LAKEWOOD CITY SCHOOLS

Transcription

1 LAKEWOOD CITY SCHOOLS Financial Forecast and Summary Report May 2017 Kent R. Zeman, CPA CFO/Treasurer In Collaboration with: Lakewood Board of Education Members Mr. Jeff Patterson, Superintendent Administrative Team Members

2 FIVE YEAR FORECAST ASSUMPTIONS REVENUE ASSUMPTIONS SOURCES of REVENUE and ANNUAL CHANGES Operating Revenue Summary Lakewood City School District PUPP PUPP Real Estate ######### ######### ######### PUPP Real Estate PUPP 1,391,727.75Income Real Estate 1,735, ,779, Income Real Estate 56% Income Tax - Tax 56% - Tax 57% - Income 0% Unres Aid ######### ######### 0% Tax ######### 0% Res Aid 548, Unres Aid 1,100, Unres Aid 1,115,162.98Unres Aid Prop Tax Allo 4,753, % 5,093, % 5,110, % All Other Rev 4,741, ,548, ,562, All Other Rev 8% Prop Tax Alloc 7% Res Aid All Other Rev 8% Prop Tax Alloc 7% Res Aid All Other Rev 8% Prop Tax Alloc 7% Res Aid As the chart above illustrates the District derives 81% of its revenue from Real Estate (56%) and Unrestricted State Aid (25%). Historical and forecasted percentages are not materially different. The District will continually rely on the local community to support the educational programs of the Lakewood City SD. SOURCES of PROPERTY TAX VALUATIONS As seen above 80% of all property tax revenue is derived from the residents of the community with the remaining 20% coming from various sources.

3 Property Taxes (Line 1.01) Property tax revenue estimates are based upon historical growth patterns, including collections, scheduled updates and reappraisals, and are substantiated by information provided for the upcoming fiscal year from the county auditor. Lakewood City S.D. property valuation for calendar year 2015 (collected and paid in calendar year 2016) is $859,479,080 an increase of 6.7% over calendar year The revaluation and triennial update are scheduled for calendar year 2018 and 2021 respectively. The current economic conditions warrant a more conservative expectation on growth; therefore, the district is now forecasting flat growth in new construction for valuation adjustments for calendar year 2016 and thereafter. The District successfully passed a 3.9 mill continuing operating levy on the ballot in May The levy will generate approximately $3.2 million dollars per year. Historical Valuation Calendar Year Valuation Percentage Change ,897, ,653, % ,334,227 (0.10)% ,833,373 (0.24)% ,027, % ,801,226 (0.32)% ,657,430 (0.44)% ,555,410 (5.62)% ,715,550 (0.07)% ,579,690 (0.86)% ,296,680 (5.30)% ,562,200 (0.08)% ,735, % ,479, % ,369, % Personal Tangible Taxes (Line 1.02) The phase out and eventual elimination Tangible Personal Property Tax (TPPT) as a result legislation (HB 153 was adopted in 2011) will have a negative impact on the district. All three components inventory, machinery, and equipment, furniture, and fixtures have been phased during calendar year , without providing reimbursement to schools during the phase out period.

4 Unrestricted Grants-in-Aid (Line 1.035) During the fiscal year ended June 30, 2016, the School District received $17,632,380 of school foundation support for its General Fund. The district anticipates receiving $17,619,460 in fiscal year 2017, a slight decrease in state funding. The District is experiencing stable to slightly decreasing student enrollment which is reflected in the flat revenue growth. The State funding formula for schools is based on several factors all of which are subject to the deliberations and approval of the Ohio General Assembly. The decrease noted above may (and probably will) change as the legislatures work through the budget process. Restricted Grants-in-Aid (Line 1.04) Revenue from restricted grants-in-aid should remain flat based upon historical trends and/or other indicators included in new legislation. Currently, only the economically disadvantaged and career/tech ed funding amounts are included in this line item. Property Tax Allocation (Line 1.05) Revenue from property tax allocation is based upon the property tax receipts and the growth/decline is reflective upon the property tax assumptions. The revenue generated in this line item is for rollback and homestead reduction payments that the state of Ohio makes on behalf of local residential taxpayers. Internal Transfers and Advances (Line 1.06) Revenues generated from internal advances and transfers are based upon historical patterns. There are no forecasted internal advances or transfers. All Other Sources (Line 2.07) Revenues from all other sources are based on historical patterns. Other sources mainly include tuition charged to other districts for career technical education services, student fees, and investment earnings.

