Elida Local Schools Financial Summit II

1. Elida Local SchoolsFinancial Summit II Report to Stakeholders Fiscal Year 2006-2007 Joel L. Parker,CPA

2. Summit Team • Lynn Metzger, Metzger Financial Services • Bruce Opperman, WLIO • Phillip Morton, Elida Visionaries • Matt Huffman, State Representative • Mike Estes, Village of Elida • Dennis Swick, Mayor of Elida • Paul Basinger, Township Trustee • Pat Schymanski, Elida Visionaries • Peter Kesler, Ohio Foam Corporation • Cliff Barber, General Dynamics • David Anderson, The State Bank • Max Stover, First Federal Bank • Steve Boroff, Superior Federal Credit Union • Steve Romey, Attorney • Beth Jokinen, The Lima News • Mike Ford, Delphos Herald • Sally Ulrich, Elida Board Member • Brenda Stocker, Elida Board Vice President • Don Diglia, Elida Superintendent • Joel Parker, Elida Treasurer • Faith Cummings, Elida NCLB Director • Jo Ellen Miller, Elida Information Director

3. Goals • Review data on high school bond issue • Review the financial condition of Elida Local Schools • Expand the knowledge base on school funding issues • Review data for future financial planning • Exchange ideas on “best practices” • Encourage dialogue on future economic trends • Have summit representative report to the Board of Education on current condition

4. THERE IS NO BUSINESS LIKE PUBLIC SCHOOL BUSINESS • Ohio Revised Code • No Child Left Behind • Unfunded mandates • DeRolph case • Collective Bargaining • Tax structure • State Budget • Levies/Bond Issues • Phantom Revenue • Voters • Raw product - 100% accepted • Emotional Issues

5. TYPES OF LEVIES • BOND LEVY – Used to finance permanent improvements, new construction or renovation (Per ORC-MAY NOT BE USED FOR OPERATIONS) • PERMANENT IMPROVEMENT LEVY- Used for repairs/fixed assets with a useful life of 5 years (can be limited or continuing) and can be renewed or replaced

6. TYPES OF LEVIES • OPERATING LEVY-Used for current operations (can be limited or continuing) can be renewed or replaced • EMERGENCY LEVY-Used for operations (limited to 5 years and generates a set amount) can be renewed but not replaced • RENEW=same effective rate • REPLACE=original millage

7. ELIDA BUILDING PROJECT • Elida High School $39,750,000 • 6.46 Bond Issue and 1 mill PI Levy (38,250,000 Bonds + 1,500,000 Interest)

8. OSFC Ranking • Year Rank State Share • 2006 386 36% • 2007 393 35% • 2008 399 34%

9. Building Project History

10. WHY NOW? • Close one 90+ year old building • Take advantage of current construction costs • Improve air quality and handicap accessibility • Expand community partnerships • Protect local and community real estate values • Better investment of tax-payer money • Great interest rate 4.25%-4.50% • Hungry contractors(good time to bid) • Excellent strategic planning • The need goes back to 1969---The Right Plan The Right Time!

11. Benefits to Community • Protect property values • Provide “Center Piece” for the community • Attract new families • Retain old families • Provide safe, healthy learning environment • Loss to open enrollment $834,000 • Loss to community schools $506,000

12. Get The Message Out! Answer Every Question! • Newsletters • Web Site • Door to Door • Town meeting • Mailings to voters • TV and radio shows • Signs • TV ads • Newspaper ads • Notes from teachers

13. Inflation Defined • 1969 New High School $2,150,000 • 2006 New High School $37,000,000 • 2007 New High School $39,750,000 • 1997 - $92 per square foot • 2007 - $211 per square foot • (Review Trend Data)

14. Interest Savingson $40 Million New High School • 7.0% - 28 years $51,000,000 • 4.5% - 28 years $30,422,000 • A Great Time to Borrow!

