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Sandusky City Schools Assumptions for Five- Year Financial Forcast

SANDUSKY CITY SCHOOL DISTRICT

ASSUMPTIONS FOR FIVE-YEAR FINANCIAL FORECAST

PROJECTED FISCAL YEARS ENDING JUNE 30, 2016 THROUGH 2020

October 2015

The Five-Year Financial Forecast is submitted by Gina Deppert, Treasurer/CFO with Sandusky City Schools. Mrs. Deppert has been with Sandusky City Schools since May 01, 2015. The Board of Sandusky City Schools will continue to monitor the assumptions presented for future updates.

Fiscal Year 2015 (2014-15 School Year) Review:

The total General Fund Revenue received for fiscal year 2015 was $44,522,056, and the total expenditures were $42,611,353. The district revenues were $1,910,707 higher than expenditures, with the cash balance as of June 30, 2015 of $4,150,867.

The Sandusky City School District’s Five-Year Financial Forecast dated October 2015, for projected fiscal years ending June 30, 2016 through 2020, represents the District’s best estimate of revenues and expenditures for the general operating fund of the District. The forecast is used as a planning tool. State law requires filing the forecast with the Ohio Department of Education twice each year (May and October). Because of the changing nature of school finance and other economic factors, this forecast is fluid and subject to change. Estimates are made based on what is considered sound but conservative assumptions.



LINE 1.010--General Property Tax (Real Estate). General Property Tax revenue estimates are based on historical growth patterns, including scheduled reappraisals and updates. Estimates for the current fiscal year are based on information provided from the county auditor. Due to slowness in the economy and review with the historical trend in recent years, projected growth in valuations of both real estate and commercial property classes are kept to a minimum. Erie County is going through a reappraisal in 2015. Future years reflect annual growth in real estate tax revenues, based on historical trends, property valuations and research with the Erie County Auditor’s office. The FY16 projections include minimal growth in valuations.

Real Estate increases/decreases are also projected based upon settlements from Board of Revisions (complaints filed for valuation/tax reductions), and small delinquency collections. In addition, collection split between fiscal years as well as collection rate are important and can impact the amount of revenue collected in any given fiscal year.

Line 1.020 Tangible Personal Property Tax

Tangible Personal Property Tax revenues consist of payments from public utility property. This tax was phased out from HB66, and Sandusky City Schools will no longer receive payment from these collections. The adjustment is reflected in the five year forecast for all projected years. The remaining collections projected contain the values from the personal property utility valuations. Growth is kept minimal based upon the most recent appraisal. Public Utility Personal Property Tax projections are based on the property valuations established from voted millage.

LINE 1.035 –Unrestricted Grants-in-Aid

Unrestricted revenue for the new biennium budget H.B. 64 simulated Sandusky City Schools to receive the fully projected increase or “cap” of 7.5%, this figure could be adjustment dependent upon many factors including the state enrollment data in comparison to the district enrollment detail. A summary of the funding calculations include the following: a per-pupil basic aid of $5,900 in FY16, Core Opportunity Grant; a state share index to determine state and local contributions, a targeted assistance funding mechanism scaled by the districts local wealth; K-3 literacy funding, involving tier funds; gifted and career tech funding; and transportation funding changes. The districts are capped and cannot receive more than an increase of 7.5% in FY16 and FY17. Sandusky City Schools, based upon estimates from the simulations posted on the Ohio Department of Education website, is projected to receive the maximum increase for FY16.

The Career Technical/Vocational funds are reflected as a deduction from the unrestricted note and added to the restricted note within the forecast. The amount included with the Ohio Department of Education simulation is $348,977. Funds projected from FY16 through FY20 are reflecting minimal increases; unknown of the future biennium budget state funding with Ohio School Districts. In addition, the district receives revenue categorized as economic disadvantaged funds; these funds are posted as restricted funds.

Sandusky City Schools will continue to receive Casino revenue payments twice a year. These payments are represented in the unrestricted grants category. The recommended allocation for revenue estimates with Casino monies is approximately $51.50 per student (educated by the district – enrollment) for FY16. In addition, special education transportation direct payments will continue for the district.

As each biennium is passed, unrestricted funds may be altered. All necessary adjustments will be made in accordance to all future biennium budgets. If the state budget reduces the state revenue with Sandusky City Schools, the financial forecast will be modified to reflect all potential increases/decreases.

