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02/09/06 1 Shaker Heights City School District FINANCE FACTS 2006 Slide 2 02/09/06 2 The District: An Overview l People 5600 students PreK-12 800 FTE employees Teachers: average 16+ years of experience l Physical Plant & Operations 12 buildings (8 schools, 4 support) 900,000 square feet in buildings, 95 acres of grounds 50 buses transport 4000+ public & private students/day l General Fund Budget $82.1 million FY2006 Slide 3 02/09/06 3 Slide 4 02/09/06 4 General Fund Expenses 2004-05 Total = $77.2 million Slide 5 02/09/06 5 Program Allocation of Budget GENERAL ADMINISTRATION 1% BUSINESS SERVICES (includes physical plant operations, transportation & treasury) 21% SCHOOL BUILDING ADMINISTRATION 7% INSTRUCTION, PUPIL & TEACHER SUPPORT 67% CO-CURRICULAR ACTIVITIES 1% CENTRAL SUPPORT SERVICES 2% COMMUNITY & OTHER 1% Slide 6 02/09/06 6 Detrimental Impacts on Revenue l House Bill 920 l Erosion of Tax Base l Tax Delinquencies l Phantom Revenue l House Bill No. 66 Slide 7 02/09/06 7 Revenue: House Bill 920 l Eliminates growth in school revenue from property taxes, even when property values rise. l Consequently, the Districts income remains flat. Slide 8 02/09/06 8 Revenue: Tax Base Erosion l Deregulation of the Electricity & Natural Gas Industries (starting FY02) Reduction of assessed value from 88-100% to 25% Assessed valuation loss of $6.6 million $946,000 in revenues lost per year State reimbursement for 5 years (15 in some districts) Slide 9 02/09/06 9 Revenue: Tax Base Erosion l House Bill No. 66 Repeal of Tangible Personal Property Tax (starting FY06) Phase-out over 4 years Loss of $2 million/year in current dollars Partial reimbursement for 4 yrs, then phased out Slide 10 02/09/06 10 Revenue: Tax Base Erosion l Repeal of Inventory Property Tax (starting FY01) Phase-out period accelerated from 25 to 13 years Loss of $500,000/year in current dollars No reimbursement l Repeal of Exempt Personal Prop.Tax (start FY04) Reduction over 10 years Loss of $300,000/year in current dollars No reimbursement Current year loss about $30,000 Slide 11 02/09/06 11 Revenue: State Support Decline l House Bill No. 66 Elimination of Cost of Doing Business Factor (starting FY06) 6.26% supplement per pupil ($324/pupil in F06) Phase-out over 2 years Loss of $2 million/year in current dollars when fully implemented Current Biennium Guarantee Slide 12 02/09/06 12 Primary Cost Pressures l Salaries & Benefits l Unfunded & Underfunded Mandates l Energy Costs Slide 13 02/09/06 13 Cost Pressures: Salaries & Benefits l Education is people-intensive vs. capital-intensive l Districts largest single expense l Negotiated contracts l Cost-of-living adjustments l Insurance Slide 14 02/09/06 14 Cost Pressures: Mandates l Special Education IDEA: Individuals with Disabilities Education Improvement Act Out-of-District Tuition Transportation Tutors & Aides l No Child Left Behind Testing Recordkeeping and reporting Intervention Slide 15 02/09/06 15 Cost Pressures: Energy l Natural Gas Supply & Demand Drive Price Severity of Winter Drives Consumption Monthly Bill Increase from $52,000 to $108,000 l Bus Fuel Prices Fluctuate l Electricity Growing Use of TechnologyIncreases Consumption Slide 16 02/09/06 16 Revenues & Expenses (without reductions) (millions of $s) Slide 17 02/09/06 17 Alternative Revenue Sources Lottery State has used proceeds to supplant, not supplement revenue from other sources Property Reappraisal Triggers reduction in tax rate under HB 920; inside mills add less than 1% to school revenues Local Income Tax Traditionally the domain of City government Federal Government Not likely State Funding Not likely Increase in Tax Base Important, but revenue growth is long-range Modification of HB 920 Not likely DeRolph Decision A dead issue School Levy Last option Slide 18 02/09/06 18 Operating Levy Cycles l Since HB 920 was enacted in 1976, the District has passed 12 operating levies. l From 1976 to 1983, the interval between levies was one or two years. l Since 1983, a three-year levy cycle has been the norm. Slide 19 02/09/06 19 Taxable Value per Pupil $422,000 $345,000 $234,000 $230,000 $211,000 $196,000 $158,000 127,000 $158,000 Beachwood Orange Mayfield Solon Chagrin Falls Richmond Heights S. Euclid-Lyndhurst Shaker Heights CH-UH Warrensville Heights Source: Ohio Department of Taxation $516,000 Slide 20 02/09/06 20 3.3 mills are needed in Shaker to yield the same amount of tax income per pupil as 1 mill yields in Beachwood 3.3 Shakers Taxable Value per Pupil Beachwoods Taxable Value per Pupil $158,000 $516,000 Millage Yield Comparison Slide 21 02/09/06 21 How much will the levy cost? $25.25 per month or $5.83 per week per $100,000 of market value Slide 22 02/09/06 22 Effective Millage (Note-1977 through 1988 effective rates approximated) School taxes as a proportion of home values have remained constant for 30 years Slide 23 02/09/06 23 Housing Values Schools are the #1 reason people move to Shaker Heights Since 1990, housing values have increased by 90% Slide 24 02/09/06 24 Responsible Stewardship l Consistently clean annual audits Numerous awards for excellence in financial reporting practices l Spending capped by Board since 1995 All financial targets achieved through cost containment & reduction efforts l Aggressive pursuit of outside funding Grants averaging $2.2 million/year E-Rate funds: $500,000 cumulative Special education reimbursements: $500,000/year Slide 25 02/09/06 25 Cost Containment Measures l Cooperative Purchasing Buses, supplies, food products, utilities, fleet insurance, vehicle fuel, computers l Energy Management Window replacements, temperature controls, boiler improvements l Technology Electronic distribution of data & documents, shift to fiber network, switch to state software for financial and student data l Efficient Operations Ongoing savings from right-sizing in 1987, consortia for special and vocational education l Workers Comp & Health Insurance Contingent premium Option: $1,100,000 savings Implementation of PPO Health Insurance Plan Workers Comp Retro Plan: $1,400,000 savings Slide 26 02/09/06 26 Shaker Heights Households Slide 27 02/09/06 27 Resources l www.shaker.org/2006levy www.shaker.org/2006levy Finance & Audit Report Auditor of States Report FAQs E-mail a question or report a rumor to levyinfo@shaker.org