15. Legislative Concerns/History • HB 920 Tax Reduction Factor • HB 152 Phantom Revenue • Budget Reduction Order • HB 95 Inventory Tax Phase Out • HB 282 Favored Charter Schools • HB 412 Mandated spending on repairs/educational supplies • SB 55 Increase in testing requirements • NCLB Increase in testing • 2008 State Budget Cuts

16. HOW MANY CLIENTS? • Students • Tax payers • Boosters • Parents • Business partners • Local officials

17. WHO ARE WE? • Maintenance – 2 • Custodial – 13.5 • Food Service – 25 • Bus Drivers – 31 • Asst Tech Co-1 • Total 268.5 • 4 Buildings • 81 square miles • Students – 2,458 • Teachers- 145 • Nurse –1 • Guidance – 4 • Professionals – 16 • Secretaries – 16 • Aides – 14

18. Average Teacher Experience • EHS – 19.1 years • EMS – 17.0 years • EES – 16.9 years • EEK – 7.6 years

19. PERFORMANCE INDICATORS • Carry-over Margin 1-5% • Strength of Carry-over - 60 day • 80% Rule on Salaries and Benefits • Debt to Total Assets • Residential Tax Rate • Per Pupil Spending (vs. other schools) • ADM Per Pupil Spending

20. AUDIT LIST • Annual Financial Audit by Auditor of State • ADM Audit by ODE(every 5 years) • Staffing Audit by ODE(5 years ago) • Curriculum Review by ODE • Annual Facility Inspection (Jared’s Law)

21. 68 Day Cash Balance! 60 DAY CASH BALANCE ALMOST A REALITY

22. June 30 Carry-Over *Gaining Strength* • 1999 $ 936,422 21 days • 2000 $1,048,819 23 days • 2001 $ 758,675 17 days • 2002 $ 821,146 18 days • 2003 $ 360,933 8 days • 2004 $ 967,429 21 days • 2005 $1,865,900 39 days • 2006 $2,645,703 53 days • 2007 $3,496,376 68 days

23. WHAT CHANGED? • Staff cuts • Administrative cuts $239,155 • Administrative Wages-0% increase 2 yrs • Streamlined food service • Moved staff to PPO insurance plan • Moved to pay to participate • Passed a levy in 2005 to bring back specific programs • Reduce bus fuel consumption • Savings on Retire/Rehire • Sharing on health premiums

24. General Fund

25. General Fund Expenditures

27. FOOD SERVICE

28. 5 Year Forecast

29. AUDIT REPORT • Performed every year • Cost to taxpayers $16,000 • Cash basis (saves taxpayers $10,000-$13,000 each year) • Tests are performed on accounts payable, payroll, compliance with ORC, fund raising, athletics, food service, grants, etc. • Clean opinion • No adjustments

30. Salary Data – Get the Facts!!

31. The Lima News-April 1, 2007 • Top 25 • Lima Total $928,919(7 of top 25) • Shawnee Total $915,855(5 of top 25) • Bath Total $836,848 (5 of top 25) • Apollo Total $829,174 (1 of top 25) • Elida Total $760,064 (1 at 16th) • Delphos Total $753,602 (3 of top 25)

32. The Lima News April 1, 2007-Superintendent Salary Data • Lima $115,269 • Crestview $108,159 • Allen East $102,019 • Delphos $101,457 • Auglaize ESC $96,600 • New Bremen $93,767 • Lincolnview $93,711 • Putnam ESC $93,565 • Waynesfield $92,426 • Elida $91,628

33. How does our 2007 residential tax rate stack up? • Residential Tax Rate 2007 • 31.44 Lima City • 31.26 Allen East • 31.15 Bath • 29.76 Shawnee • 29.23 Bluffton • 27.86 Perry • 27.09 Spencerville (Plus 1% income tax) • 27.14 ELIDA • 26.80 Delphos

34. Administrative Expenditures Expenditures Per Pupil Percentage of Total Expenditures Lima City School $1,228 13.1% State Expenditures $1,143 12.2% Spencerville $1,025 13.3% Delphos City $1,005 12.7% Allen East $961 12.9% Perry $933 13.4% Bath $882 11.7% Bluffton $856 11.1% Shawnee $831 11.5% Elida $811 11.3% ADMINISTRATIVE EXPENSES Administration: Salaries for administrators, office staff, and office supplies

