Five Year Forecast Financial Report

Transcription

1 Exhibit T-2 As approved by Board of Education 10/09/18 LOGO Shaker Heights City Schools Five Year Forecast Financial Report October, Public Finance Resources, Inc. 2016

2 Shaker Heights City Schools Table of Contents Table of Contents 2 Forecast Summary 3 Revenue Sources and Forecast Year-Over-Year Projected Overview General Property Tax (Real Estate) Public Utility Personal Property Income Tax Unrestricted Grants-in-Aid & Restricted Grants-in-Aid Property Tax Allocation All Other Operating Revenues Total Other Financing Sources 12 Expenditures Overview Personnel Services Employee Benefits Purchased Services Supplies and Materials Capital Outlay Intergovernmental & Debt Other Objects Total Other Financing Uses 21 Five Year Forecast 22 FY 2019 Current Forecast Compared to Last Filed Forecast(05/15/2018) 23 Current Five Year Forecast Change to Net Operating Revenue (Line 6.01) Compared to Last Filed Forecast 24 Page Forecast Purpose/Objectives Ohio Department of Education's purposes/objectives for the five-year forecast are: To engage the local board of education and the community in the long range planning and discussions of financial issues facing the school district. To serve as a basis for determining the school district's ability to sign the certificate required by O.R.C , commonly known as the "412 certificate." To provide a method for the Department of Education and Auditor of State to identify school districts with potential financial problems. Forecast Methodology - This forecast is prepared based upon historical trends and current factors. This information is then extrapolated into estimates for subsequent years. The forecast variables can change multiple times throughout the fiscal year and while cash flow monitoring helps to identify unexpected variances no process is guaranteed. The intent is to provide the district's financial trend over time and a roadmap for decisions aimed at encouraging financial sustainability and stability. Public Finance Resources, Inc. 2016

3 Five-Year Forecast-Basics Required two times per year- May & Oct. Last one approved May 2018 Can amend/submit any time throughout the year 3

4 Five-Year Forecast-Basics Basic Format-3 yrs of historical & 5 yrs. of projected data-general Fund Reflects actual rev. & exp. thru F18 And projected rev. & exp. F19 thru F23 based upon final F18 and YTD F19 data 4

5 Five-Year Forecast-Basics To be used as a planning tool in long-term strategic planning Designed to identify issues to be addressed in advance But one approach to balancing District s finances 5

6 Five-Year Forecast-Basics Does not reflect the exact layout of future events, as other events will occur that will impact this forecast: State Budget Bills Continued recovery of Ohio economy Continued recovery of real estate markets Other market forces 6

7 Five-Year Forecast-Basics Only thing for sure, is that most of these numbers will be different! 7

8 October, 2018 Forecast Summary Shaker Heights City Schools $120,000,000 Financial Forecast - Revenue, Expenditures, Levies, and Cash Balance $100,000,000 $80,000,000 $60,000,000 $40,000,000 $36,176,869 $20,000, Actual 2019Proj. 2020Proj. 2021Proj. 2022Proj. 2023Proj. Total Revenue Replace/Renew Levies New Levies Total Expenditures Cash Balance Shaker Heights City Schools Financial Forecast Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Beginning Balance 56,236,792 54,909,884 54,325,421 52,773,778 49,260,890 + Revenue 96,234,967 99,401,637 99,405,837 98,658,937 98,573,037 + Proposed Renew/Replacement Levies Proposed New Levies - - 2,923,050 5,846,100 5,846,100 - Expenditures (97,561,875) (99,986,100) (103,880,530) (108,017,925) (112,068,112) = Revenue Surplus or Deficit (1,326,908) (584,463) (1,551,643) (3,512,888) (7,648,975) Ending Balance with renewal levies 54,909,884 54,325,421 52,773,778 49,260,890 41,611,915 Note: Not Reduced for Encumbrances Analysis Without Renewal Levies Included: Revenue Surplus or Deficit w/o Levies (1,326,908) (584,463) (4,474,693) (9,358,988) (13,495,075) Ending Balance w/o Levies 54,909,884 54,325,421 49,850,728 40,491,740 26,996,665 Excluding the timing impact of the accordion effect of the accelerated real estate tax receipts in Fiscal 2018, the District will generate an operating excess of revenues over expenditures (operating surplus) in Fiscal 2019, after which expenditures begin to exceed revenues, by.6 million in Fiscal 2020 and by $1.6 million in Fiscal This forecast reflects the actual financial impacts of Option #3 of the District's proposed Reduction in Force to address the continuing projected declining enrollment. Option #3 incorporated a reduction of 6 positions effective in Fiscal 2019 and an additional reduction of 19 positions effective in Fiscal 2020 (total of 25 positions). The fall 2018 forecast reflects the actual 11 positions eliminated beginning in Fiscal 2019 with the remaining reductions projected to occurr in Fiscal While fund balance continues to decline under this forecast, the fund balance has improved from the May 2018 forecast with an increase to 32.5% (up from 24.5% in May 2018) of total expenditures by the end of Fiscal Likewise, the peak fund balance at the end of Fiscal 2018 improved from $49.9 million or 51.1% to $50.8 million or 52.4%. We continue to project that at least a 6.9 mill levy would need to be submitted for approval in 2020 (six years since the last operating levy approved in 2014) for collections starting in calendar 2021, in order to stave off falling into a deficit position in future years not shown on this forecast. 8 Public Finance Resources, Inc. 2016

