenditures FY Sala 0 $30,000,000 $25,000,000 $20,000,000 Personnel Services Actual and Projected $15,000, % $10,000,000 $5,000,000 Personnel services was $21,884,160 or 51.5% of the total expenditures in FY2017. Personnel services includes salaries and wages for the certified, classified, exempt and administrative employees of the district. There are two bargaining units which have negotiated agreements that govern their rates of pay. The certified employees are covered by an agreement with RLEA that is in effect through FY2021, and the classified employees are covered by an agreement with OAPSE in effect through FY2020. Salaries for certified employees are based on degree level and experience (steps). Currently, the average step increase is estimated at approximately 3% per year and degree changes are estimated at 0.33% per year. Salaries for classified employees are based on position and experience (steps). Salary increases are projected between 2% and 3% per year. Salaries for administrative and exempt employees are evaluated annually and cost of living adjustments are made when feasible. Salary increases of 3% per year are projected in FY2019 through FY2022. The personnel services projection also includes analysis of current staffing requirements, possible savings from retirements, and the cost of substitute teachers. Adjustments have been made for reductions in staff due to declining enrollment, offset by increases in staffing due to the return of elementary level programming and the restoration of transportation services in FY % 4.0% 2.0% Year-over-Year Expenditure Trend 3.52% -2.0% -0.29% -4.0% -6.0% -8.0% -1 Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 14

15 $7,550,662 $7,712,647 $7,659,944 $8,479,353 $8,902,180 $9,203,264 $9,740,980 $10,311,885 $10,936,759 $11,605, 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 $14,000,000 $12,000,000 $10,000,000 Employees' Benefits/Insurance Benefits Actual and Projected 21.0% $8,000,000 $6,000,000 $4,000,000 $2,000,000 Employee benefits was $8,902,180 or 21.0% of the total expenditures in FY2017. Employee benefits includes items such as required board contributions to the state retirement systems, Medicare tax, workers compensation premiums, unemployment premiums, and the board portion of medical, dental, vision, and life insurance premiums. Projections for several of these items are based on a percentage of salaries. These include: retirement contributions to STRS and SERS (14.00%), Medicare premiums (1.45%), and workers compensation (1.00%). As salary projections increase (or decrease), projections for these items are adjusted proportionately. Projections for the board's portion of medical, dental, vision, and life insurance premiums are based on the current number of employees enrolled in each plan of the district. The district is self-insured through the Lake County Schools Council, which is a consortium of 12 school districts pooled together to help minimize the cost of these benefits. The projections for FY2018 are based on the known medical, dental, and vision premiums in effect for those years. Since the cost of medical insurance has been increasing rapidly in recent years, medical insurance is projected to increase at a rate of 8% per year in FY2019 through FY2022. Dental and vision premiums are projected to increase at 3% per year in those years as well. 15.0% Year-over-Year Expenditure Trend 1 5.0% 5.45% -5.0% 0.92% % Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 15

16 $7,568,041 $8,826,715 $9,652,425 $9,192,363 $9,623,400 $9,639,608 $10,010,273 $10,271,165 $10,537,331 $10,806, 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 Expenditures FY Purc 0 $12,000,000 $10,000,000 $8,000,000 Purchased Services Actual and Projected 22.7% $6,000,000 $4,000,000 $2,000,000 Purchased services was $9,623,400 or 22.7% of the total expenditures in FY2017. Purchased services are on a steady increase due to increases in the cost of open enrollment out, post-secondary options, and special instruction costs. Approximately 50.42% of the costs for purchased services are for tuition based costs, which includes open enrollment out ($1,761,814), community school deductions ($850,000), scholarships out ($900,000), and all other tuition related items ($1,348,585). The District experienced a reduction in its community school deduction of approximately $250,000 since the October 2017 forecast. This is attributed to the abrupt closing of the Electronic Classroom of Tomorrow (ECOT) in January Purchased services includes a wide range of other items including special education services, instructional services, utilities, postage, printing, repairs, security, contracted transportation services, insurance, legal services, etc. Each item is assessed individually and projected based on historical information, current trends, and information known at the time the forecast was prepared. 2 Year-over-Year Expenditure Trend 15.0% 1 5.0% 6.00% 2.35% -5.0% -1 Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 16

17 $1,015,616 $1,169,296 $1,297,040 $1,348,194 $1,295,052 $1,323,741 $1,401,834 $1,434,782 $1,468,557 $1,501, 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 3.0% $1,600,000 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 Supplies & Materials Actual and Projected Supplies and materials made up $1,295,052 or 3.0% of the total expenditures in FY2017. Supplies and materials include instructional supplies, special education supplies, maintenance supplies, transportation supplies, etc. Projections for FY2018 include: Instructional supplies of $546,473, maintenance supplies of $164,113, and transportation supplies is projected at $459,903. Transportation supplies increased as compared to FY2017 due to the restoration of full busing services. This will cover additional fuel, oil, tires and parts. Supplies, in general, are projected to increase at a rate between 2% and 3% per year. All additional items that make up supplies and materials were assessed individually and projected based on historical information, current trends, and information known at the time the forecast was prepared. 2 Year-over-Year Expenditure Trend 15.0% 1 5.0% 3.02% -5.0% 2.23% % -2 Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 17

