FINANCIAL PROJECTIONS. February 14, 2011

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1 FINANCIAL PROJECTIONS Board of Education Meeting February 14,

2 FINANCIAL PROJECTIONS ARE Both an art & a science An essential element of planning; and They anticipate future financial performance No one can predict the future 2

3 AGENDA Background Information Current Base Case Strategic Staffing Case Stagnation Case Rapid Recovery Case Conclusion Board Discussion 3

4 BACKGROUND 4

5 STRATPLAN BACKGROUND Financial Forecasting Model designed & developed by Lawrence Heidemann in the mid 90 s Independent analysis Provides an analytical focus rather than just presenting numbers Highlights strategic issues, problems and opportunities Allows for a strategic view of the District s financial future Allows for optimization of a long term strategy 5

6 BACKGROUND Why Financial Projections? Public scrutiny of financial position Current economic conditions demand Schools analyze future spending plans under various assumptions so they can Determine if spending patterns need to change to support the long-term financial strength of the district 6

7 BACKGROUND Model is flexible enough to run multiple sensitivity analysis. Each case projects the impact on the ending (aggregate) fund balances. Why STRATPLAN? Different view of financial information Current Base Case Status quo All other cases are plus or minus Strategic Staffing Case Adds undefined funding for possible program improvements for the next four-years Stagnation Case CPI-U decreased by 0.5% Budget reductions in future years Rapid Recovery Case CPI-U increased by 1.0% 7

8 BACKGROUND Information used in the STRATPLAN model can be found online at: Illinois State Board of Education Annual Financial Reports General State Aid Housing & Enrollment Financial Profile Cook County Assessed Value Tax Information Park Ridge Niles Community Consolidated School District 64 Budgets Audits Annual Statement of Publication 8

9 BACKGROUND Successful 2007 Referendum Board of Education said Absent any dire economic developments Will not approach voters again before 2017 Maintain fund balance 33 % 120 days of cash on hand 9

10 OPERATING EXPENSE PER STUDENT 16,000 14,000 $13,450 12,000 10,000 $9,822 $10, $9,667 $9,926 $9,510 $9,980 $10,754 $11,146 $12,011 8,000 6,000 4,000 2, Average Daily Attendance Operating Expense Per Student 10

11 CPI-U HISTORY December XXXX CPI-U used in Tax Cap Formula (levy year) CPI-U % % % % % 3.3% % % % % % % 11

12 CPI-U PROJECTIONS December XXXX CPI-U CPI- U CPI-U used in Tax Cap Formula (levy year) Projection January 2010 Projection January

13 SENSITIVITIES Rule of Thumb One percent in CPI is roughly equivalent to: 5 in tax rate Each 5 of tax rate is roughly equivalent to: One million in annual revenues 2 3% in salary & benefit costs Class size increment of + or one Additional 10 staff members 13

2010-11 REVENUE BUDGET Revenue - Million Dollars - by Source $0.0 Revenues - by Source $12.3 $40.6 $57.

14 REVENUE BUDGET Revenue - Million Dollars - by Source $0.0 Revenues - by Source $12.3 $40.6 $57.2 $1.1 $4.8 $1.0 Local Propery Taxes CPPRT State Federal (ex "stimulus") $6.8 $2.0 $5.3 $ % 1.5% 6.3% 1.3% 74.9% Local Property Taxes CPPRT State Federal (ex "stimulus") Misc - Fees/Interest/Other Misc - Fees/Interest/Other Property Tax Details Ed Fund O&M Fund Transportation Fund Other Funds Debt Serv Fund 14

2010-11 EXPENDITURE BUDGET Expenses - Percent - by Fund Expenses - Million Dollars - By Fund 4% 3% 3% 71% $2.53 $2.75 $2.04 $14.

48 19% Transportation Fund Debt Serv Fund Other Operating Funds Expenses - Percent - by Object Education Fund 3% O&M Fund

15 EXPENDITURE BUDGET Expenses - Percent - by Fund Expenses - Million Dollars - By Fund 4% 3% 3% 71% $2.53 $2.75 $2.04 $14.62 $ Education Fund O&M Fund $5.15 $2.53 $ % Transportation Fund Debt Serv Fund Other Operating Funds Expenses - Percent - by Object Education Fund 3% O&M Fund Transportation Fund 56% Other Operating Funds Debt Service Fund 28% Ed Fund Details Ed Salaries Ed Benefits 10% 3% Sp Ed Co-Op Ed Other Salaries Benefits Sp Ed Co-op Other Operating Expenses Debt Service 15

16 CURRENT BASE CASE 16

17 WHAT DOES THE CURRENT BASE CASE REFLECT Current conditions Does not reflect additional costs associated with program improvements All other cases add to or reduce the base case 17

18 REVENUE ASSUMPTIONS CPI 2008 Levy 4.1% 2009 Levy 0.1% 2010 Levy 2.7% 2011 Levy 1.5% 2012 Levy 1.5% 2013 Levy 2.0% 2014 Levy 15% 1.5% Pattern continues 2.0% - 1.5%... Triennial Assessment Pattern 2010 increase 10% 2011 increase 1% 2012 decrease 3% 18

19 EXPENDITURE ASSUMPTIONS Staffing reflects a stable student enrollment K 8 average class size of 24 Average base salary increase of 2.5% + step Benefits average 5% All other expenses are increased by CPI Special Education Tuition average 5% Capital $1.5 million per year ( & ) ; thereafter $1 million per year 19

220.00 200.0 180.0 NOW Bond / Indebtedness 160.0 140.0 120.0 100.0 80.

