Tipp City Exempted Village Schools. Miami County

Transcription

1 Tipp City Exempted Village Schools Miami County Assumptions for Five-Year Financial Forecast Projected Fiscal years July 1, 2014 through June 30, 2019 Forecast provided by: Tipp City Exempted Village School District Gina M. Helmick, CPA, Treasurer/CFO

2 Tipp City Exempted Village Miami Schedule of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Years Ended June 30, 2012, 2013 and 2014 Actual; Forecasted Fiscal Years Ending June 30, 2015 Through 2019 Actual Forecasted Fiscal Year Fiscal Year Fiscal Year Average Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year Change Revenues General Property Tax (Real Estate) $10,334,351 $10,378,752 $11,258, % $12,066,900 $12,127,235 $12,187,871 $9,412,015 $6,575, Tangible Personal Property Tax 2,636 2, % Income Tax Unrestricted State Grants-in-Aid 6,764,439 6,967,515 7,207, % $7,505,000 $7,617,575 $7,731,839 $7,847,816 $7,965, Restricted State Grants-in-Aid 39,131 37,385 55, % $34,000 $34,680 $33,986 $33,307 $32, Restricted Federal Grants-in-Aid - SFSF 245, , % Property Tax Allocation 2,639,007 2,251,166 2,376, % $2,442,091 $2,454,301 $2,466,573 $2,437,192 $2,049, All Other Revenues 881, , , % $870,000 $870,000 $870,000 $870,000 $870, Total Revenues 20,906,747 20,627,701 21,786, % $22,917,991 $23,103,791 $23,290,269 $20,600,330 $17,492,772 Other Financing Sources Proceeds from Sale of Notes State Emergency Loans and Advancements (Approved) Operating Transfers-In Advances-In 46,000 11,896 20, % 5,000 5,000 20,000 20,000 20, All Other Financing Sources 12,032 27,504 81, % 67,000 10,000 10,000 10,000 10, Total Other Financing Sources 58,032 39, , % 72,000 15,000 30,000 30,000 30, Total Revenues and Other Financing Sources 20,964,779 20,667,101 21,890, % 22,989,991 23,118,791 23,320,269 20,630,330 17,522,772 Expenditures Personal Services 13,497,202 12,375,391 12,521, % 12,871,250 13,128,675 13,391,249 13,659,073 13,932, Employees' Retirement/Insurance Benefits 4,368,586 4,083,678 4,198, % 4,304,660 4,735,126 5,208,639 5,729,502 6,302, Purchased Services 2,818,778 2,721,223 2,171, % 2,351,286 2,586,415 2,845,056 3,129,562 3,442, Supplies and Materials 539, , , % 616, , , , , Capital Outlay 29,784 33,461 46, % 83, , , , , Intergovernmental Debt Service: Principal-All (Historical Only) Principal-Notes Principal-State Loans Principal-State Advancements Principal-HB 264 Loans 56,830 58,319 59,846 59,846 61,414 63,023 64, Principal-Other Interest and Fiscal Charges 20,949 25,445 23,917 23,916 22,350 20,740 19, Other Objects 316, ,753 1,008, % 1,170,356 1,217,170 1,265,857 1,316,491 1,369, Total Expenditures 21,570,263 20,099,192 20,549, % 21,481,429 22,552,265 23,619,715 24,768,297 26,005,542 Other Financing Uses Operating Transfers-Out 12,000 2,549 76, % 45,000 45,000 45,000 45,000 45, Advances-Out 11,896 20,700 5, % 5,000 20,000 20,000 20,000 20, All Other Financing Uses Total Other Financing Uses 23,896 23,249 81, % 50,000 65,000 65,000 65,000 65, Total Expenditures and Other Financing Uses 21,594,159 20,122,441 20,631, % 21,531,429 22,617,265 23,684,715 24,833,297 26,070, Excess of Revenues and Other Financing Sources over (under) Expenditures and Other Financing Uses 629, ,660 1,258, % 1,458, , ,446-4,202,968-8,547, Cash Balance July 1 - Excluding Proposed Renewal/Replacement and New Levies 1,296, ,537 1,212, % 2,470,563 3,929,125 4,430,651 4,066, , Cash Balance June ,537 1,212,197 2,470, % 3,929,125 4,430,651 4,066, ,763-8,684, Estimated Encumbrances June 30 36,648 52,496 37, % 38,000 38,000 38,000 38,000 38,000 Reservation of Fund Balance Textbooks and Instructional Materials Capital Improvements Budget Reserve DPIA Fiscal Stabilization Debt Service Property Tax Advances Bus Purchases Subtotal Fund Balance June 30 for Certification of Appropriations 630,889 1,159,701 2,432, % 3,891,125 4,392,651 4,028, ,763-8,722,534- Revenue from Replacement/Renewal Levies Income Tax - Renewal Property Tax - Renewal or Replacement 2,836,795 5,673, Cumulative Balance of Replacement/Renewal Levies 2,836,795 8,510, Fund Balance June 30 for Certification of Contracts, Salary Schedules and Other Obligations 630,889 1,159,701 2,432, % 3,891,125 4,392,651 4,028,204 2,662, ,149- Revenue from New Levies Income Tax - New Property Tax - New Cumulative Balance of New Levies Revenue from Future State Advancements Unreserved Fund Balance June ,889 1,159,701 2,432, % 3,891,125 4,392,651 4,028,204 2,662, ,149- ADM Forecasts Kindergarten - October Count Grades October Count State Fiscal Stabilization Funds Personal Services SFSF Employees Retirement/Insurance Benefits SFSF Purchased Services SFSF Supplies and Materials SFSF Capital Outlay SFSF Total Expenditures - SFSF See accompanying summary of significant forecast assumptions and accounting policies Includes: General fund, Emergency Levy fund, and any portion of Debt Service fund related to General fund debt