9 Shaker Heights City Schools Revenue Sources and Forecast Year-Over-Year Projected Overview Real Estate 66.4% 67.4% Public Utility Real Estate 2.8% 3.5% Income Tax 66.4% 0.0% 0.0% State Funding 17.3% 16.9% Prop Tax Alloc 8.3% 8.9% All Othr Op Rev 5.1% 3.3% Public Othr Sources 0.0% 0.0% Utility State Funding 2.8% 17.3% Income Tax 0.0% Othr Sources 0.0% All Othr Op Rev 5.1% 2018 Prop Tax Alloc 8.3% Othr Sources 0.0% All Othr Op Rev 3.3% Real Estate 67.4% Prop Tax Alloc 8.9% 2023 State Funding 16.9% Public Utility 3.5% Income Tax 0.0% Prev. 5-Year PROJECTED 5-Year Avg. Annual Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Avg. Annual Change Change Revenue: Real Estate 2.78% % 6.35% -0.21% -0.01% -0.01% -0.89% Public Utility 10.08% 3.99% 2.88% 2.87% 2.79% 2.71% 3.05% Income Tax n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% State Funding 5.75% 0.00% -5.00% 0.00% -5.00% 0.00% -2.00% Restricted Aid % 0.89% 0.81% 0.80% 0.80% 0.79% 0.82% Restr Federal SFSF % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Property Tax Alloc -0.66% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% All Other Operating 22.99% % -1.23% 1.19% -0.60% -5.14% -8.15% Total Revenue 3.61% -8.70% 3.29% 0.00% -0.75% -0.09% -1.25% Total Other Sources n/a 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Total w/other Srcs 3.61% -8.70% 3.29% 0.00% -0.75% -0.09% -1.25% Most revenues are expected to be relatively flat during the forecast period. The substantial real estate tax increase in Fiscal 2018, decrease in Fiscal 2019, and increase in Fiscal 2020 is attributable to the accordion effect of the receipt of tax payer accelerated payments in December 2017 made so as to take advantage of the federal income tax law change that went into effect January 1, The decrease in State Foundation funding in Fiscal 2020 and Fiscal 2022 reflects an anticipated maximum 5% reduction in the "guaranteed" funding assumed to occur due to the expected continuing declining enrollment at the onset of the succeeding State biennial budgets. The substantial increase in Fiscal 2018 and subsequent decrease in Fiscal 2019 in All Other Operating Revenues is due to the $1.7 million receipt in December 2017 from the bond issue proceeds that reimbursed the General Fund for its expenditures for the Middle School roof project during the summer of Public Finance Resources, Inc. 2016

10 Projected Revenues-F

11 $60,663,636 $63,215,714 $65,897,070 $66,041,948 $70,025,913 $62,600,210 $66,577,508 $66,440,693 $66,437,128 $66,429,463 Shaker Heights City Schools General Property Tax (Real Estate) Revenue collected from taxes levied by a school district by the assessed valuation of real property using effective tax rates for class I (residential/agricultural) and class II (business). $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 Actual Projected Revenu Renewal Levy Revenue Projected 2014 $60,663,636 $ $63,215, $65,897, $66,041, $70,025, $62,600, $66,577, $66,440, $66,437, $66,429, Projected Revenue Renewal Levy Revenue FORECASTED Total With Renewal Levies 70,025,913 62,600,210 66,577,508 66,440,693 66,437,128 66,429,463 YOY $ Change 3,983,965 (7,425,703) 3,977,298 (136,815) (3,565) (7,665) YOY % Change 6.0% -10.6% 6.4% -0.2% 0.0% 0.0% Percentage of Total Revenue 66.4% 65.0% 67.0% 66.8% 67.3% 67.4% Values, Tax Rates and Gross Collections Tax Yr Valuation Value Change Class I Rate Change Class II Rate Change ,291,310 (6,192,470) ,750,000 73,458, (7.12) (14.11) ,212,000 (1,538,000) ,583,000 (5,629,000) ,862,000 43,279, (3.88) (5.12) ,000,000 (1,862,000) Gross Collection Rate Including Delinquencies 99.9% 98.1% 98.1% 98.1% 98.1% 98.1% Collections of the 2014 approved operating levy began in calendar 2015 thus providing a half year of the new revenue in Fiscal 2015 and a whole year in Fiscal 2016 and thereafter. The substantial real estate tax increase in Fiscal 2018, decrease in Fiscal 2019, and increase in Fiscal 2020 is attributable to the accordion effect of the receipt of tax payer accelerated payments in December 2017 made so as to take advantage of the federal income tax law change that went into effect January 1, Key Assumption: No decline in property tax assessed valuation during the forecast period, and that collection rates remain consistent with recent years. *Projected % trends include renewal levies 11 Public Finance Resources, Inc. 2016

