1. Five Year Forecast What Does This Mean? FY 2017
Presented By Merry Lou Knuckles, Treasurer

2. Five Year Forecast – What Does This Mean?
The Five-Year Forecast is a Report mandated by state law and focused on the General Fund. It is completed twice a fiscal year, October and May.
This report based on the Permanent Appropriations and Certified Revenues as approved by the County Auditor in October and the expected tax revenues approved at the Tax Budget hearing in February.
Basically, this is a tool to help districts plan for future goals, projects and potential deficits.
Creating the Five Year Forecast is not an exact science as the information is continually changing. Consequently, the best known information is used, knowing things can change.

3. Five Year Forecast – What Does This Mean?
The Five-year Forecast is a look at the various budget components of the General Fund.
The General Fund is the main operating fund of the District.
A majority of the tax revenues received by the District are part of the General Fund.
All other funds of the District have specific purposes.
The Forecast summarizes the various revenue sources and expenditure categories within the General Fund.

4. Five Year Forecast – What Does This Mean?
Forecast worksheets are prepared to bring all the required information together to analyze it and project out the necessary current fiscal year budget and the budgets for the next four fiscal years.
Known facts drive the forecast process and include tax budget information, negotiated contracts, future goals and purchases, tax levies expiring, new tax levies needed, insurance premium increases, increases in specific expenditures such as special education services, phasing out of state revenues, and other items.
These factors and the percentage of change from the last three years are used to calculate the forecasted amounts entered into the forecast worksheet and final forecast report.

5. Five Year Forecast – What Does This Mean?
Revenues received by the General Fund:
Property tax revenues
School foundation settlements
Tangible personal property loss value make up
Homestead and rollback
Medicaid reimbursements
Pay-to-participate fees, tuition, interest, Fees, rentals, and other miscellaneous revenues

6. Five Year Forecast – What Does This Mean?

7. Five Year Forecast – What Does This Mean?
Tax revenues – %
Largest source of revenues for the General Fund. It is based on levies passed by the residents of our district and 3.5 of the 4.5 mills of inside millage.
Four voted continuing operating levies dating back to before 1976 and one voted operating levy from 2002 that must be renewed every five years – our 9.7 mill levy.
Only the inside millage will see an increase in collections if there is an increase in property valuation, the rest can only collect a specified amount of dollars as voted in on the original ballot.
A new or replacement levy or an emergency levy is the only other way to get increased revenues. Money voted on in one calendar year is not collected until the following calendar year.

8. Five Year Forecast – What Does This Mean?
Unrestricted State Grants-in-aid – 19.61%
School foundation settlement payments
State support monies - two payments a month through the school foundation settlement based on the latest formula.
Commercial Activity Tax (CAT) revenues and Ohio lottery monies are used to make these settlement payments.
Restricted State Grants-in-aid – 5.39%
Certain special education payments such as Catastrophic costs and the career tech allocation are part of our school foundation settlement.
Metzenbaum State Pass-thru monies.
The District has participated in the Medicaid reimbursement program since FY Payments are received through the Ohio Department Of Job & Family Services.

9. Five Year Forecast – What Does This Mean?
Property tax allocation – 17.51%
Tangible personal property tax loss value make- up payments
To make Ohio more business-friendly the tangible personal property tax paid by businesses on their inventory and machinery was eliminated and replaced with the commercial activity tax based on gross sales.
The State has been providing the District with TPP make-up payments at a much lower amount than previously received in TPP tax revenues.
The Governor’s budget for FY 2016 and FY 2017 reinstated the phase out period for these revenues, a loss of over $200,000 per year. There is no replacement revenue on the horizon.
Homestead and rollback payments
Property owners get a relief on their tax bills in the form of homestead and rollback deductions, as reflected on their tax bills.
The state makes up that loss of property tax revenues to the school district through state monies.

10. Five Year Forecast – What Does This Mean?
Other revenues – 9.44%
The largest portion of this revenue is for tuition paid by other districts for open enrollment – approx. $590,000.
Other revenues includes pay-to-participate fees, rentals, donations, village income tax sharing, and revenues that do not fit in any other category.
Transfers – 1.16%
Each year the General Fund will need to transfer money from the main fund to the energy conservation debt payment special cost center and to the bus lease special cost center for payment of principal and interest.
This transfer “reserves” the money for payment purposes within the general fund. The corresponding transfer out is included in the expenditures.

11. Five Year Forecast – What Does This Mean?
Expenditure Categories For The General Fund:
Also known as appropriations (the budget) in the forecast.
Personal services
Benefits
Purchased services
Materials and supplies
Capital outlay
Other
Principal and interest
Transfers

12. Five Year Forecast – What Does This Mean?

13. Five Year Forecast – What Does This Mean?
Personal services – 47.29%
Includes salaries and wages for teachers, nurses, secretaries, classroom aides, custodians, mechanics, maintenance, bus and van drivers, bus aides, cashiers, technology, principals, Superintendent, superintendent’s secretary, treasurer, assistant treasurer/payroll, accounts payable and board members.
Salaries for the certified and classified staff are based on the negotiated agreements.
Salaries for the administration and confidential staff are based on a board approved salary schedule.
Also, included are substitutes, supplementals, and severance/termination payments.

