Xenia Community School District Greene County

Schedule of Revenue, Expenditures, & Changes In fund balances for the fiscal years ended June 30, 2010, 2011 & 2012 Actual Forecasted Fiscal Years ending June 30, 2013 through 2017 May 13, 2013 Update

Forecast provided by: Xenia Community School District Bradley A. McKee, CPA, Treasurer 937-562-9033

Five Year Forecast Narrative Best Estimate as of May 13, 2013 Introduction The School District is located in Greene County and is one of the largest geographical school districts in Ohio. Xenia Community Schools is comprised of students who reside in the City of Xenia, Xenia Township, Spring Valley Township, and villages of Wilberforce and Spring Valley. All legislative power of the School District is held by the Board of Education (BOE). The School District is staffed by 128 classified employees and 318 certificated full-time employees who provide services to 4601 students. The School District currently operates eight public school buildings, which include five elementary schools (Shawnee, Cox, McKinley, Arrowood & Tecumseh), two middle schools (Central & Warner) and one high school (Xenia High School). The financial forecast presents, to the best of the Xenia Commuity School District BOE’s knowledge and belief, the expected revenues, expenditures, and operating balance of the General Fund based on the best and most current information available to us at this date. This financial forecast includes three years of historical (actual) data (FY10-FY12) and five years of projected (estimated) data (FY13-FY17). As a result, the forecast reflects the BOE’s judgment of the expected conditions and expected future achievements as of May 13, 2013, the date of this forecast. Differences between the forecast and actual outcomes will arise due to unforeseen circumstances. The major lines are referenced in the forecast below in the headings to make it easier to follow the assumptions made for the forecasted items along with referring back to the forecast. It should be of immense benefit for the reader to review the assumptions to understand the overall financial forecast for our District. If you would like more information please feel free to contact Mr. Brad McKee, Treasurer of Xenia Community Schools by e-mail at [email protected] or call 937-562-9033. Key persuasions on this forecast: Current Economic Conditions- The national, state and local economic slow down is heavily influencing the financial outlook of Our District. The Legislature and Governor are looking at implementing a new funding formula by the 2013-2014 school year, thus changing from the current “Bridge” formula. The State’s financial troubles and current local economic conditions are the biggest challenges facing our District at this time. Pending legislation will have a significant impact on how State & Federal funding might affect Xenia Community School District’s financial forecast. Collective Bargaining Unit – Since public education is a service based industry, approximately 65% +/of Xenia Community School District’s total general fund cost is expended for personnel. There are assumptions made regarding salary, fringe benefits and additions/reductions of personnel and are subject to significant change based on the district’s interest in the negotiated agreements to efficiently and effectively meet district goals. The reason that the percent has decreased from the traditional 80% +/- is due to the decision to outsource the transportation, maintenance and technology positions throughout the District. These expenditures will now be expended in the purchase services line item.

1.10

Real Estate Taxes Real Estate tax revenue is a function of the effective and full (voted) tax millage rates and the assessed valuation or total taxable value of the district. Real estate taxes are taxes levied by the school district based on the assessed valuation of the real property located within the school district multiplied by millage approved by voters. Real estate taxes apply to both residential and commercial owned properties within the school district. The County Auditor, based on new construction and complete or updated values, establishes property values each year. The last complete reappraisal of district property values was for 2011 values collected in calendar year 2012. Every six years the County Auditor reappraises properties in the county. Every three years after the reappraisal, the County Auditor updates values based on sales records. The 2011 total effective tax rate of 36.58 mills includes 4.30 inside, 16.50 outside continuing operating, 11.70 emergency, 3.00 bond, .58 construction renovation and .50 PI mills. A 2.81% increase in 2013 tax collection is based on the current estimate made from the updated Greene County Auditor’s assumptions and estimated collection rates and the fact that there was not an advance taken in fiscal year 2012. The -0.50% change for FY14 & FY15 is due to the current uncertainty of the real estate market in our School District and surrounding areas and 0.00% increase for FY16 and a modest .50% increase for FY17 due to the stabilization of estimated total assessed values in the District.

1.20

Tangible Personal Property Tax Personal property tax revenue is a function of the effective and full (voted) millage rates and the assessed valuation or total taxable value of the district. Personal property taxes are taxes levied by the school district based on the assessed valuation of tangible personal property (equipment & inventory) located at businesses within the boundaries of the school district, multiplied by millage approved by voters. Personal property taxes are paid by commercial property located in the district. In June 2005, the State of Ohio passed House Bill 66 which phases out the tax on tangible personal property of general business, telephone and telecommunication companies, and railroads. The tax on general business and railroad property was eliminated in 2009, and the tax on telephone and telecommunications property was eliminated in 2011. The taxes are phased out by reducing the assessment rate on personal property values each year. Estimates for tangible personal property taxes are based upon the mandated state reductions as well as estimates from the Greene County Auditor’s office. The State is phasing out this tax.

