Licking Heights Local School District 5 Year Forecast Assumptions (FY 2013 FY 2017) Board Approved: October 24, 2012 Revenue: General Property Tax (Real Estate) Property values dropped 7.04% in aggregate due to reappraisal in tax year 2011. The updated figures for tax year 2011 show a slight shift in distribution between counties. For the past five (5) years, 55% of total valuation has been generated from Franklin County, with 45% from Licking County. Upon reappraisal in 2011, the breakdown shifts to 52% from Franklin County and 48% in Licking County. The aggregate distribution based on real estate classification is as follows: 80.21% is agricultural/residential, 17.90% is commercial/industrial and the remaining 1.89% is public utility personal property. Decreases due to reappraisal in Franklin County were 12.21% in residential/agricultural, with a 10.53% decrease in commercial/industrial property. Updates in Licking County showed a decrease of 1.68% in residential/agricultural and an increase of 4.95% in commercial/industrial property. As a result of the reappraisal figures, new construction estimates and triennial update estimates for 2014 have been reduced. On average new construction is estimated around 1% in each year and the triennial update estimates are between 1-2%, in aggregate. As a result of the decrease in valuation, the district is no longer at the 20 mill floor in either class of real estate. The effective millage rate is now at 21.56 for residential/agricultural property and 20.87 for commercial/industrial property. As a result of coming off the 20 mill floor, future growth from new construction will only be realized on the inside millage (4.8 mills). On May 3, 2011, an emergency levy generating $6.2 million was passed by the voters of Licking Heights School District. This levy effectively renewed the $4.3 million dollar levy that was passed in May 2007, while providing an additional $1.9 million dollars. Collection for the additional millage began January 2012. The term of this levy is ten years. Since the emergency levy is a fixed sum levy, the amount of money collected will not be affected by the reduced values from reappraisal. The district has an 8.9 mill emergency levy on the ballot on November 6, 2012. The passage of this levy will generate an additional $4.3 million per year for ten years. If this levy fails, cuts of over $2.7 million will occur from FY 2013 to FY 2014. Tangible Personal Property All that remains in tangible personal property is the public utility personal property tax. All other tangible personal property taxes were phased out with HB 66. Reappraisal resulted in a decrease of 12.03% in tax year 2011. There are no increases projected through FY 2016. 1
Unrestricted Grants-in-Aid The figures shown in FY 2013 are consistent with the October #1 Bridge Report. Although the Bridge Report was not intended for use in both years of the biennium, no alternative funding calculation has been provided for FY 2013. A new proposal has been released for FY 2014 and FY 2015, but no formal calculations have been provided. By bringing the special education preschool in house and limiting bussing to only those special needs students, there are some moderate increases beginning in FY 2013 related to reimbursement for special education transportation and unit funding provided to special education preschools. The unit funding was previously received by the Licking County Educational Service Center, who provided preschool services to the Licking Heights students. These figures are flat-lined through FY 2017. Restricted Grants-in-Aid Restricted grants-in-aid is comprised of career technical aid and special education catastrophic cost reimbursement. Career tech funds are flat lined through FY 2017. In FY 2012, the special education catastrophic cost reimbursement was funded at 16% of the total costs submitted. This resulted in payment of $39,968. This amount is flat-lined through FY 2017. Property Tax Allocation Property tax allocation is comprised of homestead and rollback reimbursement provided by the State of Ohio. Recent legislation changed the requirements for homestead exemption, which will increase the homestead figures. The direct reimbursement relating to the phase-out of tangible personal property tax has been eliminated in the current budget bill. Therefore, it has been removed in FY 2012 through FY 2015. This represented over $700,000 in both FY 2012 and FY 2013 and almost $400,000 in FY 2014. All Other Revenues All other revenues consist of student fees, building rental fees, donations, tuition payments received and other miscellaneous proceeds. At the April 2010 board meeting, the Board of Education passed a resolution authorizing the transfer of funds from the permanent improvement fund to the debt service fund to cover the debt service payments for the bus purchase bonds that were issued in FY 2005. This transfer of funds will continue until the maturity date for these bonds which is December 2015. There are also revenues related to the newly instituted Medicaid reimbursement program. This provides reimbursement for a portion of the expense paid by the district for Medicaid eligible services provided to Licking Heights students. In FY 2011 and FY 2012, approximately $30,000 was received. Approximately $53,834 is due to the district based on an audit of services provided from October 1, 2009 through September 30, 2010. In FY 2013, an increase is 2
