1. The Impact of Future Population Growth on Berkeley County School District Finances and School Facilities (2016-2035) Robert T. Carey, Ph.D. William Molnar, Ph.D. Ellen W. Saltzman, M.A. August 11, 2015

2. Model Overview Baseline population projections from SC Revenue & Fiscal Affairs Office (RFA) – Projections for Berkeley County for years 2013-2035 – RFA population data divided into 5-year cohorts Used proportions from REMI projections to separate out 15-17 year-old population (for high school) and 5-year-old population (kindergarten) Otherwise stayed with given 5-year cohorts to maintain integrity of RFA projections

3. Model Overview Models without Volvo: – Performed baseline adjustment of REMI population estimates (i.e. replaced REMI population projections through 2035 with RFA projections) – Used RFA projections and REMI actual residential & non- residential capital stock estimates as basis for fiscal projections Models incorporating Volvo – Ran Volvo construction & operations through REMI model – REMI projected changes from RFA population estimates and generated new estimates for value of capital stock

4. Model Overview Primary modeling done with Regional Economic Models, Inc. (REMI) PI + model – Input-output (IO) and computable general equilibrium (CGE) model – Used to model changes in regional economy from population growth, particularly value of capital stock – Also used to model changes resulting from Volvo construction ($500 million between Fall 2015 – end of 2017) and operations (employing 2,000 workers beginning 2018 and 4,000 total beginning 2023) Fiscal impact modeling carried out using our Fiscal Impact Analysis Tool, using RFA and REMI projections as inputs Historical BCSD financial data from CAFRs FY 2006-2014

5. Projected Total Population (All Ages) Berkeley County, SC (2013-2035)

6. Projected Value of Capital Stock Berkeley County, SC (2016-2035)

7. Fiscal Impact Projections

8. BCSD Fiscal Impact Analysis Analyses run with and without Volvo REMI model – Used to estimate changes to residential & non-residential capital stock – Used to adjust capital stock and population projections in Volvo model Fiscal Impact Analysis Tool used REMI projections to estimate BCSD general fund expenditure & revenue streams (not including debt service)

9. BCSD Fiscal Impact Analysis Methodology for Fiscal Projections

10. BCSD Fiscal Impact Analysis Including millage “rollback” in revenues (millage = 149.2+12.3) : – RFA population projections alone: General fund surpluses predicted through 2035 – Incorporating impacts from Volvo: General fund surpluses predicted (albeit declining) through 2035 Without millage “rollback” (149.2 millage rate) : – RFA population projections alone: General fund surpluses predicted through 2035 – Incorporating impacts from Volvo: General fund deficits predicted beginning in 2020 through 2035

11. Projected Revenue & Expenditures Based on RFA Population Projections (without Volvo)

12. Projected Revenue & Expenditures Incorporating Estimated Volvo Impacts

13. School Construction Needs Projections

14. BCSD School Construction Projections School-age population projections used to predict need for new school construction through 2035 – 89% of school age population assumed enrolled in BCSD schools (based on historic ratio – remainder either homeschooled or attending school in adjoining county) – Age cohorts provided by RFA data used to apportion enrollment between elementary (primary), middle (elementary), and high schools. – Note: currently-planned new schools are treated as pre-existing School construction projections used to project future debt service costs (2% annual inflation rate applied to construction costs) – Assumed 5% coupon rate, 20-year term for new bond issues – Current outstanding debt included in debt service projections

15. Based on RFA Projections (without Volvo)

16. Projected Total Enrollment Based on RFA Population Projections (without Volvo)

17. Projected School Construction Needs RFA “Low” Forecast

18. Projected School Construction Needs RFA “High” Forecast

19. Projected School Construction Costs Based on RFA Population Projections (without Volvo)

20. Projected Annual Debt Service Cost Based on RFA Population Projections (without Volvo)

21. Projections Incorporating Volvo Impact

22. Projected Total Enrollment Incorporating Estimated Volvo Impacts

23. Projected School Construction Needs Volvo “Low” Forecast

24. Projected School Construction Needs Volvo “High” Forecast

25. Projected School Construction Costs Incorporating Estimated Volvo Impacts

26. Projected Annual Debt Service Cost Incorporating Estimated Volvo Impacts

27. Projected Annual Debt Service Cost Without Volvo (for comparison)

28. Conclusions Fiscal outlook: – Additional population growth associated with Volvo will place substantially increased demand on the District – Growth in revenue sources (given current millage rates, including “rollback”) are projected to be sufficient to cover additional general fund expenses up to 2035 Millage increase likely necessary soon after 2035 Construction needs: – Student-age population increases associated with Volvo will require substantial new school construction after 2020 – Debt service costs will increase as a result, although partly offset by retirement of some current debt

29. Other Considerations (Not included in our analysis) Construction of larger schools Overcrowding

30. STI serves business, government, and community constituents through objective research, outstanding graduate education, and public service programs for the state and region. Email: rob@sti.clemson.edu wemerym@gmail.com ellen@sti.clemson.edu Web: cu-real.com