EASTLAND FAIRFIELD CAREER & TECHNICAL SCHOOLS FIVE-YEAR FINANCIAL FORECAST

EASTLAND FAIRFIELD CAREER & TECHNICAL SCHOOLS FIVE-YEAR FINANCIAL FORECAST Eastland-Fairfield Career & Technical School s (EFCTS) Board of Education is a nine-member board that represents Fairfield county (2), Franklin county (3), Whitehall (1), Reynoldsburg (1), Teays Valley (1), and Gahanna-Jefferson (1). Fairfield and Franklin counties switch the 3-2 split of the five members the January of every third year through December 2014. Beginning January 2015, the split now occurs every fourth year, as the terms of the Board members migrated from the prior two-year terms to the new three-year terms effective with terms beginning after September 29, 2013. EFCTS now serves approximately 1,357 in combination of Eastland Career Center, Fairfield Career Center, Architecture, Teaching Professions, and BioScience programs at Gahanna s Clark Hall, Environmental Science at New Albany-Plain Local, Performing Arts at Reynoldsburg, Marketing/Logistics at Groveport Madison, and Multi-Media at Pickerington. An additional 929 students are served through IT and other Fundamental classes at Liberty Union, New Albany- Plain Local, Teays Valley, Gahanna-Jefferson, and Pickerington. IT Fundamental classes are introduction classes (traditionally for sophomores) that provide exposure to Information Technology in order to prepare students for advanced study in Interactive Media, Information Systems, Programming, or Networking. For EMIS purposes our enrollment has not yet been determined, as this forecast is being submitted prior to the 2014-2015 school year s October reporting availability submissions are being made but reporting is not yet available. In general EMIS enrollment information reflects smaller, due to the difference between a student served and the percentage of time of their day that the student is served. Our total enrollment for EMIS purposes for 2014 was 1,113, compared to the prior year s 1,171 and resident student count of 1,077, compared to the prior year s 1,135. We anticipate a 6.5%+ increase in our EMIS enrollment for 2015, compared to 2014. Adult Education (now known as Adult Workforce Development) serves approximately 2,700 students in all the program areas, which include career development, career enhancement, assessments, Adult Basic Learning Education, special interest, computer office skills, GED preparation/testing, human resource development, medical and dental programs, medical office,, public safety, and diversified skills training. Although the revenue and expenditure activity from this fund is not reflected on the five year forecast, the need or lack of a need to advance dollars, from the general fund to the adult education fund, is a factor in the District s balance. Grant dollars are also a factor. In FY 2014, the District received approximately $1.4 million in grant funding, and a substantial portion of those dollars are used for salaries, fringe benefits, and equipment. Although this money is not used to supplant general fund expenditures, the programs and initiatives that are funded with the grant dollars are greatly beneficial to the goals and objectives of the District, such as Ohio Graduation Testing Intervention, School Improvement, Marketing, Business Partnership Coordination, Career Development, professional development, and procuring the latest equipment for Career-Technical labs. The budget of the EFCTS District differs from a comprehensive district, as the percentage of total expenditures should be much closer to 60% salaries/benefits (80% salaries/benefits in comprehensives), because the District spends considerably more on capital outlay, such as career/technical equipment, lab upgrades, and building construction/renovations. This capital outlay is typically not purchased through bond or permanent improvement funds, but is instead

purchased with general fund dollars, using a phase approach (to adjust for fluctuating years of financial performance). The District s five-year forecast reflects a commitment to quality staffing, quality equipment, and quality facilities for our students. Further, the forecast reflects a commitment for services beyond career-technical education, such as academics and intervention for passage of the Ohio Graduation Test (OGT), as this is critical for the employability and overall success of the students. To that end, this will be the ninth year we enhance our previously-offered college preparatory academic classes and articulation agreements with options for academic and careertechnical dual enrollment and transferable articulated credit. History The District was established in 1966 with the passage of a.6 mill bond issue, which was collected over a 20 year period that ended in 1988. This money was used to build the Eastland Career Center, which opened in 1968. During that period, five school districts were included in the jointure: Groveport Madison, Whitehall, Gahanna-Jefferson, Reynoldsburg, and Canal Winchester. From 1968 to 