October 2015 Five Year Forecast

October Five Year Forecast | Eric J. Soltis, MBA

1 | P a g e

(This page is intentionally left blank.)


2 | P a g e


3 | P a g e

INTRODUCTION
Included in this Five Year Forecast (FYF) is a conservative estimation of the Pike‐Delta‐York Local School District’s
(hereinafter referred to as the “District”) General Fund cash revenues, cash expenditures, and cash balances for the
respective fiscal years forecasted.  This summary is based on numerous assumptions that were developed as of October
21, 2015.  Further explanation and rationale behind these assumptions are included in this documentation.

It is important to understand that a forecast is simply considered a “snapshot” in time.  Differences between the forecasted
figures and the actual results are expected to take place, typically because circumstances change over time.  Such variances
may have a significant impact on this forecast.

ASSUMPTIONS TO THE FIVE YEAR FORECAST
Pike‐Delta‐York Local School District
Wednesday, October 21, 2015

REVENUES
The District’s current revenues come from a variety of sources, typically including general property tax (or real estate),
tangible personal property tax, unrestricted state grants‐in‐aid, restricted state grants‐in‐aid, property tax allocation, as
well as other general revenues and financing sources.  The District operates on a fiscal year that runs from July 1st
to June
30th
, and the District is currently operating in FY16.  Figure 1 below highlights the District’s projected revenue sources for
FY16, as well as the corresponding dollar amounts and percentages.  The ensuing information provides readers a greater
understanding of where the District’s current resources are coming from.

$4,375,991
450,000
7,323,831
199,683
781,102
691,932
60,250
13,882,789

Figure 1.  FY16 Projected Revenue Sources.

Line 1.010 – General Property Tax (Real Estate)
Real estate property values are established each year by the County Auditor’s Office (CAO) based on new construction
and updated values.  Fulton County’s last triennial update occurred in tax year 2011 (TY11), payable in 2012; however, a
full reappraisal occurred last year (Fall of Tax Year 14) and was payable in 2015.  The District is currently collecting the
minimum of 20 mills for residential and agricultural real estate allowed by Ohio Revised Code (ORC).

In the most recent reappraisal, the District vastly benefitted financially from the increase in valuation, which had increased
approximately $182 million, or 13.23%.  Given this increase, and combined with roughly half of the money from the new
millage passed in May of 2014 (highlighted further in the next paragraph), an increase of $392,809 was realized from FY14
to FY15.  The CAO assured that this can be comfortably projected because the next triennial update (revaluation) will not
31.52%
3.24%
52.75%
1.44%
5.63%
4.98% 0.43%
General Property Tax (Real Estate)
Tangible Personal Property Tax
Unrestricted State Grants‐in‐Aid
Restricted State Grants‐in‐Aid
Property Tax Allocation
All Other Revenues
All Other Financing Sources


4 | P a g e

occur for another three years.  Therefore, as a result, values will remain the same during that time span.  There is a slight
increase included in FY16 to account for the additional amount generated by the new millage.

In November of 2003, the District passed a levy that was later not renewed by the voters before it expired.  Then, in
November of 2011, the voters of the District approved a $909,937 (5.99 mills) Emergency Levy for three years.  In an effort
to renew the Emergency Levy and go for an increase of $320,000 and extend the length to five years, the District’s voters
approved the renewal levy on its first attempt.  The anticipated increase in revenues is shown in Line 1.010 of the forecast.
There is a decrease in revenues in FY20 when the levy is expected to expire.

Line 1.020 – Tangible Personal Property Tax
This line item includes two types of taxes – tangible personal property taxes and public utilities personal property taxes.
Tangible personal property includes furniture, fixtures, machinery, equipment, and inventory.  The tax receipts for public
utility personal property, such as electric companies, natural gas companies, and a host of other smaller classifications,
are also included in this line item and will remain in the forecast.  These values are set by the state and fluctuate from year
to year, as seen in recent history.  The District received $459,258 in FY15, which represented an increase of $36,926 in
comparison to the previous year.  Given the unknown nature of how the state anticipates handling this revenue source, a
relatively conservative assumption of $450,000 has been included.

