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Five Year Forecast MAY 2014 UPDATE. SIMPLIFIED STATEMENT.

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Presentation on theme: "Five Year Forecast MAY 2014 UPDATE. SIMPLIFIED STATEMENT."— Presentation transcript:

1 Five Year Forecast MAY 2014 UPDATE

2 SIMPLIFIED STATEMENT

3 PROJECTED FUND BALANCES June 30, 2014 Projected Cash Balance $8,690,087 June 30, 2014 Projected Cash Balance $8,690,087 June 30, 2015 Projected Cash Balance $8,038,162 June 30, 2015 Projected Cash Balance $8,038,162 June 30, 2016 Projected Cash Balance$ 2,608,408 June 30, 2016 Projected Cash Balance$ 2,608,408 June 30, 2017 Projected Cash Balance -$7,000,753 June 30, 2017 Projected Cash Balance -$7,000,753 June 30, 2018 Projected Cash Balance-$18,383,001 June 30, 2018 Projected Cash Balance-$18,383,001 FY16 Balance Barely Meets 30 Days Required Cash on Hand FY16 Balance Barely Meets 30 Days Required Cash on Hand WHY THE DROP IN FY16 ? (Expired Levy – Replacement Needed) WHY THE DROP IN FY16 ? (Expired Levy – Replacement Needed)

4 REVENUE TRENDS: Property Tax Drops Declining revenue sources from $30 M to $27 M Declining revenue sources from $30 M to $27 M Driven by 12/31/14 expiration of Fixed Sum Levy Driven by 12/31/14 expiration of Fixed Sum Levy Replacement revenue required to maintain operations Replacement revenue required to maintain operations Anticipate modest upward trends for income tax, state aid and miscellaneous revenue Anticipate modest upward trends for income tax, state aid and miscellaneous revenue

5 REVENUE TRENDS: Public Utility Tax ? Substantial increase probable upon completion of Vassell sub- station Substantial increase probable upon completion of Vassell sub- station Estimated completion summer 2014 Estimated completion summer 2014 Tax assessed 2015 – Tax collected 2016 Tax assessed 2015 – Tax collected 2016 First half taxes received FY16 First half taxes received FY16 Second half taxes received FY17 Second half taxes received FY17 AEP estimated revenue not projected until independently confirmed AEP estimated revenue not projected until independently confirmed Vassell will increase district property valuation which reduces state funding and increases reliance on local property owners Vassell will increase district property valuation which reduces state funding and increases reliance on local property owners

6 REVENUE TRENDS: INCOME TAX Consistent year over year improvement Consistent year over year improvement Modest growth projected of 2.8% annually Modest growth projected of 2.8% annually Current year growth over 9% Current year growth over 9% Largest growth in employers withholding followed by tax returns Largest growth in employers withholding followed by tax returns Indication of improved “personal economy” Indication of improved “personal economy”

7 Revenue Trends: State Aid Grows State aid up 6% this year and 10% next year State aid up 6% this year and 10% next year Experience growth despite funding guarantee & caps Experience growth despite funding guarantee & caps Guarantee funded at FY13 level for future $4,757,849 Guarantee funded at FY13 level for future $4,757,849 Growth cap creates unfunded formula revenue this year of $1,079,900 Growth cap creates unfunded formula revenue this year of $1,079,900 Future funding increases as a result of enrollment growing faster than valuation and income wealth as compared to state averages Future funding increases as a result of enrollment growing faster than valuation and income wealth as compared to state averages Increases reduce unfunded formula but district still not fully funded Increases reduce unfunded formula but district still not fully funded Vassell will increase district property valuation which reduces state funding and increases reliance on local property owners Vassell will increase district property valuation which reduces state funding and increases reliance on local property owners

8 Summary Declining Revenue

9 Revenue Summary Graphs

10 EXPENDITURE TREND Increasing expenditures from $29 M to $39 M in next five years Increasing expenditures from $29 M to $39 M in next five years Driven by restoration of programs & reopening buildings Driven by restoration of programs & reopening buildings Reducing elementary class size now to prepare for enrollment growth Reducing elementary class size now to prepare for enrollment growth Extensive capital needs for technology, curriculum & facility maint Extensive capital needs for technology, curriculum & facility maint Healthcare cost present biggest challenge Healthcare cost present biggest challenge

11 EXPENDITURES: PERSONNEL Modest 2.8% blended average base increase projected as placeholder Modest 2.8% blended average base increase projected as placeholder Staffing level increase by positions Staffing level increase by positions Up from 18.5 projected in October Up from 18.5 projected in October 3 - all day kindergarten teachers (Offset by tuition) 3 - all day kindergarten teachers (Offset by tuition) pre-school teachers (Reclassified from purchase service) pre-school teachers (Reclassified from purchase service) 4 – pre-school aides (Reclassified from purchase service) 4 – pre-school aides (Reclassified from purchase service).75 – MS Counselor.75 – MS Counselor