1971, four districts were added: Teays Valley, New Albany-Plain Local, Pickerington, and Bexley (contract). In May, 1971, a 1.2 mill continuing operating levy passed, as well as a.4 mill bond issue that was retired at the end of 1994. The bond issue allowed the Eastland Career Center to expand with a Graphic Communications lab, a Multi-Purpose room, and the Agricultural program wing, which included Agriculture-Industrial Diesel Mechanics, Horticulture, and Management Marketing. The balance of proceeds was invested, as the bond had a limited term, for full benefit of bond proceeds. In 1980, a 1.4 mill five-year operating levy passed, which enabled the district to update some of the older labs at the Eastland Career Center. The levy also helped provide education for both youth and adults. In 1984, the district expanded to service Fairfield County. The following five districts were added: Amanda-Clearcreek, Berne Union, Bloom-Carroll, Fairfield Union, and Liberty Union- Thurston. In 1985, Walnut Township was added to our jointure. In 1986, a 1.4 mill five-year replacement operating levy passed. Fairfield Career Center was constructed in 1986-1987. The Center was constructed with an interest-free House Bill 291 loan that was paid in full June, 2005. In 1988, Hamilton Local was added to our jointure. This final member entry increased the district to serve 16 districts, covering nearly 700 square miles, which continues today. In 1990, the District resumed lab updates, following a two-year slow-down. Seven unsuccessful attempts were made to replace the 1.4 mill five-year operating levy that expired in December 1992. In 1993, the District s Central Office and Adult Education relocated to the Amalgamated Building. The building was purchased with an Ohio Department of Education HB 808 interest-

free loan that was paid in full September, 2009. Adult Education had expanded significantly, serving approximately 6,000 adults, and was renting spaces throughout both counties to house programs. In addition, guidance, intervention, special education, and academics needed additional space in the Centers. This was allowed with the movement of the Central Office and Adult Education staff. November, 1995 the District participated in the HB 264 Energy Conservation project for updates to the Eastland Career Center. This loan was a 6.5% interest-bearing loan that was paid in full May, 2005. The purpose of the loan was to improve the structure of the Eastland Career Center for energy conservation (utility-saving) purposes. February 3, 1998 saw the passage of a.8 mill continuing operating levy. This successful special election allowed the District to benefit from the full 2 mill floor, with no reduction factors. Summer, 2000, the District began a $500,000 renovation to the Dental Assisting, Electronics, Restaurant Services, and Engineering Technology labs at the Eastland Career Center. A Chemistry/Physics lab was also updated to reflect increased graduation standards. Major roof and plumbing repairs were also made to the Eastland Career Center during the year. May, 2001, the Board approved the $240,000 remodeling of the Eastland Career Center s Media Center and Computer Lab. This project also included Individual Distance Learning Labs at both the Eastland Career Center and the Fairfield Career Center, supported in-part by a grant that allowed users to link at both locations for a single class, meeting, lecture, or other use. This project was completed for the start of the Fiscal Year 2002. January, 2001, the Board approved a $2.6 million, 20,000 square foot expansion to the Fairfield Career Center that included a new HVAC lab, Physics lab and lecture room, Chemistry lab and lecture room, Computer Support Technology lab, Adult Education office space and Adult Education Assessment and Quality Training area. A distinguishing entryway was also added to the Fairfield Career Center that more clearly defines the main entrance of the building. This project was completed for the Fiscal Year 2003. March, 2002, the Board approved renovations at the Eastland Career Center that included a complete renovation of the Cosmetology Lab and Horticulture Lab and store. The Ag/Diesel lab was also renovated. This project began Summer, 2002 and was completed in time for the 2003 school year. The cost of this renovation, known as Phase III, was $1.3 million. November, 2002, the Board approved a $2 million Phase IV project that included a new 6,200 square foot building for Electrical Tech and Adult programs, new doors (with electronic security features) for the Eastland Career Center and a new façade that dramatically changed the look of the then 35-year old Eastland Career Center. Although construction fell behind, the new building and façade were used during the 2004 school year. March, 2003, the Board approved a $110,000 contract to add a new sprinkler system to Building 1 of the Eastland Career Center. It was agreed that as renovations continue, updating the sprinkler system will continue throughout the entire Career Center (where required by code). April, 2003, the Board approved a $1.5 million Phase V project for the Eastland Career Center that included the renovation of the Welding lab, Electronics lab, complete re-design of the