3 FINANCIAL FORECAST Introduction All Boards of Education are required by Ohio Revised Code to submit a five-year forecast to the state each year no later than October 31 of each fiscal year and to update the forecast if necessary between April 1 and May 31 of each fiscal year. Forecasts are living documents in that they are based on current assumptions and may and do change. Tipp City EVSD s current forecast was compiled based on current economic conditions, taxing conditions and state funding issues as well as input from the district s administration regarding district s needs. Purpose The three main purposes of the forecast are Executive Summary To provide the Board of Education a means for long range financial planning To serve as a basis for certification of 412 certificates To provide the Ohio Department of Education and Ohio Auditor of State a vehicle to identify school districts who may be in financial distress The updated forecast includes the following new assumptions Update to include fiscal year 2014 s actual figures Tax revenue estimates for 2015 include latest estimates from the Miami County Auditor. Salary and benefit estimates to include all staffing changes for fiscal year Implications of current forecast The district s ending 2014 cash balance was higher than projected due to additional transportation funding, lower than projected special education costs, the realization of savings on personnel costs due to attrition and cost containment in building/department budgets Fiscal year 2015 s and 2016 s budget reflects a positive cash flow as expenditures are in-line with funding Beginning in fiscal year 2017 the district s expenditures exceed estimated revenue The district will continue to see its cash balance drop beginning in 2017 as is the case with a normal the levy cycle The district s current assumptions and operations cannot be sustained beyond 2018 The district s ability to continue operations with the renewal of both emergency levies in 2016 will not be sufficient to fund operations; additional funds or cost or saving measures will be required. Tipp City Exempted Village School District Financial Forecast October 2014 Page 1

