HB412 FIVE YEAR FORECAST

ASSUMPTIONS – FY10

***Current economic conditions make forecasting very difficult for this year and beyond. It is very possible additional cuts in state funding or other factors could reduce revenues or increase expenditures. This forecast will be updated and presented to the Board as soon as possible if or when additional information becomes available that changes this forecast.***

 

REVENUE

A. General Property Taxes (Real Estate)

1. FY10 Property Tax estimate is based on information received from the Wayne County Auditor.

2. The Wayne County Auditor warns that due to possible higher delinquent collections, foreclosures, and possible reduced values, the school district may not see an increase in collections. For this forecast, for FY10 an increase in collections of approximately $45,000 is estimated.

3. On June 30, 2007 Governor Ted Strickland signed into law a new, expended homestead exemption that provides additional property tax relief to qualified senior citizens and permanently and totally disabled Ohioans. The new exemption offers eligible homeowners, regardless of income, the opportunity to shield up to $25,000 of the market value of their homestead from property taxation. How this exemption will affect the district’s tax income is not available for this Forecast. However, it should be noted that while the district should be reimbursed from the State for this loss of tax income, there is no guarantee that the State won’t reduce these reimbursements from one budget to the next.

4. Future growth in Property Tax income is estimated conservatively due to:

a. We do not anticipate new construction in Wayne County to continue at the same rate as in the past.

b. Many new construction projects have had tax abatements approved.

c. While HB920 does not allow for growth in property taxes, the school district is on the “2 mill floor” established by the state and does receive some growth in tax income when property values increase.

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5. HB66 will completely eliminate Tangible Personal Property Tax Revenue. This will happen over a five year period with the state reimbursing the school district through direct reimbursement and projected increases in state foundation payments.

a. This Five Year Forecast reflects the reduction in local tax income and equal increases in state income per year.

b. There should be no overall increase in income from these sources.

c. HB66 also eliminates the $10,000 Tangible Tax Exemption Reimbursement of approximately $80,000 per year to the school district over a four year period. This is also reflected in this Five Year Forecast.

 d. At this time there are a lot of unknowns concerning future state reimbursements and how elimination of the tangible personal property tax will affect the school district resources.

B. State Foundation

1. Prior to FY00, State Foundation for vocational school districts was based on Unit Funding. Beginning in FY00, vocational school districts funding is based on Average Daily Attendance (ADM) calculated by taking the actual student attendance count during the first full week in October. Arriving at the ADM number is complicated by students who may be counted as a “fraction” of a student depending on the amount of time spent in vocational school classes and this reduces the number of students counted for funding.

2. Payments from state foundation increased substantially during the past few years as student enrollment increased. However, beginning in FY07 enrollment was down from the prior fiscal year and enrollment continued down in FY08 keeping the district on the “guarantee”. The State “guarantees” all school districts will receive at least the same basic foundation income as the prior year. Past funding enrollment numbers: FY02 – 653, FY03 – 657, FY04 - 703, FY05 – 773, FY06 – 816, FY07 – 749, FY08 – 737 and FY09 - 776. The final FY09 ADM count did in fact take the district off the guarantee by approximately $69,000 but those additional monies were taken back in FY10 in a “True Up” calculation by the State. For FY10, the State is allowing a .0075 increase in foundation based on lasted year’s foundation, line 21. At this point, we still expect to lose $40,311 in Associated Services payments for the year. The October Forecast assumes we will lose approximately $67,000 in foundation funds with flat funding to continue for four more years.

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3. The “True Up” State Foundation and Tax Loss calculation as noted above assumes as property tax values decrease, the amount of state foundation monies increase. However, it appears that this principle is lost in the FY10/11 State Budget as approved. The new “SF3” for FY10 only has 8 lines and shows an increase in funding of .0075 per cent based on last year’s payments.

4. HB66 eliminated the “Cost of Doing Business” factor thus reducing the per pupil amount used for calculating state foundations payments.

5. HB66 also required a second ADM count in February and this requirement is no longer in effect. Career Center funding will be studied.

 6. Vocational enrollment is “voluntary” and projecting increases or decreases in enrollment in future years is not practical at this time.

7. The school district added two satellite programs in FY08 with one of our partner school districts. It appears under the new State Budget that adding satellite programs will not increase funding, therefore no new satellite programs are anticipated in this forecast.

C. All Other

1. Interest income is included in other revenue. Interest rates have recently declined to less than one percent and that has reduced interest income from over $340,000 in FY07 to $76,163 in FY09. For FY10, interest income is estimated at $50,000 and it is believed this income will continue to decline.

2. Revenue from all other sources is based on historical data.

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EXPENDITURES

A. Personal Services

1. Salaries in FY09 increased by just over 3.5% from FY08. The increase was mainly due to teachers and classified staff moving up one step on the salary schedule and the 2.9% increase in base salary.

