MILFORD EXEMPTED VILLAGE SCHOOL DISTRICT FISCAL YEAR 2014 FIVE-YEAR FORECAST ASSUMPTIONS

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1 The Ohio Department of Education (ODE) requires the submission of a five year forecast of revenue and expenditures for the general operating fund of public school districts which is legally adopted by the Board of Education. This submission is required by October 31 st of each fiscal year beginning July 1 st with a revision submitted prior to May 31 st of each fiscal year. This forecast is submitted in order to meet the May requirement. Beyond meeting ODE s mandate, the five year forecast is an important planning tool for the district s Board of Education and administration. It is used to identify and to prepare for future funding issues of the district in support of inspiring and preparing our students to reach their fullest potential in a diverse and dynamic world. This forecast is also utilized in meeting the district s strategic priority to respect the investment of taxpayers by providing responsible management of resources as we continue our commitment to student success. This forecast is submitted reflecting the impact of the State s biennium budget, HB59, and the district budget. The district will continue to monitor and adjust its forecast for future years as additional information becomes available, including changes to the district s tax base, state funding changes and costs to implement State mandates. Figures in this forecast were based on data which is in a constant state of flux. Events occur and decisions are made regularly that will alter this forecast some of which are material, others which are not. Such decisions are in the control of federal officials, state officials, legislators, and others with legal authority to mandate activities, actions and programs within the School District. For example, State budgets are adopted on a twoyear cycle, no reasonable assurance can be given that a five year forecast projection of State funding will bear any resemblance to reality. Therefore, financial forecast documents must be viewed and interpreted as dynamic documents. It is inevitable that no forecast number will be exactly right but the trend may certainly be relied upon. This forecast will continue to change as events occur and decisions are made; it is as dynamic and changing as the students whose education is entrusted to the Milford Exempted Village School District. REVENUES Line 1.01 General Property Taxes Due to the generosity of the Milford community, the May 7, 2013, 4.5 Mill levy passed generating additional property tax income from first half collections in 2014 and an estimated $3.9 million annually to begin in FY15. The forecast has been adjusted based on Clermont County Auditor s most recent certification. Projected real estate revenue is flat through Milford has realized some impact of the recession on its tax base including a reduction in the district s total valuation as a result of the reappraisal and requests for valuation reductions. We will continue to work with the county auditor s office to monitor property values and collections and the impact on the district s financial status. Current Agriculture Use Value (CAUV) tax is calculated as such: Income from Agricultural Production minus (-) non-land production costs divided (/) by the capitalization rate. In recent years, the average crop prices used in CAUV calculations have generally increased at a greater rate than the corresponding production costs. This translates to a larger projected net income per acre. At the same time, lower interest rates led to a decrease in the capitalization rate. A higher net income divided by a lower capitalization rate equals an increase in CAUV land values. CAUV experienced a 238% valuation adjustment thus increasing CAUV tax collections for FY 13 and thereafter.

2 Line 1.02 Tangible Personal Property Taxes MILFORD EXEMPTED VILLAGE SCHOOL DISTRICT House Bill 66 eliminated tangible personal property tax on machinery, equipment and inventory used by businesses in the state of Ohio. This change is seen as an opportunity to promote economic development in Ohio. This source of income is eliminated by FY 2010 with the exception of a small amount received for telecommunications due to payments of delinquent TPPT. Line 1.03 Income Tax The District does not have an Income Tax. Line Unrestricted Grants-in-Aid For FY12 and FY13, the state used a temporary bridge formula which funded on a per pupil basis. State support for fiscal years has been calculated using the state funding formula, Governor Kasich s Achievement Everywhere Budget. This budget released September, 2013 is based on HB59. The FY14 funding is calculated separately by each of the following categories: Opportunity Grant Targeted Assistance K-3 Literary Funding Economic Disadvantaged Funding (Poverty Assistance) Limited English Proficiency Funding Gifted Education Funding Transportation Funding Special Education Additional Funding Career Tech Education Funding Total Foundation Funding before guarantee Transitional Aid Guarantee Preschool Special Education Funding Special Education Transportation Funding The cumulative total the District will receive in FY14 is an estimated $17,775,000. As per ODE, funding for FY15 will be $18,980,000. The FY15 funding amount is maintained in future forecast years. Line 1.04 Restricted Grants-in-Aid This line item represents the amount of the reimbursements received for catastrophic special education costs and miscellaneous receipts and reimbursements. FY13 State budget was $10 Million. The FY14 State budget is $40 million but other districts may now file reducing the amount available in the pool. We anticipate funds to diminish as more apply. There is no guarantee this will be available in the future.