LINE 1.040--Restricted Grants-in-Aid. Sandusky City Schools receives funds for vocational programs at the secondary levels of instruction. In addition, the district receives Economic Disadvantage Funds posted into this line item. The five-year forecast includes the amount of funding included with the state foundation payments, listed on the Ohio Department of Education’s website. The forecast represents the best estimate with the data provided by the department. Once the established numbers are released for this category, adjustments may need to be submitted.

LINE 1.050--Property Tax Allocation. The growth in this revenue category parallels the anticipated growth and decline in property taxes and follows historical patterns.

Beginning in Fiscal Year 2006, the District began receiving cash reimbursements from the state, to hold the District harmless from the elimination of the Tangible Personal Property Tax. These reimbursements are reflected on this line. This is not new money, just a reallocation from line 1.020.

The district projections include continuation of receipt of the Tangible Personal Property Tax held harmless payment each fiscal year. Beginning with FY16, the direct payment will begin to phase out and reduce the revenue stream for this line item within the forecast, approximately 1%. In addition, payments from Homestead/Rollback exemptions paid for by the State of Ohio are reflected in this category.

LINE 1.060--All Other Revenues. All Other Revenues are projected to remain relatively steady at projected levels. This line also includes interest on district investments, and other miscellaneous revenues. Investment earnings are projected to decline in future years due to the decline in projected ending cash balances which provide the principal for investments. Due to economic conditions, projections for this category have been kept conservative.

LINES 2.040 through 2.070--All Other Financing Sources. These lines follow historical trends (transfers in, advances in, refunds from prior fiscal years). Various funds may need advances and transfers etc… to cover year end balances; such as, Food Service Fund, Grant fund allocations to address fiscal year end cash flow etc…



LINE 3.010--Personal Services. Calculations for Personal Services (salaries) for the current fiscal year are based on the collective bargaining units in place. Historical trends are used for variable areas such as substitute costs, overtime, unpaid personal leave, severance pay, educational advancement, supplemental services (coaching, all year supervision etc…) and others.

LINE 3.020--Employees’ Retirement/Insurance Benefits. This line item is based on existing negotiated agreements, employee benefit plans and historical patterns. This category consists of retirement contributions, Medicare, medical/dental/vision, life, workers’ compensation, SERS surcharge, and unemployment compensation. Any negotiated salaries will also impact this expenditure category.

Employee benefits are projected for FY 2016 based on expected actual expenses, followed by 5% increases in 2017, 2018, 2019, and 2020. During FY 2013, the employee contribution rate for insurance coverage was increased from 10% to 15% in an attempt to help defray the burden of insurance costs and distribute these costs more equitably.

LINE 3.030--Purchased Services. This category includes a wide range of expenditures including utilities, legal fees, contractual professional development, post-secondary option fees, open enrollment payments (for resident students of Sandusky City Schools, enrolled to other districts), equipment repairs, mileage reimbursements, fuel charges, and tuition expenses. Projections are based upon historical patterns and anticipated economic trends. As enrollment in community schools fluctuate, tuition fees are also subject to increase/decrease. The increases are represented in projected forecast years.

Line 3.040--Supplies and Materials. Supplies and materials consist of all supplies within the district ranging from instructional to maintenance. The supplies projected include an increase for the 2015-16 school year due to increased supply costs for the district (paper, instructional supplies, janitorial supplies etc…).

LINE 3.050--Capital Outlay. The majority of the District’s capital outlay needs are provided by a separate Permanent Improvement levy (not included in this forecast), to assist with building/grounds, technology, and transportation needs.

LINE 4.300--Other Objects. This line contains miscellaneous expenditure categories; this estimate is based on historical trends. The major expenditures in this line contain county auditor and treasurer fees.

LINE 6.010 – EXCESS OF REVENUE & OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES & OTHER FINANCING USES

The forecasted years 2019 through 2020 demonstrate the district in deficit spending (with a positive reserve balance through 2020. The Senior Administration team and the Sandusky City Schools Board of Education will continue to monitor line 6.010.

Each biennium budget may impact the five-year financial forecast. The Treasurer of the district will continue to monitor legislation for implementation to the five-year financial forecast. With changes in legislation, enrollment, and local collection efforts the forecasted numbers are subject to change. The Sandusky City Board of Education will continue to monitor the forecast should these assumptions change resulting in a negative balance any given fiscal year. A financial contingency plan shall be implemented to offset any projected shortfall.


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