Line 1.035 – Unrestricted State Grants‐in‐Aid
The State funding formula for schools is based on several factors, all of which are subject to deliberations and approval of
the Ohio General Assembly.  School funding for fiscal years 2012 and 2013 were distributed based on how much the
District received in fiscal year 2011, the current enrollment of students, and the assessed value of the District’s real estate.
The District’s amount of state funding, like all other districts, was adjusted by a statewide factor so that the full amount
of the State’s Appropriation was fully distributed.  The State Budget for FY14 and FY15 had many complex components
and changes from the previous years as well, making it difficult for school business officials to predict future funding.  As
anticipated, HB 64 (the current budget bill for FY16 and FY17) has brought forth additional changes and has added new
variables to the school funding formula, such as capacity aid, a transportation supplement, a third grade reading
proficiency bonus, as well as a high school graduation rate bonus.

This particular line item represents the financial support from the state, including core funding, preschool special
education funding, and special education transportation funding.  From the previous FYF in May of 2015, estimated state
aid was unknown and kept static with no increase or decrease.  This was due to the unfinished budget bill process (which
typically doesn’t wrap up until the very end of June), leaving it very difficult to provide any valid predictions.  However,
since the budget bill has since been signed into law, the picture has become clearer.  The state has provided a budget
simulation that estimates the District receiving $7,323,831 in FY16 and $7,484,588 in FY17 (representing an additional
$361,721 and $502,478 in comparison to the previous FYF), respectively.  Figure 2 below represents a ten‐year history of
funding received for unrestricted purposes, with an upward positive trend in the most recent years.

Figure 2.  Ten‐Year History of Unrestricted State Grants‐in‐Aid Received (In Millions).
$6.383 $6.335 $6.344 $6.348
$5.862 $5.772
$6.098
$6.292
$6.658
$7.062
5.000
5.500
6.000
6.500
7.000
7.500
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15


5 | P a g e

Casino revenues are another form of incoming dollars that the District now anticipates each fiscal year.  As casinos have
opened throughout Ohio in recent years, anticipated revenues for all Ohio school districts were expected to be distributed
beginning in early 2013.  To date, the District has received $27,440.49 in casino revenues in FY13, $67,328.89 in FY14, and
$65,581.94 in FY15, respectively.  These revenues will continue to be received on a semi‐annual basis and are determined
by the District’s number of students (or student enrollment) and incoming casino revenues.

Line 1.040 – Restricted Grants‐in‐Aid
The items funded through this line of the FYF are received from the State of Ohio and can only be used for limited types
of projects.  The main sources of funding for the District include, but are not limited to, economic disadvantaged funding,
career tech weighted funds, and catastrophic special education aid.  Given that these funds come from the state with
restrictions, it is difficult to know how to predict for future variances.  As a result, this line item is held constant.

Line 1.045 – Restricted Grants‐in‐Aid – SFSF
The Education Jobs Program, a program that was established by the U.S. Department of Education in August 2010 and
administered through the Ohio Department of Education, provided the District with additional support in previous years.
The funding from this program was specifically intended to provide educational support for students by retaining teaching
positions within the District.  These funds were to only be used for the salaries and benefits of employees working directly
with students.  Based on the financial condition of the District at the time, roughly $318,000 of the Education Jobs funds
were received for teachers’ salaries and benefits in FY12, with the remaining $17,500 received in FY13.

Line 1.050 – Property Tax Allocation
The main revenue sources in this line item include the homestead and rollback (10% and 2.5%) exemptions, which are two
tax credit reimbursements that are granted to the owners of real estate property.  The 10% credit is granted to real
property not used for business or commercial use and the 2.5% credit is granted if the property owner occupies the
residential property.  These credits were typically paid for by the state to the District, and will continue to be the case for
current levies and renewal levies, but future new levies will require the property owner to pay this portion (such as the
recent Emergency Levy renewal with an increase).  The rollback and homestead reimbursement payments will generally
increase or decrease with new construction, reappraisals, and updates, as was the case in FY15 when the previously
mentioned increase in valuation occurred.