12 $3,524,862 $2,895,898 $2,675,818 $2,771,899 $2,989,196 $3,108,343 $3,198,015 $3,289,730 $3,381,445 $3,473,160 Shaker Heights City Schools Public Utility Personal Property Revenue generated from public utility personal property valuations multiplied by the district's full voted tax rate. $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Actual Projected Revenu Renewal Levy Revenue 2014 Projected $3,524,862 $3,524, $2,895,898 $2,895, $2,675,818 $2,675, $2,771,899 $2,771, $2,989,196 $2,989, $3,108,343 $3,108, $3,198,015 $3,198, $3,289,730 $3,289, $3,381,445 $3,381, $3,473,160 $3,473, Projected Revenue FORECASTED Total With Renewal Levies 2,989,196 3,108,343 3,198,015 3,289,730 3,381,445 3,473,160 YOY $ Change 217, ,147 89,672 91,715 91,715 91,715 YOY % Change 7.8% 4.0% 2.9% 2.9% 2.8% 2.7% Percentage of Total Revenue 2.8% 3.2% 3.2% 3.3% 3.4% 3.5% Values and Tax Rates Tax Year Valuation Value Change Full Voted Rate Change ,650,160 1,139, ,150, , ,650, , ,150, , ,650, , ,150, , Renewal Levy Revenue Gross Collection Rate Including Delinquencies 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% This line reflects the breakout of the Public Utility Tangible payments previously included with the real estate tax revenues. Note Fiscal 2014 & 2015 included the $1.2 million and $181,460, respectively of non-recurring delinquent tangible personal property settlement payments. *Projected % trends include renewal levies 12 Public Finance Resources, Inc. 2016

13 Key Revenue Assumption State Support 3 Basic Funding Methods for State Foundation Gain Cap Formula Guarantee 13

14 Key Revenue Assumption State Support Gain Cap District receives less than formula calculation Increase in funding from prior year is limited by State to no more than 3.0% over last year-simply a budget balancing method utilized by the State Shaker had been on for several years Shaker amount not received under gain cap in F16 approximated $1 million; F17 14

15 Key Revenue Assumption State Support Formula District receives amount as calculated by the formula Shaker transitioned from Gain Cap to Formula method in F17 due to fact it was approaching the calculation combined with declining enrollment 15

16 Key Revenue Assumption State Support Guarantee District receives more than formula calculation Guarantee for Shaker in the new biennium is based upon 100% of F17 base funding amount since we had < 5% decline in enrollment F14 to F16 Shaker transitioned to the Guarantee funding method in F18, due to low State increase in per pupil amount combined with declining enrollment 16

17 Key Revenue Assumption State Support F19 is projected to be same as F18 due to Guarantee, but Assume a continuation of declining Guarantee for declining enrollment and thus Projecting a 5% reduction in F20/F21 and again in F22/F23 17

18 State Foundation-Funds Received Under Guarantee 17a

19 $14,140,592 $15,683,307 $16,772,300 $17,111,841 $17,306,003 $17,306,000 $16,440,700 $16,441,000 $15,618,950 $15,619,000 Shaker Heights City Schools Unrestricted Grants-in-Aid Funds received through the State Foundation Program with no restriction. $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Actual Projected FORECASTED Total 17,306,003 17,306,000 16,440,700 16,441,000 15,618,950 15,619,000 YOY $ Change 194,162 (3) (865,300) 300 (822,050) 50 YOY % Change 1.1% 0.0% -5.0% 0.0% -5.0% 0.0% Percentage of Total Revenue 16.4% 18.0% 16.5% 16.5% 15.8% 15.8% Core Funding Per Pupil 6,010 6,020 6,100 6,200 6,200 6,020 State Share Index (SSI) 41.1% 41.1% 39.1% 39.1% 36.8% 36.8% State Core Funding Per Pupil 2,471 2,475 2,382 2,421 2,280 2,213 Formula ADM (Funded Student Count) 5,020 4,849 4,728 4,635 4,540 4,449 Funding Status Guarantee Guarantee Guarantee Guarantee Guarantee Guarantee Increase in State Foundation funding due to the last State biennial budget bill, House Bill No. 64, of $1.1 million in Fiscal 2016 and another.3 million in Fiscal The District shifted from "gain capped" in Fiscal 2016, to "formula" funding in Fiscal 2017, and to "guarantee" funding for Fiscal years 2018 and beyond. Based upon the provision in the new biennial budget, the forecast contemplates a 5% reduction in the "guarantee" amount resulting in a 5% reduction in funding in Fiscal 2020 and again in Fiscal Public Finance Resources, Inc. 2016