Business Academy and the addition of a 3,600 square foot storage building. Again, although construction fell behind, the labs and building were used during the 2004 school year. April, 2003, the Board approved a $1.5 million project to replace the roof at Fairfield Career Center (the older portion of the building not the 20,000 square foot addition). Low-interest financing (3.83%) was secured for this project. The project was completed during the 2004 school year. April, 2004, the Board approved a $2.8 million Phase VI project that included the renovation and expansion of the Eastland Career Center cafeteria, renovation of the Commercial Art lab (including a gallery for student work), and a re-design of the drainage and layout for the parking lots of the Eastland Career Center. The project was completed December 2005, though the space was utilized by students and staff much earlier late 2004. August, 2004, the Board approved application with the Expedited Local Partnership Program through the Ohio School Facilities Commission (OSFC). Career-Technical Districts (JVSs) were not eligible to participate in this until FY 2005. Although Eastland-Fairfield ranks very low on the priority list which is based on relative wealth among career-technical districts filing this application will allow the potential for future projects to be considered as local share when Eastland-Fairfield does become eligible for these dollars. The effect would be a potential future period refund for the projects that begin after the master plan document is approved by the OSFC (past and current projects would be excluded). As an update to this historical information, the process has been reviewed a couple of times, including September 2012, and due to the restrictions that would be placed on the projects that are counter to the desired outcomes of the projects and the very low ranking that our District continues to have on the list, application for this program has been postponed indefinitely. April, 2005, the Board approved three projects a $1.7 million Phase VII project that included the renovation and expansion of the secondary and adult office facilities and the intervention classrooms for the Eastland Career Center, a $279,000 Phase I project for Fairfield Career Center for the complete renovation and re-equipping of the Cosmetology lab, and a $174,000 project at Groveport Madison High School for the Marketing/Logistics School Store. The Cosmetology lab was ready for the beginning of the 2005-2006 school year. The Marketing/Logistics School Store opened in December 2005, though there were a few items yet to finalize the project. The Intervention classrooms and offices were also given occupancy in December 2005, though there were a few items yet to finalize the project. All have since been finalized. July, 2005, the Board approved a $307,000 Fairfield Construction Trades project that included construction of a storage building and prep work for an outdoor work area for the construction programs at Fairfield Career Center. Construction started August 2005 and was completed August 2006. March, 2007, the Board approved a $4.5 million Phase VIII project that included the construction of the Auto Academy, which houses Auto Body, the existing Auto Technology, and added a second Auto Technology program which began in the 2008-2009 school year. In addition, the phase included the renovation of the former Machine Trades lab to serve as the Computer Aided Design Drafting lab. The new 29,500 square foot building was built west of the Electrical Technology building on the Eastland Career Center campus. The Design Drafting lab was completed for the start of the 2007-2008 school year. The Auto Academy building was

completed for the students return from spring break during the 2007-2008 school year. The new Auto program began its first year with junior enrollment during the 2008-2009 school year. The 2008-2009 school year also saw the implementation of one-to-one laptops for all full-time students at the career centers. There were pilot programs that began late in the 2007-2008 school year. The ongoing annual cost for incoming juniors was estimated to be $400,000 per year. As such, the delivery model of this was modified, effective for the 2011-2012 school year. It is no longer a one-to-one, where a student is assigned a single machine but instead machines are available to the students throughout their day by use of PCs, laptops, and laptop carts in the various classrooms, labs, media center, and study halls. The District has purchased the formerlyleased laptops and will use them as long as is practical. This should reduce any duplicate offering where a student has a laptop assigned to them but is using a PC or other device during a given lab or class. This has also reduced