Economic Update & School Funding

Transcription

1 Economic Update & School Funding Ohio University Leadership Program Professional Development CPIM Seminar March 26, 2014 Public Finance Resources, Inc. Serving the Public s Financial Leaders

2 Introduction Economic Update & Information Changing Property Values Individual District Abstracts SFPR Wealth & Economic Trends Cash Flow Cash Balance Discussion

3 Ohio Economic Update Each month the Ohio Office of Budget Management publishes an update report of Ohio s trending economy and the State Budget This can be a valuable resource to help identify potential trends that might also impact districts. The following four slides are taken from the February 2014 report.

4 Economic Conditions National GDP Fourth quarter 2013 grew 2.4 percent Down from 4.1 percent in the third quarter Slower growth expected for first quarter, gradually increasing to 3 percent through the year Employment US employment grew 175,000 jobs in Feb The unemployment rate rose slightly from 6.6 to 6.7% The Ohio unemployment rate is 6.9 %

5 Economic Conditions Leading Economic Indicators National leading indicators are consistent with continued uninterrupted economic growth Ohio leading indicators indicate continued modest growth Housing Housing starts have weakened, much weather related Home prices nationally have increased for 23 straight months In Cleveland, the only Ohio market in the national Case/Shiller Index, prices are 4.5 percent above a year ago

6 Ohio Economic Update

7 State Tax Revenues Through February, state tax revenues are $217 million above estimate, or 1.7% Year-over-year, state tax revenues are flat with last year because of the net tax cuts in HB 59 Non-auto sales tax are running below estimates, while auto sales taxes are 2.2% above estimate

8 State Tax Revenues Income tax receipts are $281 million above estimate $200M of that is due to refunds, much of which is likely due to timing issues Estimated payments are also above estimate, normally a good sign for receipts with returns to be filed in April Withholding is running about a quarter of a percent above estimate

9 Property Tax Abstracts Open Abstract Spreadsheet

10 SFPR March #2

11 Determining District Wealth when compared to Statewide data Statewide Valuation Per Pupil is used in comparison to your district, Making sure you have reasonable estimates for both. District Valuation (3 Year History) Index FY 2014 & 2015 FY 2016 & 2017 Cal Yr 2010 Cal Yr 2012 Cal Yr 2014 $437,939,320 $453,841,921 Cal Yr 2011 Cal Yr 2013 Cal Yr 2015 $453,855,590 $460,271,559 Cal Yr 2012 Cal Yr 2014 Cal Yr 2016 $453,836,880 $485,953,959 Exempt Value Exempt Value Exempt Value $76,794,310 $76,794,310 District's 3 Year Assessed Property Average $448,543,930 $466,689,147 Percentage Change 4.0% Valuation Index (VI) Calculation and Modeling: Adjusted Total ADM 3,620 3,661 3,821 3,847 3,860 Valuation Per Pupil $123,915 $122,521 $121,312 Change in District Valuation Per Pupil 1.0% State Average PP Valuation $139,914 $140,780 $140,500 Change in State Average PP Valuation 0.2% aluation Index Lower than 1.0 is Less than State Avg istrict's Per Pupil Valuation Change Relative to State Dist PP Wealth Declined to State's

12 Determining District Wealth when compared to Statewide data (Continued) To complete the Core Funding calculation you must also have reasonable estimate district and statewide per pupil income. Income Index (II) Calculation and Modeling: District's Median Income 38,397 39,933 State Median Income 32,180 33,467 District's Income Index Dist Median Inc Increased to State's

13 Statewide Federal Adjusted Gross Income Per Pupil (Targeted Assistance) Targeted Assistance Funding uses Statewide Federal Adjusted Gross Income compared to your district. However, this data is adjusted annually and is only funded at the 80 th percentile District Federal Adjusted Gross Income (FAGI) Wealth Calculation Data: FY 2014/2015 FY 2016/2017 FY 2018 TY 2009/TY 2010TY 2011/TY 2012 TY 2013 $401,529,562 $417,280,108 $429,529,568 $438,120,159 TY 2010/TY2011TY 2012/TY 2013 TY 2014 $417,280,108 $429,529,568 $438,120,159 $446,882,563 TY2011/TY2012TY 2013/TY 2014 TY 2015 $429,529,568 $438,120,159 $446,882,563 $455,820,214 3 Year Average 3 Year Average 3 Year Average $416,113,079 $428,309,945 $438,177,430 $446,940,979 Annual Change 2.9% 2.3% 2.0% Formula ADM 3,540 3,580 3,737 3,763 3,776 Less Community School and Scholarhip ADM Net Formula ADM 3,445 3,460 3,631 3,655 3,666 al Wealth(PP) = 50% Prop Value(PP)+50% FAGI(PP) $120, $118, $120, $122, % 1.6% 2.1% Statewide Average Wealth per Pupil $149,649 $150,383 $150,383 $151,887 $153, % 1.0% 1.0% Statewide Average Wealth per Pupil 80th Perc. $182,118 $184,024 $184,024 $185,865 $187, % 1.0% 1.0% Targeted Assistance Wealth Index Targeted Millage Rate

14 March #2 Foundation Settlement Report

15 Cash Flow Monitoring your monthly estimates versus actual data by Forecast line item is critical to managing both the accuracy of your overall Forecast and cash balance. Since Salaries are the largest expenditure line item it is a good example to examine.