20 $276,534 $2,299,171 $1,166,771 $1,045,195 $979,302 $988,000 $996,000 $1,004,000 $1,012,000 $1,020,000 Shaker Heights City Schools & Restricted Grants-in-Aid Funds received through the State Foundation Program or other allocations that are restricted for specific purposes. $2,500,000 Actual Projected $2,000,000 $1,500,000 $1,000,000 $500, FORECASTED Total 979, , ,000 1,004,000 1,012,000 1,020,000 YOY $ Change (65,893) 8,698 8,000 8,000 8,000 8,000 YOY % Change -6.3% 0.9% 0.8% 0.8% 0.8% 0.8% Percentage of Total Revenue 0.9% 1.0% 1.0% 1.0% 1.0% 1.0% Economic Disadvantaged Funding 191, , , , , ,042 Percentage of Disadvantaged Students 32.2% 32.2% 31.7% 31.7% 31.7% 31.7% Fiscal 2014 and 2015 amounts impacted by delay and double payment cycle for catastrophic aid reimbursements, but returned to normal schedule in Fiscal 2016 and are projected to be consistent during the rest of the projection years. 19 Public Finance Resources, Inc. 2016

21 $8,975,200 $8,967,738 $8,945,285 $8,800,663 $8,749,414 $8,749,414 $8,749,414 $8,749,414 $8,749,414 $8,749,414 Shaker Heights City Schools Property Tax Allocation Includes funds received for Tangible Personal Property Tax Reimbursement, Electric Deregulation, Homestead and Rollback. $10,000,000 $9,000,000 $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Actual Projected Revenu Renewal Levy Revenue 2014 Projected $8,975, $8,967, $8,945, $8,800, $8,749, $8,749, $8,749, $8,749, $8,749, $8,749, Projected Revenue Renewal Levy Revenue FORECASTED Total With Renewal Levies 8,749,414 8,749,414 8,749,414 8,749,414 8,749,414 8,749,414 YOY $ Change (51,249) YOY % Change -0.6% 0.0% 0.0% 0.0% 0.0% 0.0% Percentage of Total Revenue 8.3% 9.1% 8.8% 8.8% 8.9% 8.9% % of Residental Real Estate 10% Rollback 9.21% 9.21% 9.21% 9.21% 9.21% 9.21% % of Residental Real Estate 2.5% Rollback 1.86% 1.86% 1.86% 1.86% 1.86% 1.86% % of Residental Real Estate Homestead 2.06% 2.06% 2.06% 2.06% 2.06% 2.06% Due to State change in the previous State budget bill, there is no increase in Homestead Exemption RollBack (HERB) payments from the State for levies after 2013, thus no change projected in this item going forward. *Projected % trends include renewal levies 20 Public Finance Resources, Inc. 2016

22 $2,832,400 $2,241,846 $3,240,153 $2,951,607 $5,353,798 $3,483,000 $3,440,000 $3,481,000 $3,460,000 $3,282,000 Shaker Heights City Schools All Other Operating Revenues Operating revenue sources not included in other lines; examples include tuition, fees, earnings on investments, rentals, and donations. $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Actual Projected FORECASTED Total 5,353,798 3,483,000 3,440,000 3,481,000 3,460,000 3,282,000 YOY $ Change 2,402,191 (1,870,798) (43,000) 41,000 (21,000) (178,000) YOY % Change 81.4% -34.9% -1.2% 1.2% -0.6% -5.1% Percentage of Total Revenue 5.1% 3.6% 3.5% 3.5% 3.5% 3.3% Fiscal 2014 included.7 million of Medicaid reimbursement settlement payments for Fiscal 2010 & Fiscal 2015 included no final settlement payments, while Fiscal 2016 included the four-year interim period ( ) settlement amounting to $437,000; $318,000 for the Fiscal 2012 Medicaid settlement payment; and the early receipt of the Fiscal 2013 Medicaid settlement in June. Year-to-year fluctuations during the forecast period are attributable to various periodic and/or nonrecurring payments. The substantial increase in Fiscal 2018 and subsequent decrease in Fiscal 2019 is due to the $1.7 million receipt in December 2017 from the bond issue proceeds that reimbursed the General Fund for its expenditures for the Middle School roof project during the summer of Public Finance Resources, Inc. 2016

23 Shaker Heights City Schools Total Other Financing Sources Includes proceeds from sale of notes, state emergency loans and advancements, operating transfers-in, and all other financing sources like sale and loss of assets, and refund of prior year expenditures. $1 $1 $1 $1 $1 $1 Actual Projected FORECASTED Total YOY $ Change YOY % Change 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Percentage of Total Revenue 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Transfers In Advances In N/A for the District at this time. 22 Public Finance Resources, Inc. 2016