12 Summary of Additional Staff 3 Class Size Relief BWI 3 Class Size Relief BWI 3 Kindergarten Teachers (Tuition) 3 Kindergarten Teachers (Tuition) 2.5 Pre-School Teachers (PurSvc) 2.5 Pre-School Teachers (PurSvc) 4 Pre-School Aides (PurSvc) 4 Pre-School Aides (PurSvc) 1 HS Math Teacher 1 HS Math Teacher 1 Art Teacher 1 Art Teacher 2 Instructional Facilitators 2 Instructional Facilitators.75 MS Counselor.75 MS Counselor 1 Intervention HSE 1 Intervention HSE 1 HSE 1 HSE 1 HSE 1 HSE.5 Clerical HSE.5 Clerical HSE 2 HSE 2 HSE 4 Bus Drivers (two-tier model) 4 Bus Drivers (two-tier model) 1 Maintenance 1 Maintenance 1 HS Asst. Princ (PurSvc) 1 HS Asst. Princ (PurSvc)

13 EXPENDITURES: BENEFITS Insurance premium rate increases continue to pose threat Insurance premium rate increases continue to pose threat Estimate future increases at 14% Estimate future increases at 14% Healthcare reform continues to impact plan costs Healthcare reform continues to impact plan costs Rx co-payments to be included Maximum Out-of-Pocket (MOOP) Rx co-payments to be included Maximum Out-of-Pocket (MOOP) Contemplated 20% for 2015 due to MOOP Contemplated 20% for 2015 due to MOOP Insurance committee to examine cost containment strategies Insurance committee to examine cost containment strategies

14 Impact of Health Care Reform Research Institute Fee – $1440/ year to support prevention treatment Research Institute Fee – $1440/ year to support prevention treatment Reinsurance Assessment Fee – to help stabilize premiums in market as new high cost individuals access market (CY14 $45,300, CY15 $30,200 & CY16 $18,700) Reinsurance Assessment Fee – to help stabilize premiums in market as new high cost individuals access market (CY14 $45,300, CY15 $30,200 & CY16 $18,700) Health Insurer Fee – $116,100/ year to support cost of health care reform (2% of annual premium) Health Insurer Fee – $116,100/ year to support cost of health care reform (2% of annual premium) High-Cost Insurance Tax – not applicable until 2018 (40% tax on plans that exceed defined thresholds: i.e. Cadillac Tax) High-Cost Insurance Tax – not applicable until 2018 (40% tax on plans that exceed defined thresholds: i.e. Cadillac Tax)

15 EXPENDITURES: PURCHASE SERVICES Increasing costs average 5% annually Increasing costs average 5% annually Includes increases of $75K for Harrison Street utilities Includes increases of $75K for Harrison Street utilities Includes increases for community schools & autism scholarships Includes increases for community schools & autism scholarships Community SchoolsFY13 $586,675 FY14 $628,739 Community SchoolsFY13 $586,675 FY14 $628,739 Autism ScholarshipsFY $172,983 FY14 $223,116 Autism ScholarshipsFY $172,983 FY14 $223,116 Includes decreases of $550K for Pre-School and HS Asst. Princ. Includes decreases of $550K for Pre-School and HS Asst. Princ.

16 EXPENDITURES: SUPPLIES & MATERIALS Inflationary increases average 3% Inflationary increases average 3% $17K dedicated for materials needed to restock Harrison Street $17K dedicated for materials needed to restock Harrison Street $35K needed for additional book for larger “bubble classes” $35K needed for additional book for larger “bubble classes” $200K earmarked annually for new curriculum material adoptions $200K earmarked annually for new curriculum material adoptions Current year curriculum investment $200K provided by bond funds Current year curriculum investment $200K provided by bond funds

17 EXPENDITURES: CAPITAL OUTLAY Inflationary increases average 2% annually Inflationary increases average 2% annually Fiscal strife delayed maintenance and replacement cycles Fiscal strife delayed maintenance and replacement cycles Beginning in FY16 additional resources dedicated to: Beginning in FY16 additional resources dedicated to: technology replacement at $125,000 per year until obtaining the $250,000 per year replenishment goal technology replacement at $125,000 per year until obtaining the $250,000 per year replenishment goal facility upkeep are earmarked at $200,000 the first year additional investments of $100,000 per year until obtaining the $400,000 annual budget facility upkeep are earmarked at $200,000 the first year additional investments of $100,000 per year until obtaining the $400,000 annual budget

18 Conclusion Summary

19 CONCLUSION District operating demands to outpace resources District operating demands to outpace resources Declining revenue from expired levy Declining revenue from expired levy Deferred capital, maintenance and curriculum demands must be resolved Deferred capital, maintenance and curriculum demands must be resolved Salary increases modest but healthcare cost rising rapidly Salary increases modest but healthcare cost rising rapidly Tax base expected to grow but not quickly enough to avoid levy Tax base expected to grow but not quickly enough to avoid levy Replacement of levy revenue required to avoid disruption of instructional services of budget cuts. Replacement of levy revenue required to avoid disruption of instructional services of budget cuts.


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