18 $14,930 $14,072 $61,433 $76,445 $90,042 $61,559 $62,790 $64,045 $65,326 $66, 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 0.2% $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 Capital Outlay Actual and Projected Capital outlay was $90,042 or 0.2% of the total expenditures in FY2017. This line item includes computers and equipment purchased from the general fund with a useful life of at least five years. The district has a permanent improvement fund, which is not part of the five year forecast, that is utilized for most of the district's capital outlay expenditures Year-over-Year Expenditure Trend -4.73% 58.99% Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 18

19 $2,006,139 $173,797 $97,231 $79,880 $80,228 $80,193 $80,158 $80,121 $80, 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 $2,500,000 $2,000,000 Intergovernmental & Debt Service Actual and Projected 0.2% $1,500,000 $1,000,000 $500,000 Line items and include principal and interest payments relating to an Ohio House Bill 264 (HB264) project where the district financed a $928,500 School Energy Conservation Bond (Series 2015) with a 15 year term with an interest rate of 3.68%. This project was a lighting project where ballasts and lighting fixtures were improved to save in energy costs where the anticipated savings were more than or equal to the cost of financing. The final payment is due December 1, Year-over-Year Expenditure Trend 0.05% % Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 19

20 $536,525 $469,905 $481,898 $513,201 $461,255 $502,663 $455,524 $465,149 $519,982 $485, 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 1.1% $600,000 $500,000 $400,000 $300,000 Other Objects Actual and Projected $200,000 $100,000 Other objects includes various expenditures (listed below) and was $461,255 or 1.1% of the total expenditures in FY2017. Material expenditures in excess of $20,000 projected in FY2018 include: County Auditor Tax Collection Fees: $335,500 - Projected to increase as property tax revenues increase. Annual Audit Costs: $29,410 - Projected to increase approximately 2% per year. County ESC Deductions: $28,000 - Projected to increase approximately 3% per year. Liability Insurance: $24,438 - Projected to increase approximately 3% per year. Election Expense: $56,447 - Projected to be the next few years since the district does not anticipate having a levy on the ballot. This will change when the Board of Education decides to move forward with the second phase of its facilities plan. Other objects not listed above include dues, fees, shipping charges, advertisements for delinquent land/properties, and insurance bonds. Each object is assessed individually and projected based on prior history, current trends, and events known at this time. 15.0% Year-over-Year Expenditure Trend 1 5.0% 1.36% -5.0% % -3.84% Year-over-Year Expenditure Variance Actual 5-Year Average Projected 5-Year Average 20

21 $2,438 $12,000 $47,291 $147,105 $375, 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 Othe Expenditures 0 0.3% $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Other Financing Uses Actual and Projected In FY2017, $137,763 was advanced to the district's federal grant funds, which were returned to the general fund in FY2018. Also, $9,342 was transferred to the district's athletic fund in FY2017. For FY2018, the district advanced $375,000 to its permanent improvement fund in September This was returned back to the general fund by March There are no other projected Other Financing Uses for FY2018 and beyond projected at this time. Advances may occur at the end of FY2018 to the district's federal grant funds if needed. These advances would be returned to the general fund in early FY2019 and would have no long term impact on the five year forecast. Please see revenue line Advances-In for the return of any advances to the general fund Year-over-Year Expenditure Trend 27.46% 79.28% 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: 10/25/2017 5/19/2018 Current Current 1 Real Estate & Property Allocation $28,885,770 $29,240,645 $354, % 2 Public Utility Personal Property $1,552,540 $2,104,217 $551, % 3 Income Tax n/a 4 State Foundation Restricted & Unrestricted $9,302,992 $9,337,329 $34, % 5 Other Revenue $4,531,187 $5,130,370 $599, % 6 Other Non Operating Revenue $670,840 $694,874 $24, % 7 Total Revenue $44,943,329 $46,507,435 $1,564, % Expenditures: 8 Salaries $22,682,749 $22,686,285 $3,536 9 Fringe Benefits $9,202,680 $9,203,264 $ Purchased Services $9,977,818 $9,639,608 -$338, % 11 Supplies, Debt, Capital Outlay & Other $2,044,038 $1,968,190 -$75, % 12 Other Non Operating Expenditures $375,000 $375, Total Expenditures $44,282,285 $43,872,347 -$409, % 14 Revenue Over/(Under) Expenditures $661,044 $2,635,088 $1,974, %* 15 Ending Cash Balance $6,028,632 $8,002,676 $1,974, %* *Percentage expressed in terms of total expenditures The five year forecast is prepared using the best information available at the time it is prepared. It is normal to have fluctuations in the forecast based on numerous factors. Almost every financial decision affects the five year forecast in some way. When comparing FY2018 total revenue, there was an increase of $1,564,106 or 3.5% between the October 2017 and May 2018 forecast. This is caused by two major factors. First, there was an increase of $354,876 of real estate taxes collected and an increase of $551,677 in public utility personal property tax revenue, which is attributed to the recent changes in federal tax law that prompted some taxpayers to prepay their property taxes for 2018 in December This also resulted in increases of homestead and rollback revenue and revenue from the Joint Financing District that is reflected in Other Revenue. The second factor is a substantial one time increase in Medicaid revenue. The district received Medicaid cost report settlements from FY2011, FY2012, FY2013, FY2014, and FY2015 totaling $671,468. Only $486,000 was projected to be received in the October 2017 forecast. When comparing the expenditure projections, there were minimal adjustments from the October 2017 forecast. The District experienced a reduction in its community school deduction of approximately $250,000 since the October 2017 forecast. This is attributed to the abrupt closing of the Electronic Classroom of Tomorrow (ECOT) in January This makes up the majority of the $338,210 reduction in purchased services. Supplies were reduced by $75,848 based on current spending trends. 22