24 Shaker Heights City Schools Expenditure Categories and Forecast Year-Over-Year Projected Overview Salaries 57.8% 56.7% Benefits 20.1% 22.6% Purch Serv Salaries 13.1% 14.1% 57.8% Supp & Mat 2.9% 3.0% Capital Outlay 3.8% 1.1% Intergov & Debt 0.3% Benefits 0.3% Othr Objects 1.8% 20.1% 1.8% Othr Uses 0.3% 0.3% Salaries 56.7% 2023 Benefits 22.6% Othr Uses 0.3% Intergov & Debt 0.3% Othr Objects 1.8% Capital Outlay 3.8% Purch Serv 13.1% Supp & Mat 2.9% Othr Uses 0.3% Othr Objects 1.8% Intergov & Debt 0.3% Capital Outlay 1.1% Purch Serv 14.1% Supp & Mat 3.0% Prev. 5-Year PROJECTED 5-Year Avg. Annual Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Avg. Annual Change Change Expenditures: Salaries 2.00% 2.02% 1.53% 3.07% 3.08% 3.09% 2.56% Benefits 2.14% 3.31% 4.34% 6.27% 6.54% 6.65% 5.42% Purchased Services -0.72% 7.84% 3.45% 4.18% 2.84% 3.54% 4.37% Supplies & Materials -3.21% 14.77% 1.60% 1.60% 7.65% -4.03% 4.32% Capital Outlay 22.64% % 5.00% 5.05% 4.99% 5.01% % Intergov n/a n/a n/a n/a n/a n/a n/a Debt % 42.34% 0.83% -1.77% 0.78% -0.56% 8.32% Other Objects 3.04% -2.58% 4.39% 4.37% 4.40% 4.42% 3.00% Total Expenditures 1.87% 0.62% 2.47% 3.88% 3.97% 3.74% 2.94% Total Other Uses % 9.43% 8.62% 7.94% 7.35% 6.85% 8.04% Total w/other Uses 1.89% 0.64% 2.48% 3.89% 3.98% 3.75% 2.95% Expenditures reflect the salary & wage growth in accordance with the collective bargaining agreement settlements, replacement savings from retirees and other terminations, expected increases in related fringe benefits and other District operating expenditures. This forecast reflects the actual financial impacts of Option #3 of the District's Reduction in Force action to address the continuing projected declining enrollment. Option #3 incorporated a reduction of 6 positions effective in Fiscal 2019 and an additional reduction of 19 positions effective in Fiscal 2020 (total of 25 positions). The fall 2018 forecast reflects the actual 11 positions eliminated beginning in Fiscal 2019 with the remaining reductions projected to occurr in Fiscal Public Finance Resources, Inc. 2016

25 Projected Expenditures-F

26 $50,647,786 $50,924,709 $52,699,569 $54,058,679 $56,000,930 $57,134,000 $58,007,000 $59,790,000 $61,631,000 $63,537,000 Shaker Heights City Schools Personnel Services Employee salaries and wages, including extended time, severance pay, supplemental contracts, etc. $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 Actual Projected FORECASTED Total 56,000,930 57,134,000 58,007,000 59,790,000 61,631,000 63,537,000 YOY $ Change 1,942,251 1,133, ,000 1,783,000 1,841,000 1,906,000 YOY % Change 3.6% 2.0% 1.5% 3.1% 3.1% 3.1% Percentage of Total Budget 57.8% 58.6% 58.0% 57.6% 57.1% 56.7% Reflects economic provisions of current collective bargaining agreements, including SHTA, SHTA-Support Teachers, OAPSE-Clerical, OAPSE-Security, Local 200-Custodial & Bus Drivers, and OAPSE-Aides three-year contracts (SHTA renewed thru 12/31/20; OAPSE-Security, OAPSE-Paraprofessionals and OAPSE-Clerical recently renewed thru 6/30/21; Local 200-Custodial & Bus Drivers and SHTA-Support Teachers are currently still in negotiations). Also reflects replacement savings from retirements and other terminations, as well as added positions during the historical period. Major Growth Rates Used for Salaries & Wages: SHTA 2%, 2%, & 2% base salary increases effective 1/1/18, 19 & 20, respectively per new contract; All Others 2%, 2% & 2% including 1.5% base and other CBA provision salary increases effective 7/1/18, 19 & 20, respectively; Beyond the last year of contracts, assumed 2%/year base and other CBA provision salary growth plus steps. Note: This forecast reflects the actual financial impacts of Option #3 of the District's Reduction in Force action to address the continuing projected declining enrollment. Option #3 incorporated a reduction of 6 positions effective in Fiscal 2019 and an additional reduction of 19 positions effective in Fiscal 2020 (total of 25 positions). The fall 2018 forecast reflects the actual 11 positions eliminated beginning in Fiscal 2019 with the remaining reductions projected to occurr in Fiscal Public Finance Resources, Inc. 2016