3 Line 1.05 Property Tax Allocations MILFORD EXEMPTED VILLAGE SCHOOL DISTRICT The State provides reimbursement to the District for property tax relief given to residential taxpayers through the Homestead & Rollback program as well as reimbursement for Tangible Personal Property Taxes (TPPT) lost. It includes the state hold harmless payment related to the elimination of tangible taxes for years FY 2006 and thereafter. Due to the hold harmless payment each year beginning in FY12 the district lost approximately $1.1 million in TPPT reimbursement in FY12 and an additional $1.1 million for an annual loss of $2.2 million in FY13. The phase out has been suspended, and based on this change Milford will maintain $455,000 in ongoing reimbursement, instead of a complete phase-out, through FY15. Line 1.06 All Other Revenue Other local income includes investment income, tuition from other districts, rental of school facilities, donations, open enrollment, Tax Increment Financing (TIF) payments, student fees and other miscellaneous revenues. The collections from the Union Township TIF began in FY12. The district also receives TIF funding from Miami Township and the City of Milford. In FY13 the district received the first casino money promised by the state ($136,000). In FY14 additional casinos opened thus increasing distributions to school districts statewide. MEVSD received $340,000 in casino money. Interest rates have dropped to an historic low which has greatly impacted the district s investment income included in this category. Line 2.04 Operating Transfer-Out This reflects FY14 Board approved transfer from the General Fund to the Building Fund to cover the cost of potential LFI for the two Elementary Buildings through the OFCC. Line 2.06 All Other Financing Sources Milford is one district within the SWOOSH Health Care Consortium. This consortium promises wellness funds to be used as incentives for health improvement practices. The number of employees involved dictates the funds awarded. This particular line item for FY14 was a reimbursement of a prior year expenditure which SWOOSH refunded in the current year.

4 EXPENDITURES Line 3.01 Personal Services Staffing is based on the current levels with growth based on related annual enrollment increases or decreases. The personnel changes listed below include the total cost of the respective position, which includes all associated benefits. Classroom size dictated additional teachers in 4 th grade. The MEA and MCEA contracts were extended through 2014 with a waiver of raises and increments in Due to a rough winter there were increases in personnel services for overtime. The district also recalled previously RIF d custodians and saw an increase in aides as was dictated by the students needs. The personnel services have been adjusted to reflect a two percent (2%) increase for steps for FY The district is currently in negotiations with the MEA and MCEA. These adjustment will be included in the October 2014 Forecast. Personnel changes as needed for FY are noted below: Personnel changes for FY2015 Personnel changes for FY2016 Personnel changes for FY2017 Personnel changes for FY Special Education 179, High School 538, Elementary 179,520 Total $ 897, Teachers 274, Aides 68,666 Total $ 343, Teachers 280, Aides 70,037 Total $ 350, Teachers 285, Aides 71, ,201

