StruthersCitySchool District
Management’s Notes
For the Financial Forecast Fall2010-11
______
The discussion and analysis of Struthers City School District’s financial forecast provides an overall review of the School District’s financial activities for the fiscal years 2008 through the end June 30, 2015. The intent of this discussion and analysis is to look at the School District’s financial performance as a whole. Readers should also review the financial forecast with the notes in order to enhance their understanding of the School District’s financial performance.
Financial Highlights
Key Financial Highlights for Fall2010-11 Financial Forecast are as follows:
- Positive cash balance at the conclusion of each year of the forecast period through 2015.
- Fiscal year 2012 reflects the conclusion of the 5 year 6.9 mill operating levy which must be renewed.
- Transfer out amounts reflect General Fund subsidy of federal grant programs whose expenses experience a inflation rate of 2% while federal grant revenue continuing to decline 4% each year over the next five years until 2013.
- Outstanding general obligation debt reflects both the H.B. #264 project and the 2008 one year extended school bus lease purchase.
- The district has emphasized cost reduction measures over the last three years as evidenced by the continued reduction of the expenditure per pupil cost figures as published by the Ohio Department of Education as follows:
Fiscal Year Expense Per Pupil Amount of Change Percentage of Change
2009$7,225($301)(4%)
2008$7,526($88)(1%)
2007$7,614($578)(7%)
2006$8,192BaseBase
Revenue Assumptions for the Financial Forecast
Line 1.01 General Property Tax
The district anticipates stagnant growth in the first four years of the forecast due to new construction. In tax year 2008 a triennial reevaluation will occur which will increase tax collections in 2009. In tax year 2011 a sexennial reappraisal is scheduled to occur which will increase tax collection in 2012. The school district is anticipating renewing the expiration of an operating levy for the collection period 2012 to prevent a drop in tax collections.
Line 1.02 Tangible Personal Property Tax
The district incorporated the impact of the phase out of this tax for the fiscal years 2008 through 2013 as a result of state of Ohio’s tax changes. Note the reduction to $36,000 in Fy2010.
Line 1.040 Restricted Grants in Aid
For fiscal years 20010 through 2014, the school district anticipates restricted grants in aid to be consistent with fiscal year 2010.
Line 1.045 Restricted Federal Grants in Aid – SFSF
For fiscal year 2011 the district included the Fiscal Stabilization Fund ((532) and Education Jobs Fund (504) funds.
StruthersCitySchool District
Management’s Notes
For the Financial Forecast Fall 2010-11
Line 1.050 Property Tax Allocation
In fiscal year 2009, the state of Ohio began delaying the school district reimbursement for Homestead / Rollback revenue due to the dire financial condition of the State of Ohio.
Line 1.035 Unrestricted Grants in Aid
For fiscal years prior to2009, the State Legislature has increased per pupil funding 3% each fiscal year. The school district anticipates the per pupil amount of funding not to increase each fiscal year after fiscal year 2011. Hence, the state of Ohio’s biennial budget for Fiscal Years 2010 through 2011 is anticipated that the district will incur a 10% reduction of basic aid amounting to a loss of $1,000,000. It is anticipated to be restored to the prior FY2009 funding levels for the ensuing Fiscal Years 2012 and beyond with no additional growth.
Line 2.060 All Other Revenues
The school district anticipates a 9% increase this year for the forecast period. A major component of this revenue, open enrollment is expected to remain consistent in the future forecast periods with 220 students projected to attend based upon available building capacity which is an increase of 26from the pervious fiscal year which amounts to a 13% increase.
Expenditure Assumptions for the Financial Forecast
Line 3.010 Personnel Services
The school district has recently concluded labor negotiations with its employees and has entered into a two year contract with the certified staff of 2% per year while concluding a three year contract with classified staff of 2% per year. The school district has assumed the likelihood of similar annual base increases to the contracts entered into 2010 and step increases similar to the current negotiated agreements for the fiscal years 2011 to 2014 are unknown.
Line 2.020 Employee Fringe Benefits
Retirement costs are forecasted to increase based on the increase in forecasted salaries over the next five fiscal years. In fiscal year 2010, health care costs are expected to decrease due to a spousal opt-out plan design to the district’s staff. During fiscal year 2010 the district expects a one time premium holiday for one month for hospitalizationand prescription which results in partially offsetting the expected inflationary cost. It is anticipated that the district will incur an 8% increase in FY2011. Fiscal year 2012 through 2013 are anticipated to increase less than 6% each fiscal year due to anticipated increases in employee monthly contribution rate as seen in the nonprofit sector of the economy.
Line 2.030 Purchased Services
The school district anticipates that the forecasted increases in purchased services may be inadequate to offset the inflationary pressures incurred in this line item area for the future years. Purchased services beginning in FY2011 are expected to decline due to the completion of the multi-phase athletic facilities renovation program which is expected to be completed in FY2010.
Line 2.040 Supplies and Materials
The entire forecast period is showing consistent expenditures which will be needed to keep supplies at a level that is needed to effectively run the school district and meet set-aside requirements.
StruthersCitySchool District
Management’s Notes
For the Financial Forecast Fall2010-11
------
Line 3.050 Capital Equipment
Capital outlay expenditures consist of minor equipment along with $100,000 per year of the forecast period for the replacement of one school bus per year.
Line 5.010 Operating Transfers-Out
The school district anticipates transfers to cover deficit balances in its federal grant funds for the entire forecast period in order to cover cost overruns resulting from the decline in grant revenues. The district must reevaluate the delivery of these services relative to their increasing need of subsidy from the General fund.
School District Outlook
The financial forecast of the StruthersCitySchool District depicts a positive but guarded financial future which is not without its challenges though.These challenges are both external and internal in nature. Fundamentally,the district’sover dependence upon grants and state entitlements coupled with a relianceon property taxes coming from low wealth tax base makes it susceptible to fluctuations in its level of its educational funding. Lacking the strength and resiliency of its local tax base, the internal challenge of having to renew its 6.9 mill 5 year general operating levy which is set to expire in 2012 is a grave indeed. Externally, one can see the significant impact of declining federal grant monies and rising inflationary market costswould have on the school district and ultimately, the residential taxpayers,which is clearly evident upon examining the district’s anticipated growing yearly subsidy of its federal grant programs.As a result of the challenges mentioned above, the Board of Education and administration closely monitor its revenues and expenditures in accordance with its financial forecast.
Contacting the School District’s Financial Management
This financial forecast is designed to provide our citizens, taxpayers and investors and creditors with a general overview of the school district’s finances and to show the school district’s accountability for the money it receives. If you have any questions about this report or need additional financial information contact:
Dr. Michael Evanson, Treasurer
StruthersCitySchool District
99 Euclid Avenue
Struthers, Ohio44471.
This financial forecast is scheduled for adoption at the October19, 2010 regular Board of Education meeting. Please visit the Ohio Department of Education website at ftp;//ftp.ode.state.oh.us/geodoc/5-yrForecast/.
1