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Financial Projections Why Now and What to Look For Jeff Feyerer – Business Manager - Fairview School District 72 Elizabeth Hennessy - Partner– William.

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Presentation on theme: "Financial Projections Why Now and What to Look For Jeff Feyerer – Business Manager - Fairview School District 72 Elizabeth Hennessy - Partner– William."— Presentation transcript:

1 Financial Projections Why Now and What to Look For Jeff Feyerer – Business Manager - Fairview School District 72 Elizabeth Hennessy - Partner– William Blair & Company Merv Roberts - Board Member – Stevenson High School District 125

2 Financial Projections Expenses Revenues Capital Expenditures Fund Balances Tax Rates 1

3 Why Financial Projections? Planning Decision Making 2

4 Leadership Topics Data Information Knowledge 3

5 Leadership Topics Data: “Last year’s budget was $100M.” 4

6 Leadership Topics Information – Data with context “Expenses have been rising at 3% per year.” 5

7 Leadership Topics Knowledge – Shared information that is actionable – Stable enrollment will begin dropping next year – New mandated programs will begin next year 6

8 Leadership Topics Plans consistent with mission, vision, values and goals Plans should be collaborative 7

9 Leadership Topics How do we learn? – Teach, practice and reflect Collaborate – Administration – Board Members – Others 8

10 Other Planning Considerations Variability of line item.1% rule 9

11 Why are they important NOW? Financial situation of state/districts Current/potential legislation Transparency Negotiations Planning Makes budgeting easier year to year Recognize, anticipate, react! 10

12 ASSEMBLE A PLAN Gather pertinent data List assumptions for revenue and expenditures Discuss with board/administration about goals/parameters for projections How long should you look back? Go forward? How will you use the results of the projections? Will they be released or just internal? 11

13 DATA TO USE & GATHER Current Budget/Actual Historical Financial Documents Past/Projected Enrollment and Staffing Collective Bargaining Agreement(s) Board/Administrative Directives Long Term Capital Plans 12

14 REVENUES 13

15 REVENUE NOTES Be conservative in estimates! Understand primary revenue sources Changes in the pipeline Understand internal trends Know your district’s property 14

16 REVENUE ASSUMPTIONS LOCAL Levy (CPI, EAV, etc) Interest Income CPPRT Tuition Student Fees Rental Income Cafeteria Sales Intergovernmental Agreements Local tax appeals Referenda? TIF?? 15

17 REVENUE ASSUMPTIONS (cont.) STATE General State Aid (80% FY2014) Special Education Transportation Bilingual Education Grants FEDERAL Special Education Title Grants Medicaid 16

18 EXPENDITURES 17

19 EXPENDITURE NOTES Over EXPEND! Aim toward high end of historical trends Area can be broken down by having other internal plans: O&M, capital, personnel, technology that assign responsibility for planning Maintain educational programs 18

20 Expend. Assumpions – Salaries (100) Employee Roster/Personnel Plan Collective Bargaining Agreement/Salary Schedule Administrative Contracts Compile scattergrams List other: extra duty, stipends Classified Staff: estimate future based on past 19

21 Expend. Assumptions – Benefits (200) Medical/Dental Insurance – trend toward the high end Other insurance offered TRS/IMRF/THIS – how to project for the unknown? Retirement Benefits Driven by personnel plan (insurance enrollment, TRS/IMRF/THIS) 20

22 Expend. Assumptions – Purchased Services (300) Assemble list of contracts with expiration, rate increases Separate contractual from variable Identify trends in both groups Variable can be estimate, but contractual should be more exact Included in district wide plans (O&M, Technology) 21

23 Expend. Assumptions – Supplies (400) Estimate based on historical trends Very difficult to estimate based on size of purchases and amount of areas that use this object Reference district wide plans (tech, O&M) Expansion/addition of programs 22

24 Expend. Assumptions – Capital (500) Building Plan – additions, safety measures, expansion due to enrollment Technology Plan – equipment rollouts, expansion of classroom use Vehicle Schedule Consider facility analysis 23

25 Expend. Assumptions - Other Tuition – understanding special education needs Debt Payments – should be easy based on schedule; will there be other issues in the next 5 years? 24

26 TWO MAIN FACTORS: LEVY (REV) AND SALARIES (EXP) 25

27 SALARIES EXAMINED Employee roster/personnel plan => scattergram or listing => other pay duties/stipends/overtime/substitute Highest expenditure item, spend most of your time, analyze carefully Limited by parameters of current contract: what do you estimate for the future? 26