23 Actual FORECASTED Fiscal Year: Revenue: General Property Tax (Real Estate) 22,589,528 25,742,704 27,397,001 28,207,517 28,476,860 28,799, Public Utility Personal Property 1,420,598 2,104,217 1,182,537 1,778,878 1,825,409 1,871, Income Tax Unrestricted Grants-in-Aid 9,125,898 8,871,076 8,806,759 8,386,657 8,383,632 8,380, Restricted Grants-in-Aid 425, , , , , , Restricted Federal Grants - SFSF Property Tax Allocation 3,690,838 3,497,941 3,547,915 3,601,161 3,635,680 3,676, All Other Operating Revenues 3,954,237 5,130,370 4,308,218 4,115,016 4,063,792 4,013, Total Revenue 41,206,616 45,812,562 45,696,304 46,530,933 46,815,343 47,158,906 Other Financing Sources: Proceeds from Sale of Notes State Emergency Loans and Adv Operating Transfers-In Advances-In 45, , All Other Financing Sources 82, , Total Other Financing Sources 127, , Total Rev & Other Sources 41,334,354 46,507,435 45,696,304 46,530,933 46,815,343 47,158,906 Expenditures: Personnel Services 21,884,160 22,686,285 23,448,190 24,215,371 25,098,076 26,018, Employee Benefits 8,902,180 9,203,264 9,740,980 10,311,885 10,936,759 11,605, Purchased Services 9,623,400 9,639,608 10,010,273 10,271,165 10,537,331 10,806, Supplies and Materials 1,295,052 1,323,741 1,401,834 1,434,782 1,468,557 1,501, Capital Outlay 90,042 61,559 62,790 64,045 65,326 66, Intergovernmental Debt Service: Principal-All Years 48, Principal - Notes Principal - State Loans Principal - State Advances Principal - HB264 Loan - 50,736 52,603 54,539 56,546 58, Principal - Other Interest and Fiscal Charges 31,296 29,492 27,590 25,619 23,575 21, Other Objects 461, , , , , , Total Expenditures 42,335,969 43,497,347 45,199,784 46,842,555 48,706,153 50,564,503 Other Financing Uses Operating Transfers-Out 9, Advances-Out 137, , All Other Financing Uses Total Other Financing Uses 147, , Total Exp and Other Financing Uses 42,483,074 43,872,347 45,199,784 46,842,555 48,706,153 50,564, Excess of Rev Over/(Under) Exp (1,148,720) 2,635, ,520 (311,622) (1,890,810) (3,405,596) Cash Balance July 1 (No Levies) 6,516,309 5,367,589 8,002,676 8,499,196 8,187,574 6,296, Cash Balance June 30 (No Levies) 5,367,589 8,002,676 8,499,196 8,187,574 6,296,764 2,891, Estimated Encumbrances June , , , , , , Reservations Subtotal Fund Bal June 30 for Cert of App 4,984,163 7,602,676 8,099,196 7,787,574 5,896,764 2,491,168 Rev from Replacement/Renewal Levies & Income & Property Tax-Renewal Cumulative Balance of Levies Fund Bal June 30 for Cert of Obligations 4,984,163 7,602,676 8,099,196 7,787,574 5,896,764 2,491,168 Revenue from New Levies & Income & Property Tax-New Cumulative Balance of New Levies Unreserved Fund Balance June 30 4,984,163 7,602,676 8,099,196 7,787,574 5,896,764 2,491,168 23