the instances of laptop damage or wear and tear during transport among classes and to/from home and school. May, 2009, the Board approved the Phase IX project for both a renovation and addition to the Fairfield Career Center. This included the renovation of the Health Technology and Health & Recreation Services programs and the addition of square footage for the additional programs of Dental Assisting and Criminal Justice. The total cost of both renovation and expansion was $4.3 million. Although the project was not completed when originally anticipated, the Health Technology students began the 2009-2010 school year in their new labs and the Health & Recreation Services and existing Adult Health programs moved into their spaces January 2010. The Dental Assisting and Criminal Justice programs began the 2010-2011 school year in their new labs. May, 2010 the Board approved an agreement with Gahanna-Jefferson School District to occupy 8,000 square feet of the first floor of their new building Clark Hall. This commitment was for base construction and build-out of the space. The base cost totaled $1.25 million with an additional cost of $1.2 million to complete, including furniture and equipment. This project was substantially completed in time for the 2011-2012 school year. February, 2011 the Board approved the renovation of the Fairfield Career Center to support three new science labs, as a final component of the Phase IX project. The cost of the project was $657,000 and the work began April 2011. Final punch list items were addressed in May 2012. The project was considered substantially complete in time for the 2011-2012 school year. July, 2011 the Board approved the $3.5 million bond issuance for infrastructure work of the facilities. These projects include but are not limited to electrical upgrades for Eastland Career Center, partial roof replacements for Eastland Career Center, HVAC improvements at Eastland Career Center, and chiller, boiler, and pump replacements at both Eastland and Fairfield Career Centers. The repayment schedule is 10 years at an interest rate of 2.95%. Due to the nature of these necessary improvements and the economic environment, this option was determined to be more appropriate than the District s customary phase approach of financing. The impact for the general fund forecast is the repayment of principal and interest over the 10-year period. For technology infrastructure, in September 2011 the District completed a replacement of all network infrastructure with enterprise level Cisco equipment that allows enhanced security, stability, and scalability of computers and their applications. Server room electrical upgrades and server replacements were also been completed. With the ever-increasing use of technology and ever-increasing capacity and security needed for such this project allows the District s

systems (both staff and student) to function at optimal levels. This project cost $1.7 million initially with $200,000 in additional upgrades for enterprise-level backup and other features and $210,000 per year in overall annual service costs. May 2014, the Board approved a renovation of the cafeteria and Culinary Academy kitchen and instructional space. The Heritage Room and serving/seating portion of the cafeteria both previously renovated were not part of this project. This project will allow for a Culinary Services space at Eastland Career Center serving all three functions in an integrated model. This project began in late May 2014, with substantial completion November 2014. This was funded by a combination of the $3.5 million bond issuance funds and the general fund. To date, with change orders and loose equipment, the project cost $2 million. The District is re-assessing some of the prior equipment purchasing schedules and initiatives. Conversely, for those programs that have significant and sustained applications exceeding existing offerings, additional program offerings are being discussed. For example, the 2014-2015 school year saw the addition of a third Criminal Justice program, housed at Eastland Career Center in the existing lab and a third Cosmetology program, housed at Fairfield Career Center. Equipment and other lab preparations for this program were completed during Summer 2014 procurement with grant funds and the general fund in an existing space that was not previously a Cosmetology lab. Purchased service and supply budgets were reduced for FY 2013, compared to FY 2012, and then flat-lined for the remainder of the forecast. Also, personnel reductions are being reviewed, primarily through attrition not replacing some positions and providing services in a different capacity/model for others. Future The financial future of the Eastland-Fairfield Career & Technical Schools is good. HBs 66, 153 and 59 have been and will continue to be felt in years beyond those measured on this forecast. This is the second year of the biennium (HB 59). Still felt are the financial impact of the accelerated phase-out of the Direct Payments