In addition, this line item also includes the Tangible Personal Property (TPP) reimbursement. This topic was widely
debated throughout the recent budget bill process, as it affects many school districts across the state, including Pike‐
Delta‐York.  The final version of HB 64 continues the phase‐out of the TPP reimbursement, which will greatly affect the
District in FY16 and beyond.  In the previous version of the FYF, the unknown nature of the budget bill legislation rendered
a static value of $941,540.  Of which, the TPP reimbursement represented $407,359.30.  The continuation of the phase‐
out represents revenues of $252,102 in FY16, $96,845 in FY17, and $0 in FY18 and beyond, as shown in Figure 3 below.
This phase‐out impacts Pike‐Delta‐York significantly, as well as many other districts state‐wide.  In fact, according to the
state’s figures, 260 districts received the reimbursement in FY15.  Only 136 districts can expect reimbursement in FY16.

Figure 3.  Tangible Personal Property Reimbursement – History and Projections.
$884,308
$616,408
$407,359 $407,359 $407,359
$252,102
$96,845
$0
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18


6 | P a g e

Line 1.060 – All Other Revenues
There are a wide range of revenue sources that are included here, including student fees, interest income, open
enrollment tuition, donations in lieu of taxes, among other miscellaneous revenues.  Beginning in the 2009‐10 school year,
state law declared that all students who qualify for the Federal Free Lunch Program would have their student fees waived
for the entire school year.  As a result, this has significantly reduced income generated from student fees over the years.

Effective in FY14, as further explained in the Personal Services (Salaries) portion of expenditures, is the creation of Cross‐
Categorical units at each of the three school buildings.  In addition to serving the District’s special education students, the
District entered into an agreement with the Evergreen Local School District to provide services for students, expecting to
generate additional revenues of $14,524.80 per student.  The District has most recently hosted two students.

Interest income is also included in this line item, and will increase and decrease as the cash position of the General Fund
fluctuates over the FYF period.  Over the past several years, the general economic condition has drastically affected the
interest income earned by the District.  The interest rate for the STAR Ohio account is considered a benchmark for public
funds held on deposit, and Figure 4 below represents the trend of such interest rates.  If one were to look at these interest
rates prior to the dates listed in the chart, one would find interest rates at 5.31% in June of 2007 and 2.25% in June of
2008, significantly higher than those listed.  The data indicates that the negative trend has started to reverse and the
District ought to expect increased revenues from interest earned.

Figure 4.  STAR Ohio Interest Rates – June 30th
of each Fiscal Year.

In the past, the District has invested their inactive funds in a combination of federal agency securities and certificates of
deposits (CDs).  This strategy has helped keep interest rate yields above the STAR Ohio rates.  However, despite providing
better yields than STAR Ohio, many investments have been negatively affected to the same degree.  The income generated
from interest has decreased over the last few years due to depressed interest rates.  The loss in interest income has been
a noteworthy loss of revenue for the District over the years.  However, a potential increase in rates has become a regular
discussion among the Feds, given that many market indicators are trending favorably.  One indication of this is the current
STAR Ohio interest rate of 0.16 percent, which is more than double the interest rate of just a few short months ago.