28 SCATTERGRAM Salaries/Scattergram StepBABA+15MAMA+15MA+30 1$0 2$50,749$0$57,983$0 3$208,640$0$59,319$0 4$107,190$0 5$55,099$59,211$0$66,822$0 6$56,672$0$381,558$0$73,152 7$0$62,484$130,522$69,969$149,624 8$0 $67,066$0$76,608 9$0$66,341$0$73,678$157,032 10$0 $142,100$0 11$0 12$0 $79,931$0 13$0 $61,993$0 14$0 $79,854$84,510$357,332 15$0 $275,142 16$0 $94,131 17$0 $91,792$0 18$0 $93,510$1,215,132 27

29 PROJECTING TAX LEVIES Assumptions needed on new property – check with local assessors, village managers, etc. Research outstanding TIFs and understand what levy year they expire Research monthly CPI progress Consider EAV trends and effect of the multiplier Consider tax rate maximums and strategies for levying dollars in unlimited funds 28

30 PROJECTING TAX LEVIES Understand the Property Tax Limitation Law and how the Tax Cap Formula works: CPI December 1, 2011-December 1, 2012 determines CPI for Levy Year 2013 affecting Fiscal Year 2015 = 1.7% 29

31 PROJECTING TAX LEVIES Maximum Tax Rate By Fund 30

32 Using and Communicating Financial Projections Rationale for use at Stevenson High School Telling the right story – Who, what, why, where, when and how and why not 31

33 1982-Stabilizing the Tax Rate Growth in enrollment and equalized assessed value Tax rates fluttered up and down Why not: – Stabilize the tax rate – Let fund balances fluctuate – Do two or three year budgets 32

34 1985 Building Referendum Dissention in the community Skeptical community Strategy-hold building costs down Develop a 5-year budget projection Build a story around that 5-year budget used in teacher negotiations 33

35 1986-Changing Community Perspectives Blue Ribbon community interview: “the school has plans in place” “I like the stability” “There are no surprises” 34

36 1991-Tax Cap/PTELL 30 day window to sell working cash bonds 1993 building referendum plans EAV growth strong How much? How fast to pay it back? 35

37 Tax Rate / Total less B &I Rate 1989 Through

38 1991-Tax Cap/PTELL The Story: – Tax Cap creates uncertainty – State created working cash opportunity – Stevenson will use the working cash to protect the quality of the education program during this period of uncertainty – Bonds will not increase the tax rate 37

39 Impact of $11M Bond Sale No complaints from the community Passed 1993 building referendum Created a $4.1M annual non-referendum debt capacity (Debt Service Extension Base) 38

40 2002 Education Fund Referendum 1996 letter to the community – Deficit spending begins – Have built fund balances – Need an operating increase in about 5 years – Will keep you posted 39

41 2002 Education Fund Referendum Planning – EAV continues to rise – Tax rate declines – Operating referendum needed in 2002 – 1993 bonds paid of 2003 – Superintendent plans to retire

42 2002 Education Fund Referendum Actions Taken – Reschedule Superintendent retirement to 2002 – Reschedule bonds to pay off in 2002 – Debt restructure stabilized tax rate – Community trusts district’s financial management 41

43 Tax Rate / Total less B &I Rate 1998 Through

44 2002 Education Fund Referendum Campaign Theme – Increase Ed fund rate by $.35 – “not one penny more” – Maintain quality education programs – Protect home values Community Question – Why haven’t we heard about this before? – “We told you about it in1996” Result: Nearly 70% voted YES 43

45 Fund Balance 1994 Through

46 Fund Balance 1994 Through

47 Communication Tips Community Relations: – Broad-based collaboration – Task forces – Parent groups – Community organizations Powerful: “The Community Told Us” 46

48 Communication Tips What does the audience want to know? What do you want the audience to know? Do your homework-get the facts Understand the facts Identify connections between the facts Review with Superintendent and Board 47

49 Communication Tips The Message: – Tel the truth – Tell it often – Be consistent – Collaborate – Anticipate questions – Test with Friends – Anticipate the story you will tell if things go wrong 48

50 Communication Tips When the Message Changes: – Provide the rationale for the change – Admit that you were wrong – Repeat the process from the prior slide 49

51 Financial Projections Create Understanding Tool for Collaboration Turn Data into Information into Knowledge Constructive communication Words, Numbers and Charts Achieve Desired Results 50

52 Questions?? Jeff Feyerer – Business Manager – Fairview School District Elizabeth Hennessy –Partner – William Blair - Merv Roberts– Board Member – Stevenson High School District


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