0) 07-08 08-09 09-10 NOW 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20

20 NOW Bond / Indebtedness Million Do ollars (20.0) NOW New Bond Issues Other Proceeds Legal Debt Capacity Total Debt Outstanding "New" Debt Outstanding Sales, Impact Fees, Cap Surplus 20

21 Tax Rates Dolla ars (0.250) NOW Total Tax Rate SubTotal - Capped Funds Education Fund 21

100.0 95.0 90.0 85.0 80.0 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.

0) FUND AND TOTA AL DOLLARS - ED MILLION CASH FLOWS 07-08 08-09 09-10

22 (5.0) (10.0) FUND AND TOTA AL DOLLARS - ED MILLION CASH FLOWS NOW Revenue - Total Expenses - Total 22

23 MILLION DOLLARS NOW E-O-Y FUND BALANCES (cash basis) 47.49% 46.03% 41.77% 46.86% 37.76% 43.85% 39.57% 34.58% 31.03% (5.0) NOW (10.0) Total Funds 23

360 330 E-O-Y FUND BALANCES 300 270 240 210 180 150 120 90 60 30 DAYS C ASH-ON

138 141 126 0 (30) 07-08 08-09 09-10 NOW 11-12 12-13 13-14 14-15 15-16 16-17

24 E-O-Y FUND BALANCES DAYS C ASH-ON N-HAND (days cash on hand basis) 211 NOW (30) NOW Total Funds Education Fund Working Cash (for total expenses) 24

25 ADJUSTMENT TO DAYS CASH ON HAND Base Case Model Capital Projects $1.5 million through ; $1 million thereafter Affect on Cash on Hand to maintain $1.5 million (4-days) (6-days) (8-days) (10-days) 25

26 State Financial Report State Rating NOW Cash Basis. Fund Balances to Revenue Expenditures to Revenue Days Cash on Hand % Short Term Borrowing % Long Term Borrowing Financial Recognition Financial Review Financial Watch Financial Warning 26

27 STRATEGIC STAFFING CASE 27

28 WHAT DOES THE STRATEGIC STAFFING CASE REFLECT Adds Expenses of $300,000 or $400,000 per year for four years to support educational improvements. 28

360 330 E-O-Y FUND BALANCES 300 270 240 210 180 150 120 90 60 DAYS CASH-ON N-HAND (days cash on hand basis) $300,000 000 for Strategic Planning 211

29 E-O-Y FUND BALANCES DAYS CASH-ON N-HAND (days cash on hand basis) $300, for Strategic Planning 211 NOW (30) NOW Total Funds 29

360 330 300 270 240 210 180 150 120 90 60 30 DAYS CASH-O ON-HAND 138 211 E-O-Y FUND BALANCES (days cash on hand basis) $400,000 for Strategic Planning NOW

30 DAYS CASH-O ON-HAND E-O-Y FUND BALANCES (days cash on hand basis) $400,000 for Strategic Planning NOW (30) NOW Total Funds 30

31 STAGNATION CASE 31

32 REVENUE ASSUMPTIONS CPI 2008 Levy 4.1% 2009 Levy 0.1% 2010 Levy 2.7% 2011 Levy 1.5% 2012 Levy 1.0% 2013 Levy 1.5% 2014 Levy 10% 1.0% Pattern continues 1.50% - 1.0%... Permanent Reduction of Expenditures $500, $250, $250,000 Reduce CPI-U by 0.5% 32

33 DAYS CASH-O ON-HAND 138 E-O-Y FUND BALANCES (days cash on hand basis) NOW (30) NOW Total Funds 33

34 RAPID RECOVERY CASE 34

35 REVENUE ASSUMPTIONS CPI 2008 Levy 4.1% 2009 Levy 0.1% 2010 Levy 2.7% 2011 Levy 1.5% 2012 Levy 2.5% 2013 Levy 30% 3.0% Increase CPI-U by 1.0% 2014 Levy 2.5% Pattern continues 3.0% - 2.5%... 35

36 N-HAND CASH-O DAYS 138 E-O-Y FUND BALANCES (days cash on hand basis) 211 NOW (30) NOW Total Funds 36

37 CONCLUSION 37

38 The actual results will most likely be some combination of all four cases 38

39 DAYS CASH ON HAND ALL CASES Days Cash on Han nd FEB 2010 Base Cash FEB 2011 Base Cash 2011 Strategic Planning ($300,000) 2011 Strategic Planning ($400,000) 2011 Stagnation Case 2011 Rapid Recovery 39

40 Financial projections need to be updated as economic conditions change 40

41 District 64 continues to positioned itself with solid fund balances, positive cash flows and considerable flexibility 41

42 BOARD DISCUSSION 42

Board of Education Committee of the Whole February 13, 2012

Financial Projections Board of Education Committee of the Whole February 13, 2012 Financial Projections Are: Both an art & a science An essential element of planning They can anticipate future financial