Five Year Forecast

Five Year ForecastMAY 2014 UPDATE

SIMPLIFIED STATEMENT

PROJECTED FUND BALANCES • June 30, 2014 Projected Cash Balance $8,690,087• June 30, 2015 Projected Cash Balance $8,038,162• June 30, 2016 Projected Cash Balance $ 2,608,408• June 30, 2017 Projected Cash Balance -$7,000,753• June 30, 2018 Projected Cash Balance -$18,383,001

• FY16 Balance Barely Meets 30 Days Required Cash on Hand• WHY THE DROP IN FY16 ? (Expired Levy – Replacement

Needed)

REVENUE TRENDS: Property Tax Drops• Declining revenue sources from $30 M to $27 M• Driven by 12/31/14 expiration of Fixed Sum Levy• Replacement revenue required to maintain operations• Anticipate modest upward trends for income tax, state

aid and miscellaneous revenue

REVENUE TRENDS: Public Utility Tax ?• Substantial increase probable upon completion of Vassell

sub-station• Estimated completion summer 2014• Tax assessed 2015 – Tax collected 2016 • First half taxes received FY16• Second half taxes received FY17• AEP estimated revenue not projected until independently

confirmed• Vassell will increase district property valuation which

reduces state funding and increases reliance on local property owners

REVENUE TRENDS: INCOME TAX• Consistent year over year improvement • Modest growth projected of 2.8% annually• Current year growth over 9%• Largest growth in employers withholding followed by

tax returns• Indication of improved “personal economy”

Revenue Trends: State Aid Grows• State aid up 6% this year and 10% next year• Experience growth despite funding guarantee & caps• Guarantee funded at FY13 level for future years @ $4,757,849• Growth cap creates unfunded formula revenue this year of

$1,079,900• Future funding increases as a result of enrollment growing

faster than valuation and income wealth as compared to state averages

• Increases reduce unfunded formula but district still not fully funded

• Vassell will increase district property valuation which reduces state funding and increases reliance on local property owners

Summary Declining Revenue

Revenue Summary Graphs

EXPENDITURE TREND• Increasing expenditures from $29 M to $39 M in next

five years• Driven by restoration of programs & reopening

buildings• Reducing elementary class size now to prepare for

enrollment growth• Extensive capital needs for technology, curriculum &

facility maint • Healthcare cost present biggest challenge

EXPENDITURES: PERSONNEL• Modest 2.8% blended average base increase projected

as placeholder • Staffing level increase by 28.75 positions• Up 10.25 from 18.5 projected in October • 3 - all day kindergarten teachers (Offset by tuition)• 2.5 - pre-school teachers (Reclassified from purchase

service) • 4 – pre-school aides (Reclassified from purchase service)• .75 – MS Counselor

Summary of Additional Staff• 3 Class Size Relief Teachers @

BWI • 3 Kindergarten Teachers

(Tuition)• 2.5 Pre-School Teachers

(PurSvc)• 4 Pre-School Aides (PurSvc)• 1 HS Math Teacher• 1 Art Teacher• 2 Instructional Facilitators• .75 MS Counselor

• 1 Intervention Specialist @ HSE• 1 Principal @ HSE• 1 Secretary @ HSE• .5 Clerical Aide @ HSE• 2 Custodians @ HSE• 4 Bus Drivers (two-tier model) • 1 Maintenance• 1 HS Asst. Princ (PurSvc)

EXPENDITURES: BENEFITS• Insurance premium rate increases continue to pose

threat• Estimate future increases at 14% • Healthcare reform continues to impact plan costs• Rx co-payments to be included Maximum Out-of-Pocket

(MOOP)• Contemplated 20% for 2015 due to MOOP• Insurance committee to examine cost containment

strategies

Impact of Health Care Reform• Research Institute Fee – $1440/ year to support

prevention treatment• Reinsurance Assessment Fee – to help stabilize

premiums in market as new high cost individuals access market (CY14 $45,300, CY15 $30,200 & CY16 $18,700)• Health Insurer Fee – $116,100/ year to support cost of

health care reform (2% of annual premium)• High-Cost Insurance Tax – not applicable until 2018

(40% tax on plans that exceed defined thresholds: i.e. Cadillac Tax)

EXPENDITURES: PURCHASE SERVICES• Increasing costs average 5% annually• Includes increases of $75K for Harrison Street utilities• Includes increases for community schools & autism

scholarships• Community Schools FY13 $586,675 FY14

$628,739• Autism Scholarships FY $172,983 FY14

$223,116

• Includes decreases of $550K for Pre-School and HS Asst. Princ.

EXPENDITURES: SUPPLIES & MATERIALS• Inflationary increases average 3%• $17K dedicated for materials needed to restock

Harrison Street • $35K needed for additional book for larger “bubble

classes”• $200K earmarked annually for new curriculum material

adoptions • Current year curriculum investment $200K provided by

bond funds

EXPENDITURES: CAPITAL OUTLAY• Inflationary increases average 2% annually• Fiscal strife delayed maintenance and replacement

cycles• Beginning in FY16 additional resources dedicated to:• technology replacement at $125,000 per year until

obtaining the $250,000 per year replenishment goal • facility upkeep are earmarked at $200,000 the first year

additional investments of $100,000 per year until obtaining the $400,000 annual budget

Conclusion Summary

CONCLUSION• District operating demands to outpace resources• Declining revenue from expired levy • Deferred capital, maintenance and curriculum demands

must be resolved• Salary increases modest but healthcare cost rising

rapidly• Tax base expected to grow but not quickly enough to

avoid levy• Replacement of levy revenue required to avoid

disruption of instructional services of budget cuts.