budgeted due to bringing in two (2) additional MH units, as well as the special education preschool. There are two (2) revenue sharing agreements in place relative to tax abatements granted to corporations with property located in the district. The first is with the Village of New Albany regarding an American Electric Power property that was 75% abated. Given that the abatement is for 75% on the improvements to the property, the district receives 25% tax revenue on the improvements and full tax revenue on the value of the land. The revenue sharing agreement exists with the Village of New Albany and stipulates that the Village will share the income tax receipts related to the employees in the abated property up to the amount lost by the abatement. This abatement began in FY 2009. The first payment was received in July 2010. Collections in FY 2012 were about $96,000. A slight increase is anticipated in FY 2013. The second agreement exists with the City of Reynoldsburg relating to the Victoria s Secret Direct warehouse, which is 100% abated. This agreement stipulates a 50% sharing in income taxes received from the employees in the abated property. Given that these payments should have been made beginning in FY 2007, the district received back payments in FY 2011 to bring the district current. Going forward, quarterly payments are being received. Collections in FY 2012 were just below $500,000. A slight increase is expected in FY 2013. Starting in FY 2012, pay to participate fees of $100 per student per activity at the high school level and $75 per student per activity at the middle school level were collected. In FY 2012, $71,150 was collected in pay to participate fees. This revenue was used to offset the total cost of athletics and marching band, which came in at just under $210,000. In the event of a levy failure in November 2012, pay to participate fees would be increased to $350-$475 per student per activity, based on the estimated reduction in participants. The implementation of the $75/$100 fee only resulted in a reduction of around 6% of the students participating. It is expected that increasing fees to above $350 could result in reductions nearing 35%. Another projected increase includes building rental fees to be paid by YMCA for use of the LH North Elementary to provide preschool to our typical students (in conjunction with the special education preschool being provided by the district). There is also some sharing of tuition for these typical students modeled. There is a small increase shown relative to projected casino revenue for FY 2013. It is estimated that each district would receive approximately $30 per student in casino revenue. There is no increase built into FY 2014, despite more casinos scheduled to open during FY 2013. This is due to uncertainty surrounding the new biennial budget that will be presented for FY 2014 and FY 2015. In the past, revenue generating initiatives that were intended to supplement state funding for schools (i.e. lottery proceeds, etc.) have been supplanted, thereby relieving the burden of the state and thus reducing the amounts paid to schools. Until it is clear that these funds will not follow a similar fate, no increases are included. 3
Expenditure: Personal Services Personal services represents salaries paid for all staff, including certificated teachers, classified staff (i.e., bus drivers, custodians, secretaries, aides, etc.) and administrators. As outlined in the budget reduction list, the following reductions were made in FY 2012 based on levy passage: No staff additions included due to growth needs (except those paid with federal funds) Two (2) permanent substitute positions were eliminated Nine (9) educational aide positions were eliminated Elimination of athletic director/dean of students and assistant athletic director - Replaced with one (1) athletic director Early Bird programs will now be funded by federal grant monies Step freeze for some administrative/exempt staff Reduction in transportation by bringing two (2) MH units back to Licking Heights The staffing levels for FY 2013 reflect current staffing levels. In light of the tight financial situation, some staff reductions were implemented at the start of the 2012-2013 school year. These reductions included one administrative position, 4.5 teaching positions, one technology assistant and sharing of the food service director with Southwest Licking Local Schools. In addition to the staffing reductions, the certified and classified unions, as well as the exempt and administrative staff took a freeze on steps and base wages. A one-time payment was paid in lieu of these more substantial increases, netting more than $600,000 in savings. In the event of a levy failure in November 2012, further staffing reductions will occur. Some reductions would occur as soon as December 2012/January 2013. These reductions include: Four (4) K-12 teachers Two (2) gifted teachers Two (2) guidance counselors Three (3) testing coordinators Three (3) groundskeepers One (1) bus mechanic Five (5) custodians One (1) classified supervisor Additional reductions, imposed beginning with the 2013-2014 school year include: At least ten (10) additional K-12 teachers One (1) Title I teacher One (1) intervention specialist One (1) foreign language teacher Four (4) library aides Three (3) health aides One (1) central office staff member 4
In addition to these specific staffing reductions, bussing to the high school would be eliminated, resulting in reduced hours for multiple transportation employees and a 10% reduction in all supplemental contracts would be implemented. FY 2015 through FY 2017 reflects an additional five (5) teachers per year and one (1) classified employee per year to accommodate growth needs. Retirement/Benefits Retirement is directly related to the total amount estimated for personal services. The Board pays 14% to the corresponding retirement system (STRS/SERS) for all salaries, less bonuses and severance. The Board also provides pick-up and pick-up on the pick-up for all administrators, which accounts for an additional 12.4% on the administrative salaries. Benefits include medical, dental and life insurance, as well as Medicare and workers compensation. The largest portion of this category is medical