4 FINANCIAL FORECAST District Considerations Development of an operational plan or vision for the district that addresses the need for ongoing community support in the terms of levy passage for staff salaries and benefits, operations, permanent improvements and possible building or major renovations to district s current facilities Ability to maintain or implement new strategies that promote a positive cash balance including revenue generation and or cost saving measures without detriment to academic programs Monitoring and projection of enrollment figures including open enrollment to assist in projecting state revenue assistance Revenue/Expenditures Overview Beginning Cash Balance $ 2,470,563 $ 3,929,125 $ 4,430,651 $ 4,066,205 $ (136,762) Revenue $ 22,989,991 $ 23,118,791 $ 23,320,269 $ 20,630,330 $ 17,522,772 Expenditures $ 21,531,429 $ 22,617,265 $ 23,684,715 $ ,297 $ 26,070,542 Excess (Deficit) $ 1,458,562 $ 501,526 $ (364,446) $ (4,202,967) $ (8,547,770) Ending Cash Balance $ 3,929,125 $ 4,430,651 $ 4,066,205 $ (136,762) $ (8,684,532) $30,000, $25,000, $20,000, $15,000, $10,000, $5,000, $- $(5,000,000.00) $(10,000,000.00) $(15,000,000.00) Revenue Expenditures Excess Ending Cash The district will be reliant on its cash reserve balance to maintain operations through This is generally the case through a levy cycle as revenue collections do not keep pace with expenditures or the cost of doing business. Budgeted revenue is heavily reliant on the local revenue base and the need for additional revenue solutions will need Tipp City Exempted Village School District Financial Forecast October 2014 Page 2

5 FINANCIAL FORECAST to be addressed prior to Expenditures are holding firm with no increase in staff except for the addition of staff for all-day kindergarten, additional nursing staff, and the need for a part-time mechanic, additional aide support for special needs students and the leveraging of attrition in the certified staffing levels. Health care costs will be a major consideration in 2016 and beyond as the health care industry responds to the Affordable Care Act. The expectation is these costs will be passed on to the user. Since salary and benefits account for more than 80% of the district s budget, these costs will need to be monitored. Revenue Assumptions Both of the district s emergency levies expire in tax year 2016, with the last collection being in fiscal year 2018 or August This revenue accounts for approximately 25% of total revenue, and expiration will result in a negative cash balance in fiscal year State budgeted revenues represent approximately 44% of total revenues. The current state biennium budget runs through After this point, the estimates are ambiguous at best due to change in administration as well as the ever changing condition of state funding and funding models. Property Tax Allocation, 11% Restricted Grants, 0% Unrestricted Grants, 33% General Fund Estimated Revenue - FY15 $22,989,991 Other Revenue, 3% Property Taxes, 53% Property Taxes Unrestricted Grants Restricted Grants Property Tax Allocation Other Revenue Line General Property Tax (Real Estate) Property tax values are established by Miami County Auditor based on new construction. A complete reappraisal or update is completed every three years. Tax Year 2013 was a reappraisal year for Miami County, and an update will be done in tax year During a normal cycle we would expect these values to increase, however, over the recent past values have declined. Current values have seen a decrease in residential values by 8% with an increase in agricultural values of 45% for an overall decrease in value of approximately 7%. The reduction in values does affect the district s inside millage. For tax year 2013, the loss in value resulted in a loss to the district of approximately $100,000. Although declines in property values do affect inside millage the voted millage is protected by HB920. HB920 adjusts tax rates for increases/decreases in values. In effect, should values decrease Tipp City Exempted Village School District Financial Forecast October 2014 Page 3

6 FINANCIAL FORECAST effective tax rates are increased to allow the tax levies to collect the same revenue as when the levy was originally voted in. These conditions are reflected in the tax revenue estimates. Fiscal year 2015 s estimates are based on estimates prepared by the Miami County Auditor. In fiscal year estimates include increases of.05% or less based on little to no growth in values or new construction. In fiscal years 2018 and 2019 tax revenue estimates shows significant reductions as both emergency levies expire in tax year Both levies are expected to be renewed or replaced by the Board based on need. The revenue from renewal of these levies is reflected in Line Although these revenues are reflected in Line , the renewal of these levies will not be sufficient to keep the district out of a deficit balance. Below are real estate tax historical values and rates Total Res/Ag Valuation $ 359,283,290 $ 379,420,610 $ 379,527,660 $ 376,528,220 $ 387,490,750 Inside Millage Continuing Emergency (2009) Emergency (2009) Emergency (2012) Emergency (2013) Sub-Total Operating Bond (2000) Permanent Improvement Total Millage Tipp City Exempted Village School District Financial Forecast October 2014 Page 4

