Financial Readiness for Board Members

Transcription

1 Financial Readiness for Board Members OSBA Board Leadership Institute Matt Bunting & Mike Sobul, Consultants May 1, 2015 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 1

2 Introduction An overview of your fiscal conditions What questions are being asked by your residents Being ready to answer these questions Financial implications of the competing state aid formulas PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 2

3 Financial Readiness: The School Budget Report Card Balanced Budget Analysis, Financial Forecast as of October 2014 Do Projected Revenues Exceed Expenditures? FY 2017 General Fund, Advances, + Renewal Levy Amounts 1. Yes, by 0.43% Your FY 2017 Cash Balance Decreases $114,552 Millage Shortfall: 0.27 District financial stability improves when expenditures are in balance with revenue. Look forward two years to reveal the balanced budget trend. Note: Analysis excludes advances in and out, includes renewal Are Cash Reserves Adequate as a Percent of Budget? FY 2017 General Fund Line 7.02 Cash Balance w/ Levy Renewals For cash stability trend compare the rate of 2. % of Budget 17.75% shortfall or surplus with the cash balance. Budget $26,884,731 F.Y Shortfall ($114,552) Cash Reserves $4,772,408 No Renewal Levies through FY 2017 F.Y Shortfall ($782,467) PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 3

4 Expenditure Analysis Expenditure Analysis How Do Expenditures Compare to Similar Districts? 2014 Per Pupil Expenditures All Funds $10, Less, % of Avg % 5 Most Similar District Average $10,770 How Have Expenditures Changed? Per Pupil All Funds FY 2009 FY Average Annual % 1.81% Consumer Price Index '09 ' % Comparable district expenditures can provide a benchmark on cost, especially when compared to another benchmarks such as Consumer Price Index (CPI). Student enrollment trends are an indicator of staffing needs. If staffing levels change disproportionate of enrollment, then services can suffer, or budgets can be busted. How Does Your Certified Staffing Compare? FY 2014 Certified Staffing Levels District Data Change 5. Staffing Greater by: 1.60% EFM (Head Cnt) Enrollment 2, , % Students Per Certified Position (FTE) 230 Code Reg Teacher (FTE) % Similar District Average: 16.9 Students / Regular Teacher Does Your District have Capital Funds Available? Capital $ As % of General Fund Budget FY 2014 Average Annual: Gen Fund Capital Exp (3Yr Avg.) FY 2014 $49, % of Budget 3.94% PI Levy $892,908 5 Most Similar District Average 2.03% Average Annual Capital As % of Gen Fund Budget $942, % PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 4

5 Resource Analysis Resource Analysis How Much of Your Revenue is from State Basic Aid? FY State Rev % Higher levels of state funding dependency can be indicative of resource constraints on a schools' programs and services. What is Your Local Taxpayer Effort Comparison? FY 2014 ODT Methodology Available local tax revenue capacity, if authorized by voters, enables a district to offer additional services to children. 8. Effort 65% State Average Taxpayer Effort 100% Similar District Effort 67% Local taxpayer effort can be an indication of untapped potential, or already high levels of local taxpayer support. What is Your Tax Millage Rate Equivalency? Tax Year Effective Class I Millage (All) Millage Income Tax Millage Equiv.(001) Most Similar District Average Total Millage Equivalent Note: Includes Operating, PI, Bond, and Income Tax equivalent PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 5

6 What Should Board Members Be Asking? What is the current status of the district s finances? Where are your current spending patterns taking you? How long can resources maintain our spending patterns? Pay attention to Line 6.01 Income and Expenses PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 6

7 Line 6.01 and Cash Balance Income and Expense Simplified Statement Projected Fiscal Years GRANVILLE EXEMPTED VILLAGE SCHOOL DISTRICT Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Beginning Balance 2,736,341 4,568,924 5,089,705 4,938,263 3,921,492 + Revenue 26,620,356 26,590,361 26,795,943 27,102,557 27,152,700 + Proposed Renew/Replacement Levies + Proposed New Levies Expenditures (24,787,773) (26,069,580) (26,947,386) (28,119,327) (29,185,689) = Revenue Surplus or Deficit 1,832, ,781 (151,442) (1,016,771) (2,032,988) Ending Balance 4,568,924 5,089,705 4,938,263 3,921,492 1,888,504 Revenue Surplus or Deficit w/o Levies 1,832, ,781 (151,442) (1,016,771) (2,032,988) Ending Balance w/o Levies 4,568,924 5,089,705 4,938,263 3,921,492 1,888,504 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 7

8 Are You Ready to Answer These Questions? Why does the district spend so much money? Teachers and administrators are overpaid and there are too many of them! And why are you always asking for more money? What is going on with state aid? PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 8

9 Why so much Spending? PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 9

10 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 10

11 What About Teachers and Administrators? PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 11

12 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 12

13 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 13

14 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 14

15 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 15

16 PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 16

17 Overall Expenditures and Revenues PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 17

18 Why Are You Always Asking for Levies? PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 18

19 The Current Formula PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 19

20 The Current Formula PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 20

21 The Current Formula PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 21

22 Valuation Statewide 3-year average valuation for FY 2016 will be a net decline of 1.4 percent Districts with significant levels of Current Agricultural Use Valuation will see sharp increases in average valuation PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 22

23 Valuation Both the current formula and the Governor s proposal determine the local share of funding based on relative wealth Districts with sharp increases in agricultural value will be getting relatively wealthier, increasing the local share of funding and decreasing the state share under either formula PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 23