5 EXPENDITURE ASSUMPTIONS TYPES OF EXPENDITURES Operating Expenditure Summary Lakewood City School District Salaries ######### ######### ######### Benefits ######### ######### ######### Purch Serv 9,306, Benefits Benefits Benefits ######### ######### Salaries 20% Salaries 20% 21% Salaries 60% Supp & Mat 1,205, % 2,081, ,420, % Capital Outlay 625, , , Other Exp 1,019, Purch Serv Purch Serv 1,177, ,286,588.25Purch Serv 14% 15% 14% Other Exp Capital Outlay 1% Supp & Mat 3% Other Exp 1% Capital Outlay 1% Supp & Mat 3% Other Exp Capital Outlay 1% Supp & Mat 3% Personal Services and Employees Benefits (Lines 3.01 & 3.02) Expenditures for personal services and employee s benefits make up 80% of the total expenditures and are based on negotiated agreements and historical patterns. The current certified staff agreement is in effect until July 31, The current classified agreement(s) are in effect until July 31, Indicators included in these assumptions include: impact on staffing needs, retirements, normal turnover, and insurance premiums increases. The Lakewood City SD is not forecasting the need for additional staffing for the life of the forecast, however, student requirements and state initiatives may create the need for additional staffing in future years. Purchased Services (Line 3.03) Expenditures for personal services are based upon historical patterns and other indicators included in new legislation. Indicators included in these assumptions include costs to other districts for special education tuition, utility needs, repairs, and professional leave reimbursements. Special education costs and utility costs continue to be an ongoing fiscal challenge. Supplies and Materials (Line 3.04) Expenditures for supplies and materials are based upon historical patterns and other indicators included in new legislation. Indicators included in these assumptions include textbook adoptions, technology iniatives, and instructional programs. Curriculum adoptions average $500,000 per year and are anticipated through the life of the forecast beginning in fiscal year 2015.

6 Capital Outlay (Line 3.05) Expenditures for capital outlay are based upon historical patterns and other indicators included in new legislation. Indicators included in these assumptions include vehicle and bus replacement and phone system replacement. In FY 16 the District spent over $500,000 on technology upgrades and new equipment, we anticipate spending that amount annually through the remaining years of the forecast. Other Objects (Line 4.30) Expenditures for other objects are based upon historical patterns and other indicators included in new legislation. Indicators included in these assumptions include changes in county auditor & treasurer fees. Advances and Transfers Out (Lines 5.01 & 5.02) Expenditures for advances and transfers are based upon historical patterns and other indicators included in legislation.

7 SUMMARY REVENUE, EXPENDITURES and CASH BALANCE Operating Revenue and Expenditures & Year End Fund Balance Lakewood City School District $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $ Total Revenue Total Expenditures Cash Balance June 30 ACTUAL FORECASTED Total Revenue 68,864,813 70,578,992 72,158,297 71,911,617 72,148,204 72,098,047 72,054,949 71,931, Total Expenditures 67,408,678 68,372,029 68,236,302 70,872,450 72,630,296 74,338,428 76,578,793 78,865, Cash Balance June 30 22,007,845 24,214,808 28,136,803 29,175,971 28,693,879 26,453,498 21,929,654 14,995,895 The information provided above, combined with the information provided on the forecast, are used as a tool to assist the District in determining short and long-term needs. The two documents directly affect each other, in that as the assumptions discussed are modified, they directly affect the forecasted dollar amounts represented. Similarly, as the forecasted dollars are modified, the assumptions that are linked to the amounts must also be updated to reflect the change. Also, as the reader reviews the information on the forecast document, the line items that are most crucial to understand are lines Excess of Revenue over Expenditures and Cash Balance. The school funding cycle is best represented by line In the first few years following the passage of a new levy the District will see a positive cash flow represented by revenues exceeding expenditures, however, as the dollars received from the levy remain constant and the cost of the delivery of the educational process increase due to inflation, staffing needs, and other economic factors, the District will recognize an ever increasing negative cash flow represented by expenditures exceeding revenues. When looking at line on the forecast the school funding cycle is again fairly presented. The bottom line cash balance of a District will see growth immediately following the passage of a new levy, however, as mentioned above as revenues remain fixed and expenditures increase the bottom line cash balance begins to diminish. This cyclical financial structure is at the heart of the school funding dilemma.

8 Finally, if the assumptions above are realized, the Lakewood City SD will have to address the financial operating needs of the District prior to fiscal year FORECAST PURPOSE This forecast is intended to assist the school district in the financial management of its resources. The forecast will provide trend information to help in the determination of 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 in the future, rather than reaction to the past. This report includes information regarding key revenue and expenditure assumptions as well as the resulting implications. Particular attention should be given to not only the relationship of expenditures to revenue, but the rate of any adverse trend (expenditure exceeding revenue). Cash balance reserves should be recognized as the stabilizing resource that they are, rather than as a revenue source to support ongoing operations.