Northwest Local School District 5-Year Forecast

Submitted October 25, 2010

Expenditures Exceed Revenue

Structural Spending Deficit

Our enrollment estimates are several hundred student higher per year than previously estimated

The State’s new Evidence Based Funding Model works against Districts that are on the guarantee (formula doesn’t work)

The termination of the ARRA funding from the Federal Stimulus Bills

Health Care costs continue to rise well above expectations

Why a Structural Deficit?

Projected Cash Balances

Structural Operating Deficit

Cause of Structural Operating Deficit?

Flat Funding

Why Flat Funded?

Why Flat Funded? Real Estate Concerns

MedianJ urisdiction Number Median Sales Market to

County J urisdiction Name Type Year of Sales Price Price RatioHAMILTON COLERAIN Township 2005 790 $117,000 100.01% Reappraisal YearHAMILTON COLERAIN Township 2006 816 $116,250 93.36%HAMILTON COLERAIN Township 2007 587 $117,000 95.01%HAMILTON COLERAIN Township 2008 379 $112,500 100.00% Update YearHAMILTON COLERAIN Township 2009 393 $104,900 104.85%HAMILTON GREEN Township 2005 850 $135,000 100.00% Reappraisal YearHAMILTON GREEN Township 2006 776 $138,000 93.59%HAMILTON GREEN Township 2007 699 $135,400 95.33%HAMILTON GREEN Township 2008 508 $136,148 100.00% Update YearHAMILTON GREEN Township 2009 512 $129,000 102.28%HAMILTON SPRINGFIELD Township 2005 518 $126,000 100.01% Reappraisal YearHAMILTON SPRINGFIELD Township 2006 472 $135,000 94.34%HAMILTON SPRINGFIELD Township 2007 379 $126,900 96.95%HAMILTON SPRINGFIELD Township 2008 218 $121,800 100.00% Update YearHAMILTON SPRINGFIELD Township 2009 209 $122,500 105.50%

Why Flat Funded?

OBM Required Scenarios

FY11 Where FY12 Total FY13 Total FY12 Total FY13 Total FY12 Total FY13 Total FY12 ADM FY13 ADMSource Educated Funding Funding Funding Funding Funding Funding Projection Projection

OBM 24,612,321 24,743,847 24,911,159 23,725,307 23,100,993 20,651,335 20,031,981 9,176 9,189 5-Year Forecast 24,956,061 23,336,038 23,446,993 23,336,038 23,446,993 9,158 9,166 Difference 343,740 (389,269) 346,000 2,684,703 3,415,012 (18) (23)

FY12-13 ODE Budget Requests OBM Flat Scenario OBM 90% Scenario ADM Projection

State Board Budget Request and OBM Required Scenarios FY2012-13

OBM’s estimates based on the following assumptions:• ADM determined by a three year weighted average• Property valuation decreases of .1% and 3.2% for FY2012 and FY2013• Flat funding scenario reduced PPE by $111 and $197 in FY2012 and FY2013• 90% funding scenario reduced PPE by $446 and $531 in FY2012 and FY2013

5-year forecast estimates based on the following assumptions:• ADM based on district calculations less current community school students of 353• Property valuation increases of .49% and .58% for FY2012 and FY2013• 5-year forecast of 95% guarantee and 90% formula funding in FY2012• 5-year forecast of 95% guarantee (prior to coming off the formula) and 95% formula funding in

FY2013

Total Revenue by Category

Expenditures

Expenditures – Salaries

Category 2005 2006 2007 2008 2009 2010 2011Administrative Central Office 14.00 13.00 12.00 15.00 17.00 17.00 19.00

Certified Licensed 27.00 27.00 27.00 26.00 25.00 25.00 25.00 Classified 15.00 14.00 12.00 11.00 10.00 12.00 12.00