1.30

Income Tax The school district income tax (SDIT) is levied at .5% on the income of district residents and is a levy that will need to be renewed every 5 years. The last time the levy was renewed was May 3, 2011. The SDIT uses as its base the same taxable income as reported for state income purposes. These monies are not restricted, so the district can use these funds for any purpose it chooses. The advantage of the SDIT for Xenia is that there is no millage reduction factor to negatively affect collection of this tax, and the proceeds from this tax theoretically grow as residents income grows.

Fiscal year FY13 has a slight .68% increase and FY14-FY15 is held flat due to current economic conditions. FY16-FY17 reflects a .50% increase prediction due to the projected economic conditions with an assumption made to hold steady with income tax increases. This item will be closely monitored with each quarterly income tax distribution until some stability is reached. 1.35

Unrestricted Grants-in-Aid Includes: School foundation basic aid (3110), other state sources (3190) including PU property tax replacement payments which school districts started receiving in February 2002. Other State Sources (All other 3000’s). Unrestricted grants-in-aid are revenues received from the state Foundation program. The district also receives a small amount as a reimbursement for the loss of public utility taxes. This unrestricted revenue can be used for any legal purpose without restrictions. Governor Kasich’s administration has promised to change the funding model from the bridge report starting in FY14 which will be a new funding system. This forecast is based on the current funding formula. The District is expected to receive a decrease of approximately .38% based on the last foundation payment as of 05/10/2013, and a 1.0% decrease in FY14 & FY15 based on the assumption of no growth on state foundation as well as a reduction in enrollment based on recent historical trends. The current unrestricted grants-in-aid line item has been projected after consultation with ODE experts and applying the changes based on their recommendations. In FY16 and FY17 no growth is expected due to the current economic climate of the State of Ohio’s budget. We did receive $94,272.47 in reimbursement from Ohio State Casino monies in FY13.

1.40

Restricted Grants-in-Aid Restricted grants-in-aid are revenues received directly from the state that must be used for a specific purpose. A decrease occurred in the overall restricted grants-in-aid due to less projected reimbursement from the State for Special Education Catastrophic Cost and the elimination of the State to fund any allowances for bus purchases. Revenue from the Education Jobs Fund is ending the 1st part of the FY13 fiscal year due to carryover payments of salaries earned for work performed in last fiscal year. Please note that the ED Jobs funding is assumed to no longer be received after FY13. 2013

2014

2015

2016

2017

$82,679

$82,679

$82,679

$82,679

$82,679

62,757 29,558

92,315

92,315

83,565

75,253

Projections Not Based Upon Prior Year Career Technical Special Ed Excess Cost Reimbursement Education Jobs Fund Total Projected

$174,994 $174,994 $174,994 $166,244 $157,932

1.45

Restricted Grants-in-Aid –Education Jobs Fund –Of the $959,884.77 received from the Education Jobs Fund, $930,328 was received in FY12. The remaining $29,558 was received in FY13 to assist in the reduction of funds due to the SFSF funds no longer being funded, as seen in above in 1.40.

1.50

Property Tax Allocation Funds received by the district as a result of homestead exemption and property tax rollback legislation are posted under property tax allocation. The homestead exemption permits senior citizens to pay a reduced property tax rate, based on their income and age. Property tax rollback is the result of legislation granting the owners of real estate to enjoy a 10% reduction in their property taxes. If the real estate is owner-occupied, the owner is granted an additional 2 ½% reduction. The first $10,000 of taxable personal property is exempt from taxation. The state reimburses the cost of this exemption. The Property tax amounts are based on historical data and assume an annual 10% decrease in $10,000 personal property tax exemption until it is completely eliminated. School districts are supposed to be reimbursed in full for the elimination of personal property taxes through tax year 2010 with a combination of increases in state foundation payments due to lower valuations in the charge off and direct payments to the districts. The direct payment reimbursements will be based on the property valuations and levies currently in place. As long as the levies continue to be renewed, the reimbursement with current legislation calls for the reimbursements to continue until 2018. Fixed sum levy reimbursements are calculated to be made within ½ mill of the reimbursable loss. The tax value losses are multiplied by the sum of all fixed sum levies. If the sum of these calculations is greater than the equivalent of ½ mill times all remaining taxable value, the difference between those calculations is eligible for reimbursement. Fixed rate levies will be reimbursed to reflect the losses in the tax revenue during the phase out of the tangible property tax. The reimbursement for fixed rate levies is calculated by multiplying the tax rate of the levy by the value loss in the current year. Beginning in Fiscal Year 2008, a calculation was made to determine the amount of state revenue that would have been received without the personal property value loss versus the state funding with the reduced values. The reimbursement will be adjusted in the amount of state funding by the reduction of personal property value calculations. The fixed rate levies direct reimbursement began being phased out in 2011. The phase out rate is 3/17ths the first two years, and then 2/17ths until all payments stop after Fiscal Year 2018. Public utility deregulation effectively reduced the assessment rate of public utility personal property from 88% to 25%. The changes were effective in tax year 2001. Beginning in 2002, the losses in tax revenue have been offset by payments from the State of Ohio. After August 2006, the Department of Taxation has being making annual calculations to determine if the reimbursements will continue. If the state school aid increase is greater than the inflation-adjusted tax loss, no further payments are made. If the inflation-adjusted loss is greater, full reimbursements are made during the following year. This determination is repeated each year through 2016.