27 $16,991,881 $16,919,876 $17,666,678 $18,519,428 $19,482,515 $20,127,000 $21,000,025 $22,317,355 $23,776,750 $25,359,087 Shaker Heights City Schools Employees' Benefits Retirement for all employees, Workers Compensation, early retirement incentives, Medicare, unemployment, pickup on pickup, and all healthrelated insurances. $30,000,000 $25,000,000 $20,000,000 $15,000,000 Actual Projected $10,000,000 $5,000, FORECASTED Total 19,482,515 20,127,000 21,000,025 22,317,355 23,776,750 25,359,087 YOY $ Change 963, , ,025 1,317,330 1,459,395 1,582,337 YOY % Change 5.2% 3.3% 4.3% 6.3% 6.5% 6.7% Percentage of Total Budget 20.1% 20.6% 21.0% 21.5% 22.0% 22.6% Major Growth Rates Used Retirement is a fixed % of actual salaries-14% for certificated wages and up to 16% for classified wages. The health insurance rates are expected to increase 8.0% effective 1/1/19. Combined with the other half of the 3.75% increase that went into effect on 1/1/18, overall health care costs are expected to rise by a blended 5.875% in Fiscal Fiscal 2020 costs are expected to increase 10.0% effective 1/1/20 for an effective 9.0% in Fiscal Fiscal 2021 and beyond are forecasted to grow at a 10.0% annual rate based upon advice from the District insurance consultants. Note: This forecast reflects the actual financial impacts of Option #3 of the District's Reduction in Force action to address the continuing projected declining enrollment. Option #3 incorporated a reduction of 6 positions effective in Fiscal 2019 and an additional reduction of 19 positions effective in Fiscal 2020 (total of 25 positions). The fall 2018 forecast reflects the actual 11 positions eliminated beginning in Fiscal 2019 with the remaining reductions projected to occurr in Fiscal Public Finance Resources, Inc. 2016

28 $13,517,019 $13,196,942 $13,006,266 $12,668,098 $12,727,796 $13,725,600 $14,199,600 $14,792,600 $15,212,600 $15,750,600 Shaker Heights City Schools Purchased Services Amounts paid for personal services rendered by personnel who are not on the payroll of the school district, and other services which the school district may purchase. $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 Actual Projected FORECASTED Total 12,727,796 13,725,600 14,199,600 14,792,600 15,212,600 15,750,600 YOY $ Change 59, , , , , ,000 YOY % Change 0.5% 7.8% 3.5% 4.2% 2.8% 3.5% Percentage of Total Budget 13.1% 14.1% 14.2% 14.2% 14.1% 14.1% Major Growth Rates Used Out-of-District Tuition 5%; Out-of-District Transportation 5%; Repairs & Maintenance 4%; Utilities: Natural Gas 4% & Electricity 3%. Fiscal 2019 and beyond includes reserve funds for increased technology needs, loss of grant funds and other unforseen expenditures. 27 Public Finance Resources, Inc. 2016

29 $2,867,264 $3,027,687 $2,832,127 $3,041,024 $2,778,575 $3,189,000 $3,240,000 $3,292,000 $3,544,000 $3,401,000 Shaker Heights City Schools Supplies & Materials Expenditures for general supplies, instructional materials including textbooks and media material, bus fuel and tires, and all other maintenance supplies. $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Actual Projected FORECASTED Total 2,778,575 3,189,000 3,240,000 3,292,000 3,544,000 3,401,000 YOY $ Change (262,449) 410,425 51,000 52, ,000 (143,000) YOY % Change -8.6% 14.8% 1.6% 1.6% 7.7% -4.0% Percentage of Total Budget 2.9% 3.3% 3.2% 3.2% 3.3% 3.0% Major Growth Rates Used Bus Fuel 5% (including an additional allotment to cover any major price fluctuations); Also reflects projected cyclical textbook replacements in Fiscal 2019 and Public Finance Resources, Inc. 2016

30 $1,572,532 $1,357,753 $1,268,533 $1,835,476 $3,655,300 $1,000,000 $1,050,000 $1,103,000 $1,158,000 $1,216,000 Shaker Heights City Schools Capital Outlay This line includes expenditures for items having at least a five-year life expectancy, such as land, buildings, improvements of grounds, equipment, computers/technology, furnishings, and buses. Actual Projected $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500, FORECASTED Total 3,655,300 1,000,000 1,050,000 1,103,000 1,158,000 1,216,000 YOY $ Change 1,819,824 (2,655,300) 50,000 53,000 55,000 58,000 YOY % Change 99.1% -72.6% 5.0% 5.0% 5.0% 5.0% Percentage of Total Budget 3.8% 1.0% 1.1% 1.1% 1.1% 1.1% Assumes a 5% growth in capital outlay expenditures on a reduced budget due to availability of the $30 million bond issue and the 1.25 mill permanent improvement levy beginning in Fiscal Fiscal 2018 includes the non-recurring impact of the General Fund paying for the Middle School roof project in the summer of This expenditure was reimbursed in December 2017 from the proceeds of the first bond issuance and is reflected in All Other Operating Revenues. 29 Public Finance Resources, Inc. 2016

31 $245,563 $94,300 $247,898 $275,875 $271,375 $386,275 $389,475 $382,575 $385,575 $383,425 Shaker Heights City Schools Intergovernmental & Debt These lines account for pass through payments, as well as monies received by a district on behalf of another governmental entity, plus principal and interest payments for general fund borrowing. $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Actual Projected FORECASTED Total 271, , , , , ,425 YOY $ Change (4,500) 114,900 3,200 (6,900) 3,000 (2,150) YOY % Change -1.6% 42.3% 0.8% -1.8% 0.8% -0.6% Percentage of Total Budget 0.3% 0.4% 0.4% 0.4% 0.4% 0.3% Expenses in this category reflect unvoted debt service repayments. The increase in Fiscal 2019 is due to the General Fund assumption of the bus bond payments due to the exhaustion of the non-bond portion of funds available in the Capital Fund 004 that were previously used to make such payments. 30 Public Finance Resources, Inc. 2016