2. To begin FY10, several changes in personnel were made affecting costs:

a. The Auto Body program was put on hold and the retiring instructor was not replaced.

b. Both Cosmetology Instructors retired with one being replaced by an instructor being paid near the bottom of the salary schedule. The other instructor was replaced by a part time aide.

c. Two custodians retired during FY09 and were replaced with one custodian.

d. Two Adult Education Administrative Assistants whose salaries and benefits were paid by the General Fund, had their costs returned to the Adult Education, 012, Fund to start FY10.

e. One Lunchroom aide whose salary and benefits were paid from the General Fund is now being paid by the Lunchroom Fund in FY10.

f. A full time Academic Teacher resigned and was replaced by using supplemental contracts divided among other teachers saving some salary cost and benefit costs.

g. Two other Academic Teachers resigned and were replaced by teachers at a lower salary and benefit cost.

h. The School District has made a commitment to transfer funds for 23 years into the 034 Maintenance Fund as required by our OSFC Renovation Project. In order to offset some of the cost to the General Fund, 80% of the Maintenance Supervisor’s salary and benefits, 60% of the Assistant Maintenance Supervisor’s salary and benefits, and 40% of the Maintenance/Custodian’s salary and benefits have been moved to the 034 Fund.

i. One other full time certificated position is being eliminated during FY10. Approximately one half of this cost is included in FY10.

3. For FY11 and beyond, salaries are estimated to increase approximately 4% per year. This does not consider adding new positions or additional retiring or resigning staff members.

4. There is still concern over federal grant dollars continuing or grant guidelines changing. However, for this forecast, no other grant salaries are projected to be paid out of the General Fund in future years.

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B. Benefits

1. The actual cost of benefits in FY06 was less than FY05 by almost $10,000. This is due to joining the Stark County Health Insurance Consortium beginning in FY06.

2. FY07 was the first year the District was allowed a premium “holiday” in June. This meant that employees and the District did not have to pay a premium for health insurance into the Stark County Consortium for June and reduced premium costs by approximately $100,000 for the year. While not guaranteed, it is projected that the premium “holiday” will continue into future years.

3. In June, 2009 the District was notified that its health insurance costs were to increase by 9.8% for FY10. This was higher than in past years where increases averaged 7%. For FY11 and FY12 benefits are projected to increase 8% per year, for FY13 and FY14 benefits are projected to increase 9% per year.

4. After attending several meetings and taking action on recommendations, the District was notified in early FY08 that it had qualified to receive rebates on premiums paid in January 2007 and eligible join the OSBA discount premium group again. In FY09, Workers Compensation premiums decreased by over $38,000 in the General Fund and based on premium projects provided by OSBA, only a small increase is expected in this cost for FY10 and beyond.

C. Services

1. The cost of services for FY10 is estimated to increase to $810,000 and this reflects additional purchased services plus the higher cost in utilities. The Swing Space Building has been added and is operational. The district believes the renovation project will save on utilities in future years with more efficient heating and cooling systems.

D. Supplies

1. The cost of supplies is increased to meet the spending requirements of ODE Rule 3301-61-16.

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E. Equipment

1. The cost of providing up-to-date educational equipment is a major factor in providing career/technical training. The State of Ohio has also recognized this need and has provided additional funding under “weighted rates” for ADM Funding. ODE Rule 3301-61-16 requires these additional funds be spent on vocational services, supplies, and equipment.

2. In addition to equipment, under Capital Outlay is the cost to maintain the building. It is believed this cost to be approximately $50,000 per year from the General Fund. The District will use the 034 Fund, OSFC Maintenance Fund as much as possible in future years.

3. Equipment purchases for FY11, FY12, FY13, and FY14 have been maintained at approximately the same level during these years to meet the spending requirements.

F. Permanent Improvements

1. During FY07 a transfer of $2,000,000 was made to the 003 Permanent Improvement Fund to build a cash balance for expenditures in connection with the OSFC Project.

2. The contract with the Ohio School Facilities Commission requires the District to transfer a total of $6,600,000 into the 034 Maintenance Fund during a 23 year period. $164,757 will be transferred from the General Fund for another 22 years to meet this commitment. Monies are to be used to maintain the renovated career center.

G. Other Expenditures

1. Other expenditures were based on historical data.

ASSUMPTION SUMMARY

We believe that good management of our resources has allowed the school district to build a carry over in the General Fund of $4,539,264 at the end of FY09 without a new operating levy since 1987. Management will continue to carefully monitor funds available and spending to provide outstanding opportunities for our students while keeping costs within approved appropriations. Deficit spending is forecasted to begin in the FY11 School Year and an operating levy may be needed prior to the FY14 School Year to avoid a deficit cash balance. However, increased state and/or local funding may delay this need and likewise decreased state and/or local funding may accelerate the need.

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SUMMARY Continued:

This Five Year Forecast does not include new monies or additional expenditures due to the OSFC Project. Proceeds from the November 2007 .75 mill levy and expenditures will be separate from the General Fund and accounted for in the Permanent Improvement Fund.