for Tangible Personal Property and Electric De- Regulation, which were both fully phased out for EFCTS in FY 2013. In addition, the reappraisals of Franklin and Pickaway counties saw, for the first time, significant decreases in assessed valuations of residential real estate. Fairfield county s reappraisal took place 2013, collected 2014. A reappraisal taking place in 2013 will reflect a partial impact in FY 2014 and full impact in FY 2015, due to the timing of collections (March and August) during the fiscal year (July June). With the District s voted and effective millage rates being the same 2 mills a decrease in valuation has a full impact on the District s Real Estate revenue. The House Bills impact will be addressed again, in more detail, in the Revenue section of this document. Reflected below is a description of programming and facility/equipment purchases proposed, if state and local income match the projections for Fiscal Years 2015-2019. Recommendations will be re-evaluated annually and presented to the Board for approval before implementation. FY15 (2014-2015 School Year) Allocation for salary/benefit improvement (year 2 of 3-year agreement) maintain existing salary schedules with a fixed-dollar stipend for those not experiencing an incremental increase on the schedule (receive either increment or stipend)

Continued allocation for supply and purchased services at FY 2013 levels per category Allocation for equipment and facility updates/renovations of $1,766,210 Continue to absorb most of the items that have historically been student fee items - $180,000 FY16 (2015-2016 School Year) Allocation for salary/benefit improvement (year 3 of 3-year agreement) maintain existing salary schedules with a fixed-dollar stipend for those not experiencing an incremental increase on the schedule (receive either increment or stipend) Continued allocation for supply and purchased services at FY 2013 levels per category Allocation for equipment and facility updates/renovations of $4,500,000 Continue to absorb most of the items that have historically been student fee items - $180,000 FY17 (2016-2017 School Year) Allocation for salary/benefit Continued allocation for supply and purchased services at FY 2013 levels per category Allocation for equipment and facility updates/renovations of $1,266,210 Continue to absorb most of the items that have historically been student fee items - $180,000 FY18 (2017-2018 School Year) Allocation for salary/benefit Continued allocation for supply and purchased services at FY 2013 levels per category Allocation for equipment and facility updates/renovations of $1,266,210 Continue to absorb most of the items that have historically been student fee items - $180,000 FY19 (2018-2019 School Year) Allocation for salary/benefit Continued allocation for supply and purchased services at FY 2013 levels per category Allocation for equipment and facility updates/renovations of $1,516,210 Continue to absorb most of the items that have historically been student fee items - $180,000 Revenue: HBs 66 and 153 have a longer term negative impact on the district s revenue. House Bill 66 removed personal property (tax on machinery and equipment, furniture and fixtures, and inventory) from the local valuation. Thus, our local revenue is based on 2 mills of a smaller valuation. There was a substitute funding mechanism in place by the state, but it was not a true hold harmless. The hold harmless was capped at 2004 values. House Bill 153 accelerated the phase-out of the hold harmless such that it has been phased out for EFCTS for FY 2013 was previously to be phased out in calendar year 2018. FY 2011 the annual direct reimbursement payment for tangible personal property was $633,185. The direct payment for electric deregulation was $72,016. The cost of doing business factor, which differentiated revenue received by the state based on the county in which the district is located, was phased out effective FY 2008. This equates to a loss of approximately $230,000 per year for the lost factor when not on the state foundation guarantee. The District became a formula district during the 2008-2009 school year, because of the increase in enrollment in workforce development programs. House Bill 1 re-instated flat-dollar revenue