32 $1,537,905 $1,694,414 $1,476,571 $1,515,540 $1,755,307 $1,710,000 $1,785,000 $1,863,000 $1,945,000 $2,031,000 Shaker Heights City Schools Other Objects Primary components for this expenditure line are membership dues and fees, ESC contract deductions, County Auditor/Treasurer fees, audit expenses, and election expenses. $2,500,000 Actual Projected $2,000,000 $1,500,000 $1,000,000 $500, FORECASTED Total 1,755,307 1,710,000 1,785,000 1,863,000 1,945,000 2,031,000 YOY $ Change 239,767 (45,307) 75,000 78,000 82,000 86,000 YOY % Change 15.8% -2.6% 4.4% 4.4% 4.4% 4.4% Percentage of Total Budget 1.8% 1.8% 1.8% 1.8% 1.8% 1.8% Assumes a 5% growth in most of these expenditures which primarily consist of County Auditor & Treasurer fees (for collecting the District's property taxes). The increase in Fiscal 2018 was attributable to election expenses charged for the bond issue on the May 2017 ballot. 31 Public Finance Resources, Inc. 2016

33 $2,446,264 $220,000 $235,000 $245,000 $265,000 $290,000 $315,000 $340,000 $365,000 $390,000 Shaker Heights City Schools Total Other Financing Uses Operating transfers-out, advances out to other funds, and all other general fund financing uses. $3,000,000 $2,500,000 $2,000,000 $1,500,000 Actual Projected $1,000,000 $500, FORECASTED Total 265, , , , , ,000 YOY $ Change 20,000 25,000 25,000 25,000 25,000 25,000 YOY % Change 8.2% 9.4% 8.6% 7.9% 7.4% 6.8% Percentage of Total Budget 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% Transfers Out 265, , , , , ,000 Advances Out This category includes transfers to other funds, primarily Fund 300 for District athletics. Fiscal 2014 included the transfer of $2.2 million to the District's capital fund. 32 Public Finance Resources, Inc. 2016

34 FY 2019 Current Forecast Compared to Last Filed Forecast(05/15/2018) FY 2019 Current Revenue Forecast Compared to Prior 1.01 Real Estate $1,795, Public Utility FY 2019 $142,673 Current Revenue Forecast Compared to Prior 1.03 $100 Income Tax 2.xx Other Sources 1.035, 1.04 State Funding -$32, Other Rev. $476, Prop Tax Alloc Prop Tax Alloc Other 1.035, Rev State Funding -$32,000 $476,000 2.xx Other Sources 1.03 Income Tax 1.02 Public Utility $142, Real Estate $1,795,951 FY 2019 Current Expenditure Forecast Compared to Prior 3.01 Salaries -$197, Benefits Intergov + Debt + Other $109, Purchased Serv. 4.3 Other Exp -$8, Capital $160,000 -$452, Supplies 3.04 Supplies -$153,000 -$153, Capital 3.03 Purchase -$452, Other Exp 3.02 Benefits $59, Salaries -$197,000 -$8,000 Intergov + Debt + Other Note: Individual category variances beteween -$100 and +$100 are not reflected. FY 2019 Current Expenditure Forecast Compared to Prior $59,332 $160,000 $109,500 Previous Filed Forecast: 05/15/2018 Summary Analysis of Current Compared to Last Filed Forecast FY 2019 Impact Net FY 2019 Revenue Variance $2,382,624 Net FY 2019 Exependiture Variance -$481,568 Net FY 2019 Impact on Ending Cash Balance $2,864,192 Favorable Percentage of Budget 2.94% May 2018 vs. October 2018 for Fiscal 2019: The $2.4 million favorable revenue variance for Fiscal 2019 is primarily attributable to the $1.9 million property tax favorable variance resulting from the accelerated real estate tax collections caused by the change in federal income tax laws; and the.35 million interest income favorable variance due to higher interest rates and cash balances. The.5 million favorable expenditure variance is primarily attributable to reduced projected utility and out-of-district tuition expenditures. The combination of the revenue and expenditure variances nets to a $2.9 million favorable variance from the May forecast for Fiscal Public Finance Resources, Inc. 2016

