Five Year Forecast Assumptions FY22-26 (Summary) Submitted May 2022

The District:

Auburn Career Center is officially a Vocational School District within the definition of Ohio Revised Code and is comprised of ten participating districts in Lake and Geauga County. Those districts include:	Berkshire, Cardinal, Chardon, Kenston, Fairport, Kirtland, Madison, Painesville City, Riverside and Perry Local.

Overview:

This financial forecast for the general operating fund is prepared according to the requirements legislated by HB412 and the district has prepared financial forecasts as a routine for many years and believes it is a valuable management tool. This forecast is an estimate of the most probable financial position, results of operations and changes in financial position for the five-year period. “Most probable” means that the assumptions have been evaluated by management and that the forecast is based upon management’s judgment of the most likely set of conditions and its most likely course of action. “Most probable” is not used in a mathematical or statistical sense.

Summary Notes:

Revenue:

Geauga and Lake County completed the sexennial tax value updates in 2017 and 2018 respectively. The triennial updates for Geauga and Lake County were completed in 2020 and 2021 respectively. Therefore, the next full reappraisal will be 2023 for Geauga County and 2024 for Lake County. In FY2021, we realized an increase in tax collections due to the completion of the triennial update in Geauga County. Geauga’s residential property increase equated to an average of 10.15% per Auditor Walden. Therefore, for FY2022, I have applied the same percentage for Lake County. Additionally, the Newbury property tax loss has been projected in the forecast beginning with tax collections received in the first half of 2022. Based on trend, projections are calculated at a 95% collection rate.

	HB59 removed property rollback reimbursement on any new levies approved in November, 2013 and thereafter. However, local tax collections will offset on any new levies.

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	Foundation levels in FY2022 are projected at the current funding levels provided by the Ohio Department of Education and the Office of Budget and Management. Also, shown in this line item are casino revenue and open enrollment adjustments/transfers.

	Governor DeWine’s Fiscal Year 2022-2023 Executive Budget was released February 1, 2021. Upon its passage in July, 2021, the Office of Budget and Management originally committed to an October timeline in which districts would be provided the actual state funding allocations; however, this is still an ongoing process today due to the complexities that have arisen during the implementation of the Fair School Funding Plan. The Fair School Funding Plan is a system for funding schools that can be broken down into three main components: the base cost; the state and local share; and additional targeted assistance/categorical aid. HB110 approved only two years of what is expected to be a six year phase in.

	Therefore, state funding levels in FY2022-FY2023 are projected pursuant to simulations provided as well as the current funding settlements from the Ohio Department of Education.

	Additionally, the budget bill moved the Student Wellness funding from fund 467 into the general fund. It is deemed restricted funding and is shown in Line 1.040 of the forecast.

	Adult Workforce continues to excel and we are seeing continued growth in programming. The balance still owed to the general fund at of the end of FY2021 was $855,000. The five year forecast reflects a payback schedule of $100,000 per year for FY2022-FY2026. However, this is analyzed at the end of each fiscal year to determine if the transfer of additional funds are feasible. The $100,000 per year will continue to be assumed beyond FY2026 and, until such time the advances have been totally repaid to the general fund.

	All other revenues are projected to realize a 1% increase each year. Due to economic declines, interest rates have plummeted; therefore, interest income has been projected to decrease 50%.

	Line 2.060 includes revenue from the sale of the “unfinished” FY2020 student house and the vacant lot east of the house. The proceeds received from the house was $245,342.40 and the vacant lot was $63,407.30 totaling $308,749.70. FY2023 and beyond no longer reflects this source of revenue as the district is no longer building homes effective the 2020-2021 school year.

Expense:

     FY2022 salaries are showing a 3% increase compared to FY2021. FY2023 reflects the initial projections of additional staff due to the recent enrollment policy

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change. The remaining years assume only step and educational advancements that is projected at 2%.

	FY2022 estimates reflect a 3.5% increase in healthcare premiums. FY2023 and all remaining years are projected with a 10% increase. These estimates have been supplied by the Lake County School Council based on current industry standards. FY2023 also reflects the corresponding increase in benefits due to the recent enrollment policy change

	In March, 2022, Lake County School Council approved a third healthcare premium holiday. The forecast reflects half of the reduction in June, 2022 and the remaining in July, 2022.

	Purchased Services have realized an 8% increase when compared to FY2021. I would attribute this to high inflationary increases and supply chain issues. Additionally, FY2023-FY2026 reflect a 5% inflationary increase and the initial projections of additional services due to the recent enrollment policy change.

	Supplies have realized a 20% increase when compared to FY2021. I would attribute this to high inflationary increases and supply chain issues, as well. Additionally, FY2023-FY2026 reflect a 5% inflationary increase and the initial projections of additional instructional supplies due to the recent enrollment policy change.

	Capital Outlay estimates have been increased to $300,000 per year for technology maintenance, and equipment purchases. The increase is necessary based on the trend we have seen over the last several years.	Additionally, FY2023 reflects anticipated classroom improvements and technology due to the recent enrollment policy change. We continue to use the Perkins grant for program equipment upgrades; however, these funds continue to be reduced resulting in the need to shift the burden back to the general fund.

	Other objects include expenditures such as liability insurance, county auditor fees, state auditor fees, membership dues and other miscellaneous expenditures. Projections reflect a 3% increase to the previous year’s total expenditure.

	Debt will continue to be paid from the general fund for the two roof replacement projects totaling $5.1 million in bond issues which included $1.060 million for HB264 energy improvements. Debt repayment for the Industrial Arts Facility is also included for a $600,000 bond issue. Debt repayment for the $1.745 million bond issuance for the B-wing roof replacement and TLC parking lot replacement. Debt repayment for the $1.3 million bond issuance for the Horticulture parking lot, main building window replacement, an outside classroom, other miscellaneous furnishing and equipment	The following tables reflect the debt repayment schedule and maturity:

FISCAL YR.	TOTAL PRINCIPAL/INTEREST
2022
	$758,196

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2023
	$748,085
	
2024
	$752,599
	
2025
	$751,545
	
2026
	$758,924

BOND	MATURITY
$2,800,000
	6/1/2026
	
$2,300,000
	6/1/2027
	
$ 600,000
	6/1/2027
	
$1,300,000
	6/1/2030
	
$1,745,000
	12/1/2033

	Additionally, line 5.010 and 5.020 include projections of transfers to the Capital Improvement fund, Principal fund and Food Service.