35. Building Operations Expenditures Expenditures Per Pupil Percentage of Total Expenditures Bluffton $1,804 23.3% State Expenditures $1,779 19.0% Shawnee $1,749 24.2% Bath $1,716 22.7% Lima City $1,673 17.9% Perry $1,664 23.9% Allen East $1,567 21.0% Spencerville $1,529 19.8% Elida $1,412 19.7% Delphos $1,326 16.8% BUILDING EXPENSES Building Operations:Utilities, maintenance, repairs, busses and lunchroom expenses

36. Staff Support Expenditures Expenditures Per Pupil Percentage of Total Expenditures Lima City $389 4.2% State Expenditures $293 3.1% Bluffton $155 2.0% Elida $90 1.3% Spencerville $51 0.7% Bath $35 0.5% Allen East $34 0.4% Perry Local $25 0.4% Shawnee $24 0.3% Delphos $12 0.1% Staff Support Expenses Staff Support: Teacher training and other professional development activities

37. Pupil Support Expenditures Expenditures Per Pupil Percentage of Total Expenditures State Expenditures $935 10.0% Lima City $931 9.9% Delphos $907 11.5% Bath $851 11.3% Spencerville $806 10.5% Shawnee $727 10.1% Allen East $688 9.2% Bluffton $672 8.7% Elida $669 9.4% Perry $623 9.0% Pupil Support Expenses Pupil Support: Salaries for librarians, counselors, and nurses

38. Instructional Expenditures Expenditures Per Pupil Percentage of Total Expenditures State Expenditures $5,205 55.6% Lima City $5,148 54.9% Delphos $4,664 58.9% Spencerville $4,299 55.8% Bluffton $4,244 54.9% Allen East $4,220 56.5% Elida $4,169 58.3% Bath $4,070 53.9% Shawnee $3,891 53.9% Perry $3,704 53.3% Instructional Support Instruction: Teacher and education professional salaries and classroom materials

39. STATE FUNDING FLAWS • Over-reliant on property taxes • No inflationary growth on property taxes • Phantom Revenue • Unfunded mandates • System too complicated • Many man hours on levies(2000,2003,2004,2005,2006,2007,2008) • Schools get viewed as “Big Government Waste” • One of the few ways voters can express frustration with taxes

40. PHANTOM REVENUE • Who is it?? • State assumes we receive 23 mills from local tax payers • Elida actually receives 20 mills • This 3 mill gap is a huge problem • The State deducts 3 more mills than we actually receive • See SF3 handout (making sausage)

41. State Aid-Short Version • $5,403 x 1.00687x2,442.15=13,285,586 • Less 8,226,036(.023 x357,653,735) _______________ • $5,059,550

42. 23 Mill Charge- Off • FY 2005 $7,383,852 • FY 2006 $7,870,054 • FY 2007 $8,226,035

43. State Aid FY 2006 $7,520,508 FY 2007 $7,520,508 FY 2008 $7,458,619 FY 2009 $7,458,619

44. TAX BASE

45. STATE BUDGET BREAKDOWN • Primary & Secondary Education 35% • Medicaid 20% • Colleges 13%

46. State Budget Concerns-FY 2010 • CAT $ 1.3 billion new • Corporate Franchise Tax 1.1 billion loss • Tangible Property Tax 1.6 billion loss • Income Tax 2.1 billion loss • NET LOSS 3.5 billion in state revenue • 10 year job loss – 210,000 manufacturing • 10 year job loss- 4,000 Allen County

47. CONSTITUTIONAL AMENDMENT • High-quality education is a fundamental right for every Ohio child • Determine levels of funding based on student need • Eliminate “Phantom Revenue” • Exempt Ohio seniors and disabled from property taxes on the first $40,000 of the market value of their homes • Create an independent commission appointed by Ohio’s top elected leaders(to monitor efficiency) • Direct the commission to report annually to the governor • Create and maintain a permanent local government fund to support local government services • Establish a system to fund colleges at no less than 2007 amounts and increases annually based on state’s personal income percentage

48. DISTRICT WIDE REPAIRS

49. Cost per building/per student

50. 5 Year Goals • Pass a building bond issue • Continue to monitor health insurance (Health Savings Accounts, Spousal language, Mandate Generic Drugs)…impact of state pool • Enhance customer service • Maintain 0-5% profit margin • Continue to review staffing needs • Monitor new legislation • Others ???? (group discussion)