Instructional StaffTeachers 662.00 651.00 632.00 624.00 577.00 575.00 558.00 Instructional Specialists 12.00 10.00 9.00 8.00 8.00 8.00 12.00 Librarians 6.00 4.00 4.00 4.00 4.00 4.00 3.00 Instructional Coordinator 4.00 1.00 1.00 1.00 1.00 1.00 1.00 Counselors 19.00 17.00 17.00 17.00 17.00 17.00 17.00 Psychologists 1.00 1.00 1.00 - - - -

Support StaffEducational Assistants 147.50 139.50 151.50 150.50 150.00 157.70 183.50 Nurses 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Health Technician 18.00 18.00 18.00 18.00 17.00 17.00 17.00 Library Assistants 14.00 14.00 14.00 14.00 13.00 13.00 13.00 Transportation/Delivery 92.00 90.00 91.00 75.00 75.00 79.00 78.50 Food Service 106.00 104.00 104.00 104.00 100.00 98.30 97.50 Secreterial/Clerical 68.00 65.00 62.00 64.00 65.00 65.00 63.00 Data Processing 5.00 5.00 6.00 6.00 6.00 5.00 5.00 Maintenance 9.00 8.00 8.00 10.00 10.00 9.00 11.00 Custodial 64.00 62.00 67.00 63.00 62.00 62.50 62.50

Total District Staff 1,284.50 1,244.50 1,237.50 1,211.50 1,158.00 1,166.50 1,179.00 Increase/(decrease) Prior Year (40.00) (7.00) (26.00) (53.50) 8.50 12.50

Northwest Local School District Historical Staffing Data (All Funds)

• In 2010 salaries of $1,527,726 were paid using ARRA funds• An increase of $675,000 is estimated for 2012 all day kindergarten• The implementation of the alternative programs estimated salary increases

for 2011 are $209,250 and $450,750 in 2012• Step increases of 2% are factored in annually• COLA of 0% are projected through 2015

13

Expenditures - Benefits

District Annual Prior Year Increase Actual Difference % Premium ActualYear Payroll # Claims Premium W/C Rate Increase Since FY03 Claims Pmt - Claims Claims - Pmts Cost p/Claim Cost p/Claim2000 44,110,138 35 402,063.00$ 0.9115 N/A 184,288.00$ 217,775.00$ 45.84%2001 47,162,990 37 256,708.15$ 0.5443 -36.15% 55,131.00$ 201,577.15$ 21.48%2002 50,222,261 24 343,570.49$ 0.6841 33.84% 39,643.00$ 303,927.49$ 11.54%2003 51,938,137 37 320,042.80$ 0.6162 -6.85% 107,233.00$ 212,809.80$ 33.51% 8,649.81$ 2,898.19$ 2004 55,024,468 32 272,040.97$ 0.4944 -15.00% -15.00% 373,457.00$ (101,416.03)$ 137.28% 8,501.28$ 11,670.53$ 2005 53,678,275 38 371,185.27$ 0.6915 36.44% 15.98% 174,634.00$ 196,551.27$ 47.05% 9,768.03$ 4,595.63$ 2006 54,230,724 38 336,447.41$ 0.6204 -9.36% 5.13% 107,902.00$ 228,545.41$ 32.07% 8,853.88$ 2,839.53$ 2007 52,379,544 31 342,467.02$ 0.6658 1.79% 7.01% 63,351.00$ 279,116.02$ 18.50% 11,047.32$ 2,043.58$ 2008 51,122,765 37 348,743.01$ 1.1153 1.83% 8.97% 59,766.00$ 288,977.01$ 17.14% 9,425.49$ 1,615.30$ 2009 49,733,210 30 570,172.19$ 1.3488 63.49% 78.15% 68,575.00$ 501,597.19$ 12.03% 19,005.74$ 2,285.83$

6 Year Ave. 52,694,831 34.33 373,509.31$ 0.7692 16.71% 141,280.83$ 232,228.48$ 44.01% 10,878.91$ 4,114.98$

2010 54,314,028 12 670,801.54$ 0.8974 17.65% 146.58% 6,568.00$ 664,233.54$ 0.98% 55,900.13$ As of 6/30/10