In the mid‐1990’s, the District entered into donation agreements with several companies that located within the District’s
boundaries.  These donation agreements were in conjunction with these companies receiving 100% tax abatement on
tangible personal property for ten (10) years.  During the life of these tax abatement agreements, the assessed valuation
of the real estate and tangible personal property was not included on the tax duplicate valuation.  The annual donation
amount was equivalent to a property tax of 7.0 mills.  The final donation payment of one such agreement was received in
FY13.
In addition to the donation agreements mentioned above, one such agreement recently expired with the last payment
made of $41,388 made in FY13.  More recently, as HB 59 (the budget bill for FY14 and FY15) was passed and law and
school funding formula changes have taken place, the District successfully redirected two current abatement agreements
0.19%
0.11%
0.04%
0.07%
0.03% 0.03%
0.07%
0.14%
0.00%
0.04%
0.08%
0.12%
0.16%
0.20%
FY09 FY10 FY11 FY12 FY13 FY14 FY15 10/1/2015


7 | P a g e

back to the District.  These agreements, one with a donation amount of $19,057 annually from Fulton County Processing
and the other at $38,675 annually from Worthington Steel Company, are expected to expire in FY19.  Upon the expiration
of these agreements, these amounts will then be included in general property tax (Line 1.010) in FY20.  Furthermore, the
District has another agreement with Fulton County Processing and is expecting the first of ten payments to begin in FY16,
in the amount of $26,414.  Last, the District approved an agreement with NatureFresh Farms and is expected to begin
receiving payment in FY17.  With future agreements anticipated, the District expects to receive donations in the amounts
of $25,646 in FY17, $74,887 in FY18, $120,188 in FY19, and $110,573 in FY20, respectively.

In future years, a multiplier of 1% is added in to this line item prior to the additional tax abatement revenues.

Line 2.060 – All Other Financing Sources
This line item mainly includes refunds of prior year expenditures, such as the bus garage insurance claim.  These revenues
are not expected on a yearly basis, and accordingly, an assumption of zero has been made for future years beyond FY16.

EXPENDITURES
The District’s current expenditures are made up of several different areas, which include personal services (salaries),
employees’ retirement and insurance benefits, purchased services, supplies, and materials, and capital outlay.  Figure 5
below denotes the District’s expected expenditures categories for FY16, the corresponding dollar amounts, and respective
percentages.  The following information emphasizes the District’s current FY16 budget.

$6,923,456
3,023,701
2,606,337
459,622
56,162
207,861
13,277,139

Figure 5.  FY16 Projected Expenditures.

Line 3.010 – Personal Services (Salaries)
This forecast reflects salaries approved by the Board of Education for certificated, administrative, and classified staff
through the end of the 2016‐2017 school year.  The latest agreement with the Pike‐Delta‐York Education Association
(PDYEA) was ratified by the Board of Education on August 20, 2014 and covers the 2014‐15, 2015‐16, and 2016‐17 school
years.  The PDYEA agreed to receive base salary increases of 2.0%, 1.5%, and 1.5%, respectively.  It was also agreed that
PDYEA members could select a traditional health plan and contribute 9% toward health insurance premiums in 2014‐15,
10% in 2015‐16, and 11% in 2016‐17, or members could select a High Deductible Health Plan with an optional Health
Savings Account and receive specific incentives.  On October 29, 2014, the Pike‐Delta‐York Board of Education ratified a
three‐year contract with OAPSE Local #660 Union, which was similar to that which was agreed to with PDYEA (i.e. – similar
base salary increases and insurance offerings).

52.11%
22.79%
19.65%
3.46%
0.42%
1.57%
Personal Services
Employees' Retirement/Insurance Benefits
Purchased Services
Supplies and Materials
Capital Outlay
Other Objects


8 | P a g e

Many staffing changes have affected the overall outcome of personal services.  One major change, a salary reduction plan
(a retire‐rehire option), has helped the District financially in FY14 and beyond.  The six employees (five teachers and one
administrator) that opted to initially participate are employees that would have continued working for the District whether
they retired or not.  One additional employee took this option and the District will realize additional savings beginning in
future years.  This has been an opportunity for the District to provide the same high‐quality instructional service at a
significantly reduced cost.

Another major decision the District made at the beginning of FY14 was to form Cross‐Categorical units at each of the three
school buildings, bringing back students from the Northwest Ohio Educational Service Center (NwOESC). With this
decision, the District has utilized the savings from these purchased services (mentioned also under Line 3.030) to pay for
three new teachers and four aides.