5 Line 3.02 Employees Retirement/Insurance Benefits MILFORD EXEMPTED VILLAGE SCHOOL DISTRICT Benefits are projected using two categories. The first category, retirement benefits and Medicare, is included at the current employer contribution level of 14% and 1.45% respectively of salaries through FY18. The second category includes health care insurances that are based on demographic enrollments and rates. Health insurance has been projected at thirty-two percent (32%) increase for FY2014, ten percent (10%) increase for FY 2015 and each year thereafter. The district joined SWOOSH FY12 in hopes of allowing the district to keep insurance costs steady opposed to fluctuating with a direct correlation to claims. This change will have a positive long-term impact on the cost of employee benefits for the district. Insurance coverage and practices are in the midst of an overhaul nation-wide National Health Care effective 1/1/14 and estimated rates for FY 14, though high are reasonable. SWOOSH will be switching from fully-insured to self-insured on 1/1/2015. A reserve is necessary for this process. This figure for 2014 has been adjusted accordingly. Dental insurance has been increased at an annual rate of three percent (3%). Also included here are unemployment and tuition reimbursement which were held constant. The district elected to manage worker s compensation through self-insurance beginning in 8/1/2014 with an anticipated savings to the district. This savings was realized and is anticipated to continue this trend. There was also an increase in staff retirement FY13 with severance to be realized in FY14. Also, teachers will see a 1% increase in their individual portion to STRS for the next 4 years. This will cause them to have to pay from the current rate of 10% up to the new STRS requirement of 14% rate by FY17. Line 3.03 Purchased Services Purchased Services projections are based on increases in building space and inflation. The major items included in Purchased Services are maintenance costs, utilities, contracted services, professional meeting expenses, property and vehicle insurance, student transportation services, tuition to other districts and communication expenditures. Projections are increased at the rate of four percent (4%). FY14 experienced a large increase due to hiring the Hamilton County Educational Services, Council of Governments (COG) to provide all substitute teachers. Since we now contract for these services, we have been able to decrease our line item for personnel services.

6 Necessary building maintenance for the district is evaluated each year. The five year maintenance plan is as follows: Fiscal Year Miami Boilers 75,000 Theater Sound System 24,000 Total Maintenance $ 99,000 Computer MHS 17,000 6 wd Utility Vehicles 12,000 Mower 15,000 Total Capital Outlay $ 44,000 Total Fiscal Year $ 143,000 Fiscal Year District Roof repairs 35,000 Upgrade Fire Alarm at High School 75, Batwing 10,000 Windows at High School 60,000 Maintenance Building 25,000 Total Maintenance $ 205,000 Van 30,000 Drainage Issues at Baseball Area 30,000 Pick Up Truck 35,000 HVAC Equipment Replacement 50,000 Total Capital Outlay $ 145,000 Total Fiscal Year $ 350,000

7 Fiscal Year MJHS Roofing Needs 90,000 Asphalt Patching Across District 40,000 Elementary Gym Lights 40,000 Total Maintenance $ 170,000 Energy Savings Initiatives (VFD s etc) 20,000 Pick Up Truck 35,000 HVAC Equipment Replacement 50,000 Total Capital Outlay $ 105,000 Total Fiscal Year $ 275,000 Fiscal Year Windows at High School 40,000 District Roofing Needs 50,000 Asphalt Patching Across District 40,000 Elementary Gym Lighting 40,000 Total Maintenance $ 170,000 Energy Savings Initiatives (VFD s etc) 20,000 Vehicle Equipment Needs 35,000 HVAC Equipment Replacement 50,000 Total Capital Outlay $ 105,000 Total Fiscal Year $ 275,000

8 Fiscal Year District Roofing Needs 50,000 Asphalt patching across District 40,000 Elementary Gym Lights 40,000 Total Maintenance $ 130,000 Energy Savings Initiatives (VFD s etc) 20,000 Vehicle Equipment Needs 35,000 HVAC Equipment Replacement 50,000 Total Capital Outlay $ 105,000 Total Fiscal Year $ 235,000 Line 3.04 Supplies and Materials Supplies and Materials projections are based on inflation estimated at three percent (3%). Supply expenditures include instructional materials such as textbooks, software, and technology in the classrooms and throughout the district and custodial supplies and fuel for buses. Purchasing of Science textbooks has been delayed so the budget for those textbooks has been shifted from FY14 to FY15. Textbook needs are as follows: FY2014 English Language Arts, 300,000 Art, Music, World Language FY2015 Math and Science 1,160,000 FY2016 Social Studies 480,000 FY2017 World Language, Health, PE, 450,000 ½ ELA JH & HS FY2018 English, Language Arts 450,000