Ohio Bureau of Workers' Compensation Payments & Actual Claims History

• Tuition reimbursement of $75,000 started in 2011

• W/C premium increases annually• Medical insurance rate increases of 36%

September 1, 2009 and 31% September 1, 2010, 15% projected 2011 through 2015

• Total salaries and benefits in 2010 of 80.1% and expected to increase to 84.5% in 2015

Reporting Period = 10/09 - 9/10

Most Recent 12 Months:

Enrolled(A)

MedicalClaims

(B)

RxClaims

(C)

TotalClaims

(D) = (B+C)

Total Premium(E)

LossRatio*(D/E)

Quarterly Loss Ratio

October-09 862 $330,254 $21,651 $351,905 $535,008 65.8%

November-09 862 $355,286 $39,762 $395,048 $533,852 74.0%

December-09 858 $596,561 $49,927 $646,488 $531,792 121.6%

January-10 861 $318,965 $68,754 $387,719 $532,751 72.8%

February-10 862 $630,344 $82,378 $712,722 $532,866 133.8%

March-10 863 $420,842 $86,255 $507,097 $532,278 95.3%

April-10 862 $564,502 $94,915 $659,417 $532,181 123.9%

May-10 863 $520,767 $111,907 $632,674 $530,474 119.3%

June-10 859 $564,809 $119,652 $684,461 $530,533 129.0%

July-10 859 $608,530 $121,157 $729,687 $528,494 138.1%

August-10 853 $614,647 $162,331 $776,978 $526,669 147.5%

September-10 870 $367,446 $6,737 $374,183 $728,880 51.3%

Average861

* Loss Ratio is defined as Total Claims divided by Total Premium

101%

Northwest SchoolsMedical Loss Ratio Summary - Incurred with UHC

87%

124%

105%

Total $5,892,953 $965,426 $6,858,379 $6,575,778 104.3%

Net of Pooled Claims(Above $250,000)

$6,651,301 $6,575,778 101.1%

Expenditures - Other

Total Expenditures by Category

Historical End of Year Balances

Structural Operating Deficit

Are We Alone?

NWLSD-3.46%

• As of May, 2010, over 450 districts projected their expenditures to exceed their revenue in fiscal year 2011.

• On average , expenditures exceeded revenue by -5.54% of operating revenue.

Per Pupil Expenditures

Total Per Pupil Expenditure

Annual Percentage Change Per Pupil

The Superintendent and administrative team have begun work in addressing the structural deficit of the district

We currently have a plan in place that has budget reductions in place through 2012 fiscal year which are included in this forecast

We are reviewing this plan and will make modifications and recommendations to the Board of Education that will address the deficit spending with budget cuts and revenue ideas

Without a change in action the district will face an operating deficit in 2013 of $5,741,425 as illustrated below while realizing major educational programing cuts

The sooner reductions are made or revenue is increased, the less impact there will be for reducing or eliminating educational programs

Financial Strategy

DisclaimersThe 5-year forecast for Northwest Local School District (Hamilton County) is derived

from the last three completed fiscal years (FY08 – FY10) of historical data, the current fiscal year’s (FY11) appropriations, and the next four fiscal years (FY12 – FY15) of forecasted data based on current information, logical estimates and rational assumptions.

As we continue to move forward in a volatile economy, the District’s efforts of budget management has helped maintain a healthy cash balance but our financial concerns continue amidst the State’s financial uncertainties and revenue predictions. School districts, local governments and state governments face treacherous times with high unemployment rates, a severe downturn in housing conditions and values, and the continued effects of a major recession both in the United States and globally.

As we review the District’s 5-year forecast we all must acknowledge this forecast as a work-in-progress as we continue to navigate through the storm of uncertainty. Many of the assumptions used in this forecast are derived from past experiences and spending history, however, many are a guess at best using the uncertainty of the current conditions and political climate we currently work in. I am confident with diligent management and a proactive stance using this data we can ride through this storm and continue the successes that our District is accustomed to.