In future years, only step raises are included for both respective unions.  However, step raises and percentage increases
to the base salary beyond the 2016‐2017 school year will need to be negotiated, as current contracts will expire.  The
same is the case for many other staff members, including administrators, supervisors, and non‐union staff.

Line 3.020 – Employees’ Retirement/Insurance Benefits
STRS and SERS contributions will increase or decrease by 14% of wages being paid each year.  SERS Surcharge is an
additional employer charge levied on the salaries of lower‐paid SERS members. The surcharge is figured at 14% of the
difference between the member’s annual compensation and the minimum compensation level.  The SERS Surcharge will
be a maximum of 2% of the classified wages paid in each year, but will be adjusted for a state‐wide maximum of 1.5%.
The Board’s share of the employees’ retirement benefits contributions being paid to STRS and SERS will fluctuate as the
District’s salaries increase or decrease.

The District participates in the Northern Buckeye Health Plan (NBHP) health insurance consortium with other public school
districts in Fulton, Henry, Defiance and Williams County.  Within the NBHP consortium, there are a variety of health, dental
and vision insurance options.  Both the PDYEA and the OAPSE Local #660 Master Agreements included a change in health
insurance coverage effective August 1, 2009 to an Access+ plan.  Per the most recent negotiated agreements, both PDYEA
and OAPSE Local #660 employees choosing the Access+ plan will contribute 9% of monthly health insurance premiums in
2014‐15, 10% in 2015‐16, and 11% in 2016‐17.  Members from both unions are offered a High Deductible Health Plan with
an optional Health Savings Account.

Early in FY13, the District implemented a new Wellness Program.  The goal of this new initiative was to promote a healthy
attitude and lifestyle to all employees of the District, both in and out of the work environment.  Through this program,
one potential benefit is to help reduce health insurance claims throughout the year.  In turn, this could lead to lower
premiums.  The overall effectiveness of this program will depend on those individuals who are voluntarily involved and
their respective commitment level.

To adjust for all of the areas which influence the employees’ retirement and insurance benefit line, the assumption of an
annual increase is being set conservatively at 5.0% to predict future increases.

Line 3.030 – Purchased Services
This area primarily includes open enrollment tuition, utilities, property and fleet insurance, and student services received
from the Northwest Ohio Educational Service Center (NwOESC).  Many of the factors which influence the changes in these
costs are outside of the District’s direct control, such as utilities and property and fleet insurance coverage, because these
are purchased on the open market.


9 | P a g e

Open enrollment and community school payments are based on the number of resident students who choose to attend
another public school system or community school. For each student who attended another district, $5,732 was
transferred out of the District for FY12.  HB 59 has established per pupil aid at $5,745 for FY14 and $5,800 for FY15, and
HB 64 increased these amounts to $5,900 for FY16 and $6,000 for FY17, respectively.  No transfer is made if a resident
student decides to attend a private school, but state funding is reduced for the District.  The District has taken action
toward bringing back resident students by expanding its course offering through the implementation of an online “Panther
Virtual Academy.”

Also noteworthy, the District’s Maintenance Plan allows for certain maintenance‐related services to be paid for via the
Classroom Facilities Maintenance Fund, freeing up General Fund dollars.  More specifically, these monies accompanied
the building project via the 0.5‐mill of voted millage and are solely intended for the maintenance of classroom facilities.
The District’s cost for services from the NwOESC have increased or decreased based on the number and the level of
services utilized by the District and its students.  The District analyzes the need for services from the NwOESC on a yearly
basis and adjusts accordingly.  With the major decision to bring back majority of the students being served by the NwOESC
and forming Cross‐Categorical units in each of the three school buildings, the District anticipated savings in purchased
services for FY14 and beyond.  While this savings is realized from this change, it is important to remember the salary (Line
3.010) and benefit (Line 3.020) increases related to the hiring of these new staff members (three teachers and four aides).