1.60

All Other Revenue Includes: 1410 Interest Earnings 1200 Tuition 1390 Other Transportation Fees

1740 Other Classroom Fees 1810 Rental Income 1852 Rental Income 1890 Other Miscellaneous Revenue 1932 Compensation for Loss of Assets 2200 Intermediate Restricted Grants 4110 Unrestricted Federal Grants 4220 Restricted Federal Grants 5300 Refund of Prior Year Expenses Xenia’s other local revenue is projected to decrease 37.99% in FY13 due to current economic factors, ($285K +/-) received from an insurance reimbursement deposited for hail damage to property, ($194K +/-) for transportation reimbursement, ($27K +/-) for retrofit of school buses from state of Ohio, ($60K +/-) interest recovered in previous year, ($101K +/-) due to reclassification of casino monies and a drastic increase in free and reduced lunch/student fee applicants. For FY14, the District is not projecting any insurance reimbursements, thus a decrease 2.20% has been estimated. There is a 0% increase projected for FY15, .25% increase projected for FY16 and .50% increase projected for FY17 due to expected state budget changes in funding per pupil. Advances-in Money received by the General Fund, as a result of an advance from another fund, in anticipation of future revenue. An advance is a temporary reallocation of money. These monies are specifically for monies moved to the Detention and Rehab Center for Xenia Community students. 3.010 Personal Services Includes salaries and wages for contracted days/hours, supplemental, overtime hours, substitute wages, severance pay and miscellaneous pay. - Wages are calculated in accordance with existing negotiated wage agreements and historical patterns regarding overtime, supplemental, extended and substitute pay. Certificated/Classified contracts have been negotiated for 2012-2013 and is accounted for. - Salaries and benefit projections are based on current staff. Projected increases are based on no salary schedule step increases. With the current economic conditions there is an assumption of 0% annual raise starting in FY13-FY17. There is an assumption made that individuals who earn higher education will move over on the salary schedule. - There are some assumptions made to pay certificated/classified staff earned severance pay. - FY13 reduction of 15.89% is due to subcontracting transportation, custodial/maintenance and technology positions as well as the implementation of reduction in force. - FY13 due to the timing of teacher calendar year most of the projected retirements will occur in July, pushing the liability of retirement severances into the next fiscal year. This is the main reason for the 2.50% increase in FY14 as opposed to the 1% for the preceding years. - FY15-FY17 a 1% increase due to severance payouts and movements on salary schedule due to education classification. 3.020 Employees’ Retirement/Insurance Benefits Includes board contributions to STRS and SERS for employee’s retirement, worker’s compensation premiums and costs, unemployment compensation premiums, FICA and employee health insurance