35 Current vs Prior Forecast F2019 Revenues 34

36 Current vs Prior Forecast F2019 Expenditures 35

37 Shaker Heights City Schools Five Year Forecast Actual FORECASTED Fiscal Year: Revenue: General Property Tax (Real Estate) 70,025,913 62,600,210 66,577,508 66,440,693 66,437,128 66,429, Public Utility Personal Property 2,989,196 3,108,343 3,198,015 3,289,730 3,381,445 3,473, Income Tax Unrestricted Grants-in-Aid 17,306,003 17,306,000 16,440,700 16,441,000 15,618,950 15,619, Restricted Grants-in-Aid 979, , ,000 1,004,000 1,012,000 1,020, Property Tax Allocation 8,749,414 8,749,414 8,749,414 8,749,414 8,749,414 8,749, All Other Operating Revenues 5,353,798 3,483,000 3,440,000 3,481,000 3,460,000 3,282, Total Revenue 105,403,626 96,234,967 99,401,637 99,405,837 98,658,937 98,573,037 Other Financing Sources: Proceeds from Sale of Notes State Emergency Loans and Adv Operating Transfers-In Advances-In All Other Financing Sources Total Other Financing Sources Total Rev & Other Sources 105,403,626 96,234,967 99,401,637 99,405,837 98,658,937 98,573,037 Expenditures: Personnel Services 56,000,930 57,134,000 58,007,000 59,790,000 61,631,000 63,537, Employee Benefits 19,482,515 20,127,000 21,000,025 22,317,355 23,776,750 25,359, Purchased Services 12,727,796 13,725,600 14,199,600 14,792,600 15,212,600 15,750, Supplies and Materials 2,778,575 3,189,000 3,240,000 3,292,000 3,544,000 3,401, Capital Outlay 3,655,300 1,000,000 1,050,000 1,103,000 1,158,000 1,216, & Intergov'mtal & Debt Service 271, , , , , , Other Objects 1,755,307 1,710,000 1,785,000 1,863,000 1,945,000 2,031, Total Expenditures 96,671,798 97,271,875 99,671, ,540, ,652, ,678,112 Other Financing Uses Operating Transfers-Out 265, , , , , , Advances-Out All Other Financing Uses Total Other Financing Uses 265, , , , , , Total Exp and Other Financing Uses 96,936,798 97,561,875 99,986, ,880, ,017, ,068, Excess of Rev Over/(Under) Exp 8,466,828 (1,326,908) (584,463) (4,474,693) (9,358,988) (13,495,075) Cash Balance July 1 (No Levies) 47,769,964 56,236,792 54,909,884 54,325,421 49,850,728 40,491, Cash Balance June 30 (No Levies) 56,236,792 54,909,884 54,325,421 49,850,728 40,491,740 26,996,665 Reservations: Estimated Encumbrances June 30 5,081,976 5,081,976 5,081,976 5,081,976 5,081,976 5,081, Reservations Subtotal 353, , , , , , Fund Bal June 30 for Cert of App 50,801,746 49,474,838 48,890,375 44,415,682 35,056,694 21,561,619 Rev from Replacement/Renewal Levies & Renewal Levies Cumulative Balance of Levies Fund Bal June 30 for Cert of Obligations 50,801,746 49,474,838 48,890,375 44,415,682 35,056,694 21,561,619 Revenue from New Levies & New Levies - - 2,923,050 5,846,100 5,846, Cumulative Balance of New Levies ,923,050 8,769,150 14,615, Unreserved Fund Balance June 30 50,801,746 49,474,838 48,890,375 47,338,732 43,825,844 36,176,869 Ending Fund Bal. as % of Total Expend.-pre levy 52.4% 50.7% 48.9% 42.8% 32.5% 19.2% 36 Public Finance Resources, Inc. 2016

38 OTHER FINANCIAL ANALYSIS 37

39 Revenue, Expenses, Fund Balance (with New Levies) 38

40 Revenues Net of Expenditures 39

41 Net Income Surplus/Deficit 40

42 CASH BALANCES 41

43 Cash Balances 42

44 Yearend Cash Balances 43

45 ENROLLMENT 44

46 Historic vs Projected Enrollment 45

47 Enrollment Projection Head Count Summary/Analysis Shaker Heights City Schools Prior Year Actual/Estimated Enrollment (October Count) 4,865 4,708 4,587 4,493 4,398 Projected Changes to Prior Year Enrollment Net All-Grade Level Mobility Factor (Change) to Prior Year New Kindergartners In Loss of Seniors from Prior Year Net Change in Outgoing and Incoming Pupils Current Year Estimated Enrollment (Simulated October Count) 4,708 4,587 4,493 4,398 4,308 District Head Count Grade K Total Can Differ by Rounding 4,708 4,587 4,493 4,398 4,308 Year-Over-Year Percentage Change -3.23% -2.58% -2.03% -2.12% -2.06% 46

48 ADM-Yr. Over Yr. % Change (and trendline) 47

49 Enrollment-Mobility Step 2 - Select Grades 1-12 Mobility (Gain/Loss) Factor 0 YOY Student Count Change due to Mobility YOY Student Count Change due to Mobility 10 Y -8 5 Yr## 3 Yr## Yr Average 5 Yr Average 3 Yr Average Press Mobility Button to Model >> % -1.88% -2.88% 10 - Year Average 5 - Year Average 3 - Year Average << YOY << YOY 48

50 Enrollment-Kindergarten Note: on average Kindergarteners enrolled were less than resident births 49

51 ASSESSED VALUATION 50

52 Millage & Valuation by Tax Year

53 Assessed Valuation Tax Year 2017=$811 million 52