To adjust for all of the areas which influence the purchased services line, the assumption of an annual increase is being
set conservatively at 1.0% to predict future increases.

Line 3.040 – Supplies and Materials
After careful review of all supply budgets, Administration looks to keep these costs under control by monitoring respective
expenditures (which is primarily where instructional supplies and textbooks are purchased, as well as custodial supplies,
maintenance supplies, transportation supplies, and fuel for the bus fleet).  This is a by‐product of the District’s goal to
maximize efficiency and reduce waste where applicable.

During FY11, plans were initiated to develop a permanent fueling station for diesel and propane.  The bulk buying power
allowed with this type of fueling station (funded by Federal grant dollars and the District’s Permanent Improvement Fund)
has provided a positive effect on the operations of the district in future years.  In addition, the recent construction of the
new Bus Garage (paid for with leftover funds from the Ohio Schools Facilities Commission Project) provides ample storage
space, allowing the District to purchase discounted supplies in bulk.

To adjust for all of the areas which influence the supplies line, the assumption of an annual increase is being set
conservatively at 1.0% to predict future increases.

Line 3.050 – Capital Outlay
Due to the financial nature of the District over the last several years, minimal expenditures were planned from this line
item.  However, in more recent years, the District believes that it is imperative to continually invest in various technological
equipment to stay relevant in the classroom.  Currently, the High School has achieved a “one‐to‐one” ratio of devices to
students, and the Middle School and Elementary School are making great strides to get to this status as well. The
Permanent Improvement Fund has also been a secondary option for capital outlay expenditures, but has been utilized
more sparingly recently.

At this point, the planned expenditures for capital outlay in FY16 and beyond are still relatively minimal in comparison to
the entire budget.  Future expenditures are kept static and will be based on the amount of General Fund dollars available.


10 | P a g e

Line 4.300 – Other Objects
This area includes various fees (State Auditor and County Auditor and Treasurer), staff and District memberships, election
expenses, and liability insurance.  The liability insurance market is dictated by market forces.  A modest increase has been
included in FY16 to account for the remaining portion of the newly voted millage, and includes an assumption of a 1%
increase in future years thereafter to keep in line with inflation and market volatility.

CLOSING SUMMARY
Given all of the assumptions listed in these notes, applicable for both revenues and expenditures, Figure 6 below charts
the total expenditures, revenues, and fund balances throughout the entire forecast.  Figure 7 thereafter expands upon
the cash balances at the end of the respective fiscal years (FY13 through FY15 are actual figures and FY16 through FY20
are forecasted figures).  It is worth pointing out that, by the nature of forecasting and the vast amount of assumptions
that must be made, it is common to see diminishing cash balances in the latter years of the forecast.  These declines are
known as “deficit spending” and are highlighted as negative figures in Line 6.010.  It is one of the District’s financial goals
to reduce or eliminate deficit spending as often as possible.

Overall, the District is in solid financial shape in comparison to where it was just a few short years ago.  The District has
made substantial financial strides to overcome obstacles and get to where it is today, and will continue to be mindful of
District resources in the future as well.  It is the fiscally responsible mentality and a teamwork approach amongst District
administration and a supportive community that has produced great results in recent years.  The District anticipates
continuing to foster such relationships to maintain the trust that has been extended, especially when it comes to the
proper handling of the financial resources that are made available to the District.

Figure 7.  Total Expenditures, Revenues, and Fund Balances (In Thousands).

Figure 7.  Cash Balance June 30 – Line 7.020.
‐$5,000
$0
$5,000
$10,000
$15,000
Total Revenues
Total Expenditures
Excess Revenues over
(under)  Expenditures
Cash Balance June 30
$836,209
$1,360,926
$2,518,516
$3,124,164
$3,402,035 $3,350,646
$3,054,644
$2,306,451
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

October 2015 Five Year Forecast

Recommended

Recommended

More Related Content

Similar to October 2015 Five Year Forecast

Similar to October 2015 Five Year Forecast (20)

October 2015 Five Year Forecast