7 Line Unrestricted State Grants-in-Aid FINANCIAL FORECAST Unrestricted State Grants-in-Aid includes basic foundation funding, open enrollment payments and casino tax revenue. Foundation Funding Fiscal year 2015 s basic foundation estimates were based on the most current School Finance Payment Report, SFPR. The new state funding model combines different elements of a district s demographics to derive a state share percentage, or the rate at which the state has determined is their share of the cost to education a student. These demographics include the districts per pupil valuation as compared to the state s median valuation, and a wealth index. The wealth index is the percentage of the district s median compared to the state s median income. The district s current per pupil valuation is % greater than the state average and the district s median taxpayer income is % greater than the state s median income. The state evaluates both of these indexes to determine the state share index. If the valuation indicator is lower than the income indicator, the state uses only the valuation indicator to calculate the state share percentage. Additional factors also impact state basic foundation funding including special education, transportation, etc., however core pupil funding is the main funding factor accounting for 76% of state basic foundation funding s projections were based on the current state funding model, and include the implementation of all-day kindergarten. Numbers including valuations, income levels and current enrollment figures which calculate funding are still based on 2014 s levels. These will be updated we believe sometime in December of Fiscal year s estimates were increased by 1.5% which approximates the average historical growth in per pupil aid. Open Enrollment The district has an open enrollment policy that accepts students from adjacent school districts provided Tipp City has the capacity to accept these students without detriment to academic programs. Fiscal year 2015 s estimates are based on little to no change in the current number of open enrollment students in/out. The district currently received more than $600,000 in 2014 for open enrollment students. Casino Tax Revenue The district received its first payment of casino tax revenue in January Ohio s first casinos opened in May 2012 in Cleveland and Toledo. A casino in Columbus opened in October 2012 and a casino in Cincinnati opened in February Each casino is required to file and remit taxes to the state of Ohio daily. Revenue accumulates in the Casino Tax Revenue Fund. By the 15th day following the end of a calendar quarter, money is transferred from the Ohio Casino Tax Revenue Fund into the several funds including 34% to the County Student Fund. Money is distributed from this fund to all school districts in Ohio based upon student populations as certified by the Ohio Department of Education. Money is remitted directly to the school districts by January 31st and August 31 st of each year. The estimate for years was flat lined as recent casino tax revenue has declined. Tipp City Exempted Village School District Financial Forecast October 2014 Page 5

8 Line Property Tax Allocation FINANCIAL FORECAST Included in this estimated are reimbursements received from the State of Ohio for tax credits given for owner occupied residences and business credits. Also included in this estimate are state reimbursements for Tangible Personal Property tax losses s estimates for property tax reimbursements were based on figures provided by the Miami County Auditor. Subsequent year s estimates were increased by.05% the estimated average year over year growth. The tangible personal property tax reimbursement estimate was based on prior year s collections. This reimbursement is only available to current qualifying tax levies. Due to the unknown passage of rates/amounts of the two emergency levies, the reimbursement for these levies was removed from the forecast in conjunction with their expiration. Additionally, the full tax reimbursement will be totally phased out in October As a result, all reimbursements were removed from the forecast in The district received more than $800,000 in reimbursements during 2014 with $60,000 of these being generated from the district s emergency levies. Expenditure Assumptions Principal - Other, 0% Capital Outlay, 0% Supplies and Materials, 3% Purchased Services, 11% Benefits, 20% General Fund Estimated Expenditures - FY15 $21,531,429 Interest & Fiscal Charges, 0% Other Objects, 6% Personal Services, 60% Personal Services Benefits Purchased Services Supplies and Materials Capital Outlay Principal - Other Interest & Fiscal Charges Other Objects The forecast includes a salary base increase of 2% for staff in 2016 through Insurance benefits continue to rise not only due to the cost for coverage, but also due to the Affordable Care Act. In 2015, the district was fortunate to only receive a.5% increase in health care premiums and a zero increase in dental premiums. This was due in whole from low claims cost. This trend is not expected to continue in 2016 as the costs associated with implementation of the Affordable Care Act will be fully felt in Tipp City Exempted Village School District Financial Forecast October 2014 Page 6