14. Five Year Forecast – What Does This Mean?
Benefits – 24.48%
STRS and SERS are 14% of salaries and wages.
Medical (hospitalization and prescription) and dental insurances are through United Health Care due to a 34% increase with Aetna. There was a 22% increase in medical and an 8% increase in dental.
Medicare costs will increase as older employees retire and new employees are hired.
The District qualified for group rating again and should see a discount on worker’s comp premiums in FY 2017.

15. Five Year Forecast – What Does This Mean?
Purchased services – 18.97%
Professional services are those services provided to the District by outside sources.
The largest of these services is for special education needs outside of the regular classroom, nearly $1,096,000 in the current budget.
Next is tuition paid to other districts/schools for open enrollment - $437,414, community/online schools - $326,322 and post-secondary education/CRO - $82,100.
Utility costs should continue to see some relief due to the energy conservation project that was completed in fiscal year 2012.
Other services include insurance, legal, technical, training & repairs.

16. Five Year Forecast – What Does This Mean?
Materials and supplies – 2.39%
Includes, office supplies, classroom materials, software and computer supplies, library books, newspapers, periodicals, maintenance and repair supplies, bus supplies, diesel and regular fuel and tires.
Capital outlay - .76%
Includes purchases of new and replacement equipment, vans and buses for the district.
The District entered into a lease agreement for 3 new buses this year, the savings from the repair costs of the aging fleet will make the lease payments.
Other expenditures – 2.34%
Includes the various fees charged to the district from banks, the county ESC, the board of elections, the county auditor, the county treasurer and the state auditors for their services.

17. Five Year Forecast – What Does This Mean?
Debt payments - .52%
The energy conservation project is being paid for by 0% interest QSCP bonds.
The principal and interest payments are paid from the savings on the utility bills due to the upgrades and replacements of heating equipment, the HVAC units and lighting.
Transfers Out – 3.25%
Each year the general fund has to transfer money to the food service fund to help with the operation of the three cafeterias and to avoid a deficit cash balance at year- end.
The corresponding transfer out within the general fund for the energy conservation debt payments is recorded here, the net effect is $0.
The Board has agreed to hold $150,000 in a Budget Reserve in efforts to carry that money over into the next fiscal year.

18. Five Year Forecast – What Does This Mean?
Information and support documentation for any known facts is collected to make the necessary assumptions to build the Forecast for the next four fiscal years.
Assumptions are your best guesses at the time you are putting the Forecast together at what the next four fiscal years will hold for the District.
Any known changes and cuts for the next fiscal year are included in the assumptions and figures.
This information is entered into the worksheet and then into the final Five-year Forecast document.

19. Five Year Forecast – What Does This Mean?
Review the forecasted data to see just where the district could be in the next five years.
If any of the costs in our current appropriations budget increase beyond our current revenue budget we will end the fiscal year in a deficit cash situation.
The 9.7 mill levy passed in November, 2012 is up for renewal in 2017 in order to receive the associated revenues in This is reflected in the Forecast.
The need for a new tax dollars is very apparent to continue to operate effectively from fiscal year 2017 and forward!

20. Five Year Forecast – What Does This Mean?
When we look at line of the Forecast it shows our cash balance as of June 30th for this fiscal year at a positive $1,191.
Sound Fiscal Management is to have a Unencumbered Cash Balance at the end of the fiscal year equal to one month’s expenditures. Based on this Forecast information we should be ending our fiscal year with $1,129,869 for an ending cash balance. (Total Expenditures divided by 12)
We are forecasting a positive ending cash balance through fiscal year Each year there after is in the red, since the 9.7 mill levy is set to expire on December 31, 2017.

21. Five Year Forecast – What Does This Mean?
Since we know the 9.7 mill levy is only good for 5 years, we must reflect the effects of that levy on our Forecast for future years.
Therefore one-half year’s collection of $1,383,300 is subtracted from the tax revenues at the top of the Forecast (line 1.010)for the first year it would expire – FY 2018 and the full amount for each year there after.
Since we expect to renew the levy it is then added at the bottom of the Forecast as future revenues on line

22. Five Year Forecast – What Does This Mean?
An important line to look at is line12.010, Fund balance June 30 or our ending cash balance after the renewal levy is accounted for.
Here we are showing a deficit in FY 2018 and forward.
This means new money is needed in order to continue to operate at the current levels for the District by January of 2017 at the very latest to avoid future cuts.
This is why the Board has a 4.5 mill additional operating levy on the ballot for November The need is real and the time has come to pass new money in order to continue to operate as Cardinal Local Schools.

23. Five Year Forecast – What Does This Mean?
Some major issues for future years –
State funding is a huge unknown factor for all school districts. This past year we saw the affects of changes in the state funding and lost over $500,000 in anticipated revenues during the year.
There can be a change in the funding formula for the next state two-year budget cycle and this can hurt the school funding currently being received. Any new unfunded mandates will be detrimental to the District.
The phase out of the TPP make-up payments has begun and at this time will continue until the money is no longer received. NO REPLACEMENT REVENUES ARE OUT THERE at this time.

24. Any Questions??
Please look for the Five Year Forecast and corresponding Assumptions on the District website after tonight’s meeting.
Please contact the Treasurer at or