that represented a.75% increase in 2009 s state basic aid for fiscal year 2010 and a.75% increase of 2010 s state basic aid for fiscal year 2011. HB 153 was flat funded for the state basic aid line item for fiscal years 2012 and 2013. HB 59 returns to the formula with an overall guarantee and an overall cap (minimums and maximums), that includes components such as the current year s enrollment and a state share percentage. The District remained on the guarantee for 2014. Projections for 2015 reflect the District again being paid from the formula, due to increased enrollment, an increase in the per-pupil funding amount, and the decrease in assessed valuation. With the estimated projected increase of enrollment, 2015 is actually estimated to experience the gain gap of approximately $375,000, representing dollars that will not be received but would if no cap. Transfer line items include Open Enrollment, Associated Services from Member Districts (serving as a CTPD), and Other Adjustments - contracts with other districts. We currently have a contract in place with Bexley City Schools, in which tuition is paid by the district for students to attend our programs. In addition, we currently have a satellite unit agreement with Reynoldsburg City Schools for the Performing Arts Program. Eastland-Fairfield s state share, according to the District s state report is approximately 43.5%. Foundation Revenue, however, makes up only approximately 23% of the District s General Fund Revenue. R.E./P.P.T./R.B-H.S. This local revenue, typically referred to as Property Tax Revenue had increased dramatically due to our 2.0 mills, with no reduction factor applied, and the incredible growth that had taken place in Franklin, Fairfield, and Pickaway counties. Reappraisals had also added to the increase in revenue for the district. Eastland-Fairfield serves the six counties of Franklin, Fairfield, Pickaway, Hocking, Licking, and Perry. Every district differs with regard to state/local funding share. Eastland-Fairfield s local revenue, including Other Local Revenue, is approximately 77% of the General Fund Revenues. Unfortunately, an unprecedented decrease in appraisal values occurred, due to the housing market changes that began in 2008 and the reappraisals that took place reflecting the changes. The benefit of the full 2.0 mills that had been experienced during the prior years saw a full decrease, as no buffer exists between voted and effective millage so the District saw the full 2.0 mill impact on the appraisal decreases, making FY 2013 revenues similar to FY 2006. Current total collections to date, at the time of this forecast s submission, from all counties reflect nearly no change in revenue, compared to FY 2014. FY 2014 finished the year with a 1.57% increase, compared to FY 2013. FY 2013 had finished the year with a 2.7% decrease, compared to FY 2012. Fairfield county s reappraisal took place 2013, collected 2014. A reappraisal in 2013 reflected a partial impact in FY 2014 and will see full impact in FY 2015, due to the timing of collections (March and August) during the fiscal year (July June). The Eastland-Fairfield Career & Technical Schools now serve the following associate schools in the six counties: Amanda-Clearcreek Berne Union Bexley (contract) Bloom-Carroll Canal Winchester Fairfield Union Gahanna-Jefferson Groveport Madison Hamilton Local

Liberty Union-Thurston New Albany Plain Local Pickerington Reynoldsburg Teays Valley Walnut Township Whitehall Other Revenue Contracts for IT Fundamental Program contracts, Interest Income, and Summer School are some of the components of the district s other local revenue. The GRADS program was significantly reduced in FY 2006, as cross-district contracts were not renewed. For FY 2012 they were fully eliminated. The IT Fundamental Contracts are also decreasing, as the State is no longer funding this model of delivery (for new contracts). The IT Fundamental program at Bloom-Carroll was discontinued as of FY 2006, as Bloom-Carroll terminated the contract, due to financial reasons. For FY 2012 the IT Fundamentals contracts for Canal Winchester and Whitehall were also discontinued. Further, Liberty Union s was reduced by half. Interest Income is increasing through a revised investment strategy that involves purchasing longer-term, callable instruments and then re-investing in the same once the first is called. Set-Asides Effect of S.B. 345 The Senate Bill eliminated the Budget Reserve requirement (effective FY 2001). This Bill also calculated the minimum spending requirements for Capital Outlay and Textbooks and Supplies (both effective FY 2002) by a new equation that significantly reduced the minimum spending threshold for most districts in the state of Ohio. Eastland-Fairfield was one of the many who benefited from this calculation, as the District s expenditures for these two categories were historically greater than the revised minimum. Thus, since FY 2002, no setasides were anticipated. Effective for FY 2012, HB 30 has repealed the requirement for setasides for supplies and textbooks. The only remaining category is capital outlay, and Eastland- Fairfield has no set-aside requirement for this category. Enrollment Projections Enrollment projections for a career-technical district are challenging to calculate, as the district is a school of choice for students. Past trends have been tracked and projections estimated as follows: Category FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Total 1 12 1,166.48 1,135.11 1,077.23 1,150.00 1,150.00 1,150.00 1,150.00 1,150.00 Open Enrollment 21.82 30.34 31.60 31.00 30.00 30.00 30.00 30.00 Other Adjustment 6.15 6.00 4.00 5.00 5.00 5.00 5.00 5.00 Total EFCTS 1,194.45 1,171.45 1,112.83 1,186.00 1,185.00 1,185.00 1,185.00 1,185.00