benefits. The Board of Education pays 14% of each employee’s salary to the State Teachers Retirement System (STRS) for certificated employees or to the School Employee’s Retirement System (SERS) for classified employees. The board is also required to pay 1.45% of each employee’s salary for Medicare tax for employees hired after 01/01/1986. - Retirement costs, workers’ compensation and Medicare taxes increase commensurate with salary increases. - Fringe benefit costs are estimated to increase based on projected annual increases in insurance premiums around 8% in 2013 and 8-10% starting in 2014-2017 per estimate from current carrier. - FY13 reduction is due to reduction in force benefits netting with the additional cost of unemployment benefits. - In FY13 there is an assumed decrease of 22.19% due to reduction in force and subcontracting transportation, custodial/maintenance, psychologist services and technology positions. 3.030 Purchased Services Amounts paid for personal services rendered by personnel who are not on the payroll of the district, and other services, which the district may purchase. Includes fleet and building insurance, maintenance contracts, IEP related services for special needs students, community school and open enrollment adjustments, special education excess costs, tuition, OSHA services, intra-school travel, professional development in service costs, meeting and travel cost, certificates/licenses, legal services/consultants/technicians, postage/printing/advertising, leases, utilities, continuing education reimbursements, etc… 86.21% increase in 2013 due to primarily outsourcing transportation, maintenance, technology and psychologists. Other factors that are expected to increase are negative open enrollment figures, increase in MD Classroom expenses, additional cost for visually impaired student, increase in speech pathology, increase in multiple handicap services, increase in ED classroom expenses, increase in psychologist expenses, increase in utility expenses, increase in community school/stem school/autism scholarship students, legal fees, outside vendor services and increase in special education excess cost. FY14 there is a 6.77% expected increase based on current historical projected increases that are expected in negative open enrollment, additional community school/stem school/autism scholarship students as well as an increase cost of legal fee due to pending legal litigation. A slight increase of approximately 3.00% is estimated for 2015-2017 in order to plan for the ever fluctuating special education and outsourcing charges. 3.040 Supplies, Materials and Textbooks Amounts paid for material items of an expendable nature that are consumed, worn out, or deteriorated from use, or items that lose their identity through fabrication or incorporation into different or more complex units or subunits. This includes textbooks, supplies for teachers, office supplies and materials, maintenance supplies, library supplies/books/periodicals/magazines, gasoline/diesel and parts/tires for buses. 6.79% increase in 2013 due to FY12 depletion of consumable supplies of the district and trying to control material supply purchases. For FY14 an assumption is made of 1.09% increase to hold steady if possible levy does not pass. In FY15 a slight increase of 2.00% and FY16-FY17 a 3.00% increase is

used as an assumption due to increases in fuel prices, material supply demands for the classrooms based on historical increase, increase in instructional and office supplies as well as textbook purchases. 3.050 Capital Outlay Includes new and replacement equipment, vehicles, and building/land improvements/construction. Since the district is currently under fiscal constraints, the assumption is to slow down the general fund capital outlay purchases until the district can get back on more solid ground. Increase of 152.07% this year due to previous year’s reduction and revisit equipment purchases that were put off due to economic conditions. 25% increase in FY14 to continue to replace aged and broken equipment at the current level, 1% increase in FY15 and a 3.0% increase for FY16-FY17. 4.050 Principal-Notes The district issued a ten year lease with 5th/3rd Bank for three buses set to expire 10/01/2018, a ten year bus lease with US Bank that is set to expire 07/01/2016 and two HB 264 projects (one will expire 12/01/2025 and one will expire 06/01/2014). For FY14-FY17, it ties to debt service schedule for future years. General Fund Debt Service Expenses FY13

HB264 5th/3rd (3 bus, 10 years) US Bank (10 year Bus Lease) RW Baird (HB264) Huntington (HB264)

$110,000.00 $170,000.00

Other $22,112.90 $102,000.00 $0.00 $0.00

Total

$280,000.00

$124,112.90

Interest & Bank Fees $6,189.61 $20,012.40 $57,100.00 $6,800.00 $90,102.01

4.300 Other Objects Includes county auditor and treasurer fees, county ESC deductions, fee on delinquent taxes paid, annual single audit charges, bank charges, liability and accident insurance, professional dues/fees/memberships, judgments against the district, back pay, awards and prizes. - A 4.38% decrease is expected in FY13 due to a decrease expected multi-handicap charges and ballot charges not expended until next fiscal year. - A 3% average increase is assumed for FY14-FY17. 5.010 Operating Transfers-Out Transfers are a permanent movement of monies between funds, and advances are a temporary movement of monies between funds. These are usually projected based on past history and knowledge of deficits in other funds.

- Transferred monies within the General fund to replenish last year’s charges for textbooks and instructional materials and supplies. Also, expect to transfer monies out of General fund to cover Uniform School Supply fund due to increase in free and reduce students. 8.10

Estimated Encumbrances June 30

The amount of outstanding purchase orders open at the end of the fiscal year. Purchase orders remaining open at the end of the fiscal year represent financial commitments made in the previous fiscal year that have not been completely fulfilled, or financial commitments made in the next fiscal year which represents obligations or expenses related to the fiscal year in which the purchase order was issued. 9.03

Budget Reserve After the effective date Am. S.B. 345 (07/01/2001), no board of education of any school district shall be required to establish and maintain a budget reserve account as previously required. - This board of education decided to keep $573,354 as a set-aside.

20.01 ADM forecasts for Kindergarten – October Count Week Estimated 20.02 ADM forecasts for Grades 1-12 – October Count Week Estimated 21.01 State Stabilization funds that will be used for salaries.