24 The Governor s Proposal Uses the same base formula as the current model, but some significant changes Changes how the median income factor is used Increases the base per pupil amount by $100 per year Introduces a percentage of total resources phase-out of the guarantee Sets the cap growth at 10 percent each year Restarts the phase-out of Tangible Personal Property reimbursements PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 24

25 The Governor s Proposal Median Income in Lower Wealth Districts Districts with Valuation per Pupil at Least 20% Below the Statewide Average State Share Index (SSI) Change Relative to FY 2015 Higher SSI means more state aid and lower SSI means less state aid. The formula structure causes the shifting up and down relative to 2015 under the current formula PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 25

26 The Governor s Proposal Median Income in Higher Wealth Districts The Incorporation of the Income Index is Phased-in over 5 Years Administration Printouts Show Only the First Two Years PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 26

27 The House Substitute Proposal Local share is based on a charge-off for the calculation of core aid (based on a % of valuation) The charge-off is variable based on relative median income and ranges from about 10.5 mills to mills in 2016 and mills in 2017 The guarantee for the biennium is at the 2015 funding level for both FY16 and FY 17; the cap growth is 7.5 percent per year The TPP phase-out is the same as in the Governor s proposal There is a temporary law guarantee that prevents districts from losing money when combining the reimbursement with state aid PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 27

28 The House Substitute Proposal One component has been added to Targeted Assistance Capacity aid would go to districts with tax yield per mill that is below the statewide median yield per mill This aid is aimed at smaller and less property wealthy school districts There is an additional component outside the formula for districts that receive a core aid amount that is less than 20 percent of the base per pupil funding amount ($1,180 in FY 2016) This targets very high wealth districts PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 28

29 Impact of the House Proposal In FY 2016, 498 districts would see additional resources through the funding formula That number drops to about 430 districts when the TPP phase-out is taken into account PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 29

30 What to Put in the 5-Year Forecast PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 30

31 What to Put in the 5-Year Forecast PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 31

32 What to Put in the 5-Year Forecast PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 32

33 Key Points to Take Away You and your CFOs may have difficult choices to make about state aid and TPP assumptions for your five-year forecast Understanding key spending and revenue data will help you be ready to discuss financial issues and answer tough questions about how and why you spend your resources PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 33

34 Additional Resources Financial Readiness for Board Members (Top Story) Financial Readiness Report Card Financial Readiness Benchmark Indicator Currently health insurance cost per pupil Will be updated periodically Interested in current updates, follow us at: PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 34

35 The Public Finance Resources Team Matt Bunting, Consultant, has over 25 years of experience in the public finance sector. This includes 15 plus years as a school district treasurer, and 11 years with the Auditor of State where he led financial, legal compliance, and Federal single audits of government entities. Matt has served as interim school treasurer several times, as well as worked with Ernie and Stacy to test their forecasting software and instruct at their yearly seminars. He holds an Associates Degree in Accounting from Hocking College, and is a Certified Government Financial Manager. Ryan Ghizzoni, Consultant, began his career with the Auditor of State s Office and has served as a school district treasurer for the past 10 years. During his career, he has been the recipient of six Association of School Business Officials International Meritorious Budget Awards and was the recipient of the Ohio Association of School Business Officials 2011 Outstanding Treasurer of the Year Award. Ryan holds a Bachelors of Business Administration from the Youngstown State University, and is a Certified Administrator of School Finance and Operations. Debra Hoelzle, Chief Operations Officer, provides direct services to clients, and oversees the day-to-day operations of PFR. She brings with her operational experience from both the public and private sectors, including a school district and multiple corporations in the financial services industry. Debra holds her Masters of Business Administration from Ohio University, and her Bachelors of Science in Business Administration from The Ohio State University. Stacy Overly, Consultant, provides direct financial services to clients. He has over 20 years of experience serving as school district treasurer, including 15 plus years of developing financial forecasting tools, and providing instruction and training opportunities attended and used by over two hundred of Ohio s public school treasurers. Stacy works with clients to analyze trends and review local economic data to help determine a long-term operating strategy for the organization. He holds his Masters of Business Administration and his Bachelors of Business Administration in Finance from Ohio University. Mike Sobul, Consultant, brings 30 years of experience in public finance and tax analysis. Currently a school district treasurer, Mike spent nearly 25 years with the Ohio Department of Taxation where he led revenue forecasting efforts and provided analysis, training, and fiscal services to schools and local governments. Mike holds a Masters Degree in Public Policy from the University of Michigan and a Bachelors Degree in Economics and Political Science from Wittenberg University. Ernie Strawser, Consultant, provides direct services to our public finance clients. He has over 30 years of public finance experience as a CFO, consultant, and developer and instructor of financial forecasting techniques and tools which have been used by over two hundred Ohio school district CFOs. Ernie works with clients to facilitate their understanding of local financial results, trends, and strategies. He holds both a Masters of Science in Administration from Central Michigan University and a Bachelor of Science in Finance from Ohio University. PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 35

36 Services Five Year Forecast Software More than a compliance document Cash flow monitoring Modeling scenarios Graphics and dashboards Planning tool Consulting Maximize your effectiveness Financial consulting and cash flow monitoring Forecast review and analysis, what if planning Presentations to key stakeholders Special Projects Data Interpretation Data driven decision making Multi-year data sets to identify trends Benchmark analysis reports to see how you compare Graphics that are easy to read, understand and explain Data driven decision making PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 36

37 PFR Contact Information Ernie Strawser Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH Phone: Debra Hoelzle Chief Operating Officer Public Finance Resources, Inc. PO Box 1822 Columbus, OH Phone: PUBLIC FINANCE RESOURCES: EMPOWERING THE PUBLIC'S FINANCIAL LEADERS 37