insurance. Currently the Board pays 75% of the medical premiums, with the employee picking up the remaining 25%. In FY 2013, the district s health insurance carrier was changed to Medical Mutual which realized a 14.12% savings over the renewal rates. The final renewal percentage was 14.38% with Medical Mutual. In addition to the lower renewal rate, Medical Mutual provided a rate cap in year 2 of 15%. Beginning in FY 2014, a 10% increase is again projected each year. As a result of union negotiations, an insurance steering committee was created, consisting of the superintendent, treasurer, insurance brokers and the officers from both LHEA and LHESPA. The purpose of this committee is to re-examine the current structure of our health insurance and seek a more cost effective way to provide the same benefit. It is anticipated that the results from this committee and its recommendations will result in additional cost savings going forward. Dental insurance is in the second year of a two-year rate guarantee. Life insurance remained at current rates. Increases are budgeted relative to the proposed staffing additions in FY 2015 through FY 2017. Worker s compensation has increased significantly over the past two (2) years. Total premium in calendar year 2008 (based on 2007 payroll) was $22,288. This premium grew to $66,085 in calendar year 2009 (based on 2008 payroll). The total to be paid in calendar year 2010 (based on 2009 payroll) is $116,936. Based on the poor claims experience, the district was not invited to participate in the group rating program and is estimated to experience a 12% penalty in 2010. Premium in 2010 rose to $145,474. Continued efforts to reduce premiums resulted in a moderate increase in FY 2011 to $146,123 and a slight reduction to $140,522 in FY 2012. Current estimates show the premiums remaining about the same for FY 2013. The district is working cooperatively with the Bureau of Workers Compensation to establish a safety committee, offer trainings and participate in cooperatives that will continue to assist in the reduction in claims and consequently premiums. The district made a change in third party administrators to try to better manage claims, while also reducing cost related to this service. The MCO (Managed Care Organization) service will be changed in May 2012, which will help 5
better manage our claims. This is a free service, regardless of vendor, as it is paid for by the Bureau of Worker s Compensation. In coordination with the proposed reductions should the November levy fail, reductions will be seen in all related benefits (retirement, Medicare, insurance benefits). Unemployment costs were also calculated and accounted for in the event of a reduction in staff. Purchased Services The expenditures in this category include utilities, repairs and maintenance, postage and various other services. As part of the budget reductions, a 10% reduction in building/department budgets was made in FY 2010 and maintained in FY 2011. An additional 5% reduction was made in FY 2012. In FY 2013, a number of adjustments are reflected based on the district s efforts to reduce and/or contain costs. Savings were realized in the areas of the SRO (School Resource Officer) contract, sharing the cost of the athletic trainer with the athletic department, not converting to GAAP and by moving from the Licking County Educational Service Center to the Educational Service Center of Central Ohio. Additional reductions resulting from a levy failure include eliminating one of the two school resource officers and an additional 5% reduction in building/department budgets. A 5% trend increase is estimated for each year thereafter through FY 2017. Supplies and Materials Supplies and materials include supply purchases relating to student fees and building/department needs. As part of the budget reductions, a 10% reduction in building/department budgets was made in FY 2010 and maintained in FY 2011. An additional 5% reduction was made in FY 2011. An additional 10% reduction in FY 2013 is reflected. Textbook allocations are included beginning in FY 2014. Textbook needs in FY 2012 and FY 2013 will be addressed using permanent improvement funds. In FY 2014, $200,000 is allocated, with a $50,000 increase in FY 2015. This increased level is maintained in FY 2016 and FY 2017. It is expected that the use of traditional textbooks will be evaluated over the next year and may be replaced or supplemented with electronic media at a potential savings to the district. A 2% trend increase is estimated for FY 2014 through FY 2017. Capital Outlay Due to the passage of the permanent improvement levy in November 2009, no equipment purchases are budgeted from the general fund. All equipment purchases will be paid for out of permanent improvement funds, building funds or other grants. 6
Principal Other These figures represent the principal payments for the limited general obligation bonds that were issued for the purpose of purchasing new buses. This obligation matures in December 2015 (FY 2016). Interest and Fiscal Charges These figures represent the interest payments for the limited general obligation bonds that were issued for the purpose of purchasing new buses. This obligation matures in December 2015 (FY 2016). Other Objects Other objects primarily include membership fees, auditor and treasurer fees, liability insurance, bond premiums and other miscellaneous expenses. A 2% trend increase is estimated for FY 2014 through FY 2017. ADM Projections: Since a second count in February is no longer required and kindergarten is no longer reduced by half, a total enrollment estimate is provided. Based on preliminary counts in October, the kindergarten class is shown at 297 students, with total enrollment K-12 at 3,658. This is slightly higher than projected for FY 2013. Moderate increases are estimated in future years. 7