1. Cleveland Municipal School District Fiscal Year 2009 Budget Overview

2. 2 Cleveland Municipal School District Average Daily Membership 200720082009 CMSD Count53,20249,85746,548 Charter Count11,57312,69313,593 The District is projected to lose over 3,000 students per year. Charter school enrollment is projected to increase 900 students per year.

3. 3 The proposed general operating revenue forecast for the 2008-2009 school year totals $661,224,776, a decrease of $12.4 million or 1.8% lower then the current year. State sources represent 72.6% of the District’s revenue.

4. 4 Tax revenues for 2009 are projected at $153,381,626 a decrease of $21.3 million or 12.2%. This decrease is primarily due to: -Reduced real property tax collection rate to 86.81% from 88.04%. -Shift of real property tax collections to Homestead/Rollback revenue due to HB119 – elderly and disabled home owner tax reduction. -The continued elimination of personal tangible property tax.

5. 5 Property Tax Allocation increase of $9.4 million or 26.3% is due to: -The shift of Real Property Tax to Homestead/Rollback due to HB119 -Increase of HB66 CAT Tax Reimbursements based on the elimination of Personal Tangible Property Tax.

6. 6 Due to declining enrollment, CMSD is a guarantee district. This results in the District receiving the same amount of state funding as it did in 2007 and 2008. Although our overall state funding remains level, the deductions for community schools continues to rise (from $93 million in 2008 to $101.4 million in 2009).

7. 7 Tax revenue combined with HB66 hold harmless reimbursements is projected at $198.7 million, a decrease of $11.9 million or 5.65%. Tax revenue is lower due to the collection rate of 86.81% and phase out of tangible personal property tax. The difference between the gross and net state funding represents flow thru charter school tuition costs. As charter school enrollment increases, the net dollars available to CMSD operations declines.

8. 8 Other Revenue is projected to decrease $498,891 or 1.7%.

9. 9 The proposed general operating budget for the 2008-2009 school year totals $711,892,569, an increase of $27.5 million over the current year budget.

10. 10 Employee compensation (salaries and fringe benefits) are projected at $494.3 million, an increase of $14.6 million over the current year budget. Salary estimates include a provision for a 3% base wage increase consistent with our employee union agreements. Health insurance estimates reflect a rate increase of 2%. Wage estimates have been adjusted to include salary schedule step increases. District retirement costs are projected to increase consistent with the overall increase in salary levels. Compensation projections reflect a net reduction of 70 positions due to declining enrollment.

11. 11 The allocation for supplies, textbooks and equipment is recommended at $14.6 million, a $307,000 increase over the current year budget. The appropriation for textbooks is recommended at $5.9 million, a 3% increase over current year allocation.

12. 12 Purchased Services are projected at $186.2 million, an increase of $12.3 million over current year estimates. Charter school tuition is projected at $101.4 million, up $8.4 million (9%) from current year projections. Utility costs are projected to increase by approximately $2 million over current year projections. Other purchased services are projected to increase $1.3 million. Tuition costs for students who reside in the District and receive services at other educational institutions are projected to increase.

13. 13 Other Miscellaneous expenses (fixed charges) are projected at $6.0 million. This category of expenditures includes County Auditor and Treasurer fees ($3.6 million), fees charged by the County for the collection of delinquent taxes ($1.3 million) and property and casualty insurance ($0.4 million).

14. 14 Total Debt Service expenditures are projected at $1,251,000, a reduction of $18.4 million from current year budget estimates. In 1997, the District issued Revenue Anticipation Notes (RAN) whereby CMSD restructured all of its outstanding General Fund debt. The RAN had a ten year maturity with the final payment in the 2006-2007 school year. Total Debt Service expenditures are projected at $1,251,000, a reduction of $18.4 million from current year budget estimates. In 1997, the District issued Revenue Anticipation Notes (RAN) whereby CMSD restructured all of its outstanding General Fund debt. The RAN had a ten year maturity with the final payment in the 2006-2007 school year. Debt Service expenditures are projected at $1,251,000. This category provides for the repayment on the District’s HB 264 Energy Conservation Bonds and loans from the Environmental Protection Agency for use in asbestos removal projects.

15. 15 The 2008-2009 budget proposal includes $6,000,000 to cover a potential deficit in the Food Service program. Transfers include a $944,000 sinking fund payment to repay the District’s Qualified Zone Academy Bonds (QZAB) debt. $2.5 million has been projected to cover year end cash flow advances (June 2009 advances to Special Revenue Funds).

16. 16 Cleveland Municipal School District Summary of Revenues and Expenditures 2007 - 20082008 - 2009 Beginning Unencumbered Cash Balance 80,418,495 69,607,113 Total Revenues 673,600,267 661,224,776 Total Expenses 684,411,649 711,892,569 Ending Unencumbered Cash Balance 69,607,113 18,939,320

17. 17 Cleveland Municipal School District Major Financial Uncertainties for the 2008-2009 School Year Cleveland Municipal School District Major Financial Uncertainties for the 2008-2009 School Year CMSD Student Enrollment CMSD Student Enrollment 2008-2009 Charter School Enrollment 2008-2009 Charter School Enrollment Actual unreserved carry-over balance (June 30, 2008 unreserved balance) Actual unreserved carry-over balance (June 30, 2008 unreserved balance) Energy Costs Energy Costs Approval of the new Medicaid reimbursement plan to reinstate Medicaid reimbursements from the Federal Government Approval of the new Medicaid reimbursement plan to reinstate Medicaid reimbursements from the Federal Government Tax collection rate and delinquencies Tax collection rate and delinquencies We have prepared this year’s budget using the best available information, knowledge and judgment in those areas which are variable. However, there are numerous financial uncertainties that could have a major impact on the 2008-2009 school year budget. We have prepared this year’s budget using the best available information, knowledge and judgment in those areas which are variable. However, there are numerous financial uncertainties that could have a major impact on the 2008-2009 school year budget.