16 Personal Services Cash Flow Personnel Services TEAYS VALLEY LOCAL SCHOOL DISTRICT PICKAWAY COUNTY Cash Flow Analysis Cash Flow Actual Fiscal Year Expenditures Current Fiscal Year Distribution Current Est. Est./Actual Original Est. Cash Flow Est. Actual July 1,486,503 1,474,868 1,357, % 1,418,781 1,418,781 1,418,781 1,485,743 Actual August 1,416,612 1,386,841 1,334, % 1,281,159 1,281,159 1,281,159 1,460,738 Actual September 1,409,431 2,090,250 1,334, % 1,340,000 1,312,486 1,340,000 1,460,610 Actual October 2,182,736 1,421,427 1,354, % 1,394,840 1,334,764 1,394,840 1,481,869 Actual November 1,513,523 1,458,669 2,179, % 2,275,000 2,100,843 2,275,000 2,384,872 Actual December 1,453,038 1,397,415 1,368, % 1,394,317 1,385,706 1,394,317 1,497,970 Actual January 1,403,462 1,346,887 1,292, % 1,368,840 1,365,108 1,368,840 1,414,753 Actual February 1,400,732 1,371,544 1,341, % 1,400,000 1,351,071 1,400,000 1,467,472 Estimated March 1,524,408 2,170,206 1,389, % 1,423,107 1,423,107 1,425,000 1,520,183 Estimated April 2,148,994 1,380,941 1,339, % 1,377,879 1,377,879 1,377,879 1,466,201 Estimated May 1,504,263 1,408,682 2,064, % 2,214,658 2,214,658 2,214,658 2,259,494 Estimated June 1,438,316 1,580,735 1,394, % 1,543,031 1,543,031 1,543,031 1,526,268 Actual Dollars Spent FYTD 12,266,037 11,947,901 11,563,679 11,549,918 Actual Percentage Spent FYTD 65.0% 64.6% 65.1% 63.8% Remaining Dollars to be Spent 6,615,981 6,540,564 6,188,616 6,558,675 Remaining Percentage to be Spent 35.0% 35.4% 34.9% 36.2% Annual Cash Flow Total 18,882,018 18,488,465 17,752,295 18,108,593 18,433,505 19,426,173 Forecast Amt >> 18,108,593 19,426,173 Cash Flow Exceeds Variance >> (0) % Variance >> 0.00% 0.00%

17 Cash Balance Policy Maintaining a cash balance policy that supports fiscal stability The district needs to maintain adequate cash flow reserves that achieve the following goals: Ensure continuity of programs and services be meeting ongoing costs. Be prepared for unexpected delays in revenue collections. Provide for adequate reserves to allow implementation of budget adjustments to meet changing financial conditions.

18 What is an Adequate Cash Balance for Your District? There are many ways to calculate a minimum cash balance amount, Some even look like this equation The more simple and more common calculations usually produce a similar amount. 18

19 How to Determine an Adequate Amount 1 Month Expenditures: $30,203,618 / 12 months = $2,517, Days Expenditures: $30,203,618 / 365 days x 30 days = $2,482,000 10% of Annual Expenditures: $30,203,618 x 10% = $3,020,000 Minimum of 3 Payrolls: $17,491,784 / 26 pay periods x 3 = $2,018,000 (what about benefits?) Two months of property tax settlements 19

20 Developing a Cash Balance Policy What would your district s monthly cash balance projections look like if you started July 1 with a zero balance? If the district had started fiscal year 2014 with a zero cash balance then the monthly cash balance would drop to - $6,730,738 in the month of January as modeled in the graph below.

21 Cash Balance Policy (Continued) If the district were to experience a one month delay in the receipt of its local real estate property tax collections then the monthly cash flow balance would drop further to -$12,023,079.

22 Teays Valley s Cash Balance Policy Teays Valley s current Cash Balance Policy is $2.5 million represented by the green line.

23 Teays Valley s Cash Balance Policy (Continued) If Teays Valley started FY14 at 0, its $2.5 million minimum balance policy amount:

24 Perfection Will Fund Your Schools! Now Get Busy!

25 Summary State Revenue is still performing well. The State s valuations are still dropping. What about your district? Could your ADM change cause a double Wealth Ranking hit? Your Cash Balance Plan or Theirs???

26 Public Finance Resources Employee Bios Debra Hoelzle, Chief Operations Officer of Public Finance Resources, 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 Master of Business Administration from Ohio University, and her Bachelor 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 Master of Business Administration and his Bachelor of Business Administration in Finance from Ohio 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, 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 Master of Science in Administration from Central Michigan University and a Bachelor of Science in Finance from Ohio University. Matt Bunting, Consultant, has over 27 years of experience in the public finance sector. This includes 18 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 a Degree in Accounting from Hocking College, and is a Certified Government Financial Manager. 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 Master Degree in Public Policy from the University of Michigan and a Bachelor Degree in Economics and Political Science from Wittenberg University. 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 Bachelor of Business Administration from the Youngstown State University, and is a Certified Administrator of School Finance and Operations. Public Finance Resources, Inc. Serving the Public s Financial Leaders 26

27 Today s Presenters Ernie Strawser Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH ernie@pfrcfo.com Phone: Stacy Overly Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH stacy@pfrcfo.com Phone: Matt Bunting Ryan Ghizzoni Debra Hoelzle Stacy Overly Mike Sobul Ernie Strawser Public Finance Resources, Inc. Serving the Public s Financial Leaders 27