9 Line 3.05 Capital Outlay This area is primarily used to fund equipment purchases from building and departmental budgets. Capital outlay expenditures such as roof replacement, vehicle replacement, etc. have been accounted for through the permanent improvement fund, but with the recent resolution passed to move ½ mill from Permanent Improvement Fund to Classroom Facilities Maintenance Fund for OFCC Projects, General Fund and Permanent Improvement Fund expenditures and for capital outlay may gradually increase until all buildings in the master plan are complete. The district also needs to maintain current technology, and would like to expand in the future. This is also a very costly item that is being reviewed on an ongoing basis. Needs are as follows: FY ,000 FY ,000 FY ,500 FY ,500 FY ,000 Line 4.05 HB 264 This area includes principal and interest payments on debt issued to fund energy conservation projects. Savings in operational and utility costs were utilized to fund the debt. As of FY14, this is now paid in full. Line 4.06 Interest and Fiscal Charges Interest incurred on the HB264 Loan mentioned on line Line 4.30 Other Objects This area includes such items as auditor and treasurer fees paid to the County Auditor, membership fees, liability insurance and fees for the annual district audit Estimated Encumbrances Two areas of the budget are currently reserved. The first is encumbrances, i.e. funds set aside for payment of goods or services ordered but not yet received at the end of the fiscal year. Any increase in this line item would result in an offsetting decrease in the actual cash expenditures listed in lines 5.01 to 5.05 and would therefore not effect the ending cash positions in any year. Line 9.03 Budget Reserve This line item represents the amount required to be set aside for budget stabilization per House Bill 412. Senate Bill 345 eliminated the requirement for school districts to maintain a budget reserve.

10 Special Notes: The district was awarded the Auditor of State Award from the Ohio Auditor of State, Dave Yost. This award is given to those entities that file timely financial reports in accordance with GAAP, as well as receive a clean audit report. As stated on the letter from Dave Yost, Auditor of State, the clean audit report means that our financial audit did not contain findings for recovery, material citations, material weaknesses, significant deficiencies, Single Audit findings or any questioned costs. The district was recognized with a letter from Senator Keith Faber on behalf of the members of the Ohio State Senate congratulating Milford on receiving an Auditor of State Award. The letter stated the district has been presented with this prestigious honor in recognition of its timely, accurate, and comprehensive financial statements. It continued to state the district has certainly proven itself to be fiscally responsible, and through unfaltering commitment, it has earned the respect and appreciation of many. The district was reviewed during the annual Audit FY13 concerning the student data reported to the Ohio Department of Education. There were no problems noted with the District s student enrollment reporting to the Ohio Department of Education. Summary Disclaimers Professional Diligence Notice and Disclaimer: Reasonable professional diligence and care has been exercised in the preparation of this forecast. It is a public record pursuant to Ohio law. Public dissemination is required by State law and enabled by Resolution of the Milford Exempted Village School District Board of Education. A variety of sources and methods are used to develop the forecast data. Various assumptions and projections are employed in developing the data that may or may not be timely, accurate, complete or correctly interpreted. All forecast data is subject to change or correction at any time without notice. If any notice is subsequently provided, such notice may be limited to the filing of a revised forecast within the parameters of the statutory filing schedule. This forecast document is designed solely to provide a general indication of the probable future financial position of the Schools District based on information currently available to the School district. The legitimacy or accuracy of any specific assumption, number or the forecast total, while deemed reliable, can not be guaranteed. In many cases, a relatively small change in one forecast number will have the effect of materially changing forecast data and trends, positive or negative. Therefore, professional discretion, diligence and caution are required when using and interpreting forecast information. Current fiscal year forecast data does not necessarily reflect current School District appropriations, budgets, certifications or other data maintained in the files of the School District, including the Office of the Treasurer of the Board of Education. Future forecast fiscal year data in compiled from public sources to the extent possible and reasonable. Historical data is based on fiscal year end data filed by the Treasurer of the Board of Education. Questions from the community and other users of this data are encouraged. The contact person is Deborah Caudle, Treasurer, Board of Education.