9 FINANCIAL FORECAST The district is most able to control costs at the supply/material level. These costs account for 3% of the general fund budget. So, while controllable, they have a small effect on the district s budget. Despite this, the forecast includes a 3% increase in this line item for 2016 through The district is also forecasting the purchase of a bus in years This will be in addition to the bus that will be purchased out of permanent improvement funds. To address the district s aging bus fleet, the purchase of two buses per year is needed. Line Personal Services The forecast includes an addition of 2% to base pay for all staff s estimates include severance payments for staff that will be retiring; the hiring of additional kindergarten staff to accommodate all day kindergarten, the hiring of one full-time nursing staff, the addition of a part-time mechanic, and a small increase in personnel costs for aide s to assist special needs students. Also included are the cost savings of approximately $165,000 realized from attrition of veteran staff and their replacement with newer members, and reductions made to workdays for some classified staff. Line Employees Retirement/Insurance Benefits This line item includes insurance, retirement, Medicare and worker s compensation insurance. An increase in retirement is required due to an increase in salaries as the district must deposit 14% of includable compensation to either the State Teachers Retirement System or the School Employees Retirement System. Health care costs have also caused this line item to increase estimates include a rate increase of.05%. Years 2016 to 2019 reflect a 10% increase for health care costs. This estimate was based on the most current research of where premiums will be going in the future. Dental insurance premiums show no increase as rates have been locked with our dental carrier through Workers compensation premiums are also reflecting an increase of 5% in 2016 as the district moves from a group experience rating plan to an individual rate. The remaining years are held steady as the district expects to move back into a group experience rating plan in Line Purchased Services Purchased services include expenditures for utilities, professional development, and state foundation deductions for tuition-type students, including open enrollment, community school, scholarships and post-secondary enrollment option/college credit plus students. It also includes estimates for special education services that may need to be provided outside services provided by the Miami County and Montgomery County educational service center contracts. Estimates for this line item were based on historical trends and estimated service needs. A 10% increase was incorporated throughout the forecast to accommodate the addition of professional development cost, estimated increased special education costs, potential consultant costs, and additional wellness expenditures. Professional development costs have been included as Race to the Top dollars has been in the most part funding the District s professional development for the last 3 fiscal years. These costs will have to be absorbed by the general fund. Outside service payments for special education services are also on the rise. As is the national trend Tipp City also is seeing a small rise is those students identified, but more importantly is seeing the cost to support these students increase at a disproportionate rate. Tipp City Exempted Village School District Financial Forecast October 2014 Page 7

10 Line Supplies and Materials FINANCIAL FORECAST This line is also increased for 2016 and incorporates a 3% increase over the life of the forecast. This is due to an anticipated increase in diesel fuel and instructional materials as a whole. Line Capital Outlay Fiscal year 2016s estimate include an increase of approximately 3% during the life of the forecast and the purchase of a school bus every year from 2016 to 2019 to upgrade our aging fleet. In prior fiscal years the district has purchased one bus with its permanent funds. This however has not been sufficient to maintain a workable fleet and the addition of a purchase within the general fund is needed. Line Principal-HB 264 Loans The District issued 15 year Energy Conservation Notes, HB264, in fiscal year Amounts on this line include principal repayment on this loan. These notes will be paid in full in fiscal year Line Other Objects County ESC contract and county auditor fees for tax collections are in this line item. This line item shows moderate increases as the cost for special education services is not expected to decrease. Also included in this line item are transfers that will be made to the uniform school supplies fund from the general fund to cover the costs incurred from mandatory waiver of school fees, and an anticipated transfer to the nutrition services fund for deficit spending in that fund. Conclusion The district will see its revenues fall by approximately 24% from 2015 to This is due to the expiration of the district s two emergency levies The district s expenditures will climb by more than 21% from 2015 to 2019 as cost of doing business increases Cash reserves will not be sufficient to maintain operations beyond 2018 Although the district has implemented many cost saving measures including energy efficiencies, wellness programs and adherence to strict staffing levels, the district will be operating in a deficit in 2017 The forecast demonstrates the district is operating within their means and has made appropriate budgetary decisions to extend the latest voted operating funds through to their expiration Additional programs, changes in services, and/or prevention of cut to services cannot be implemented without additional funding and renewal of both emergency levies Tipp City Exempted Village School District Financial Forecast October 2014 Page 8