Cleveland Municipal School District

1. Cleveland Municipal School District Five Year Financial Forecast MAY 2012 The primary goal of the Cleveland Municipal School District is to become a premier school district in the United States of America.

2. Five Year Forecast - Contents Major Assumptions General Fund Revenues General Fund Expenditures Five Year Forecast Summary

3. Cleveland Municipal School District Major Assumptions

4. Major Assumptions Revenue: Forecast assumes that the property tax current collection rate will remain at 78.87%. In 2012 Cuyahoga County will complete the six year reappraisal of all property. The impact on the district should be minimal. Forecast uses the bridge formula to determine state funding in all years. Forecast assumes the Average Daily Membership for K-12 to be: FY12 – 40,758 FY13 – 38,854 FY 14 – 37,548 FY15 – 36,300 FY 16 – 35,448 Forecast assumes that Charter School ADM will increase 1,100 students each year. Forecast assumes no new levy revenue.

5. Major Assumptions continued Expenditures: Forecast assumes a total of 2,591 classroom teachers in FY13 (2,316 are budgeted within the General Fund). Forecast assumes April layoffs are permanent. Forecast budgets 50 less employees each year in FY14-16. Healthcare rates are forecasted to increase 7.7% in FY13 and 9.7% in FY14-16. Forecast assumes all union agreements as currently defined. Charter School Pass-Through increases $8.4 million each year. Forecast assumes costs and savings from Employee Separation Plan. One-time or temporary budget closure recommendations were limited to less than 25%.

6. Cleveland Municipal School District General Fund Revenues

7. Cleveland Municipal School DistrictFY 2011-2012

8. Cleveland Municipal School DistrictLocal Taxes – Property Tax Revenue

9. Cleveland Municipal School DistrictProperty Taxes – Current Collection Rate Current Collection Rate Year

10. Cleveland Municipal School DistrictProperty Taxes – Total Collection Rate Current Collection Rate Year Lien sale scheduled for May 30, 2012

11. Cleveland Municipal School DistrictState Foundation Revenue Revenue (In Millions) Fiscal Year

12. Cleveland Municipal School DistrictState Foundation Revenue – Excluding Charter School Portion Revenue (In Millions) Fiscal Year

13. Cleveland Municipal School DistrictEducation Jobs

14. Cleveland Municipal School DistrictProperty Tax Allocation – State Hold Harmless Reimbursements

15. Cleveland Municipal School DistrictOther Revenue Revenue (In Millions)

16. Cleveland Municipal School DistrictTotal Revenue – Excluding Charter School Portion Revenue (In Millions) Fiscal Year

17. Cleveland Municipal School District General Fund Expenditures

18. Cleveland Municipal School DistrictWhere the Money Goes

19. Cleveland Municipal School DistrictSalaries

20. Cleveland Municipal School DistrictFringe Benefits

21. Cleveland Municipal School DistrictPurchased Services Expenditures (In Millions)

22. Cleveland Municipal School DistrictSupplies, Textbooks, Equipment, and Other Expenditures

23. Cleveland Municipal School DistrictTotal Expenditures– Excluding Charter School Portion

24. Cleveland Municipal School District Five-Year Forecast Summary

25. Cleveland Municipal Public SchoolsOctober 2011 Five-Year Forecast(in millions of dollars)

26. Revenue Update FY12

27. Expenditure Update FY12

28. Cleveland Municipal Public SchoolsOctober 2011 Five-Year Forecast Adjusted(in millions of dollars)

29. Revenue Update FY13

30. Expenditure Update FY13 * Final financial update to the 5-Year forecast will reflect updated projected savings

31. Cleveland Municipal Public SchoolsOctober 2011 Five-Year Forecast Adjusted(in millions of dollars)

32. Cleveland Municipal Public SchoolsMay 2012 Five-Year Forecast(in millions of dollars)

33. Cleveland Municipal Public SchoolsMay 2012 Five-Year Forecast(in millions of dollars)

34. Cleveland Municipal School DistrictMay 2012 Five-Year Forecast Summary Property Taxes Current economic conditions continue to have a significant impact on tax collection rates State Foundation Revenue Projections are based on the Bridge formula. Education Jobs (Ed Jobs) A federal program to save or create education jobs for the FY 11 and/or FY 12 school years. This is one-time money that is being utilized in FY 12.

35. Cleveland Municipal School DistrictMay 2012 Five-Year Forecast Summary -Continued Salaries and Benefits Forecast assumes 2,591 total classroom teachers in FY13. (2,316 in the General Fund) Forecast budgets 50 less employees each year in FY14-16. Forecast assumes all union agreements as currently defined. Healthcare rates are forecasted to increase 7.7% in FY13 and 9.7% in FY14-16. Charter School Tuition Charter school tuition is projected to increase $8.4 million per year over the forecast period. Financial Summary A balanced budget is currently forecasted through June 30, 2012. A $19.3 million deficit is currently forecasted through June 30, 2013.

36. Fiscal Caution, Watch and Emergency • Lower bond ratings • State control • Higher Class Sizes

37. Fiscal Caution, Watch and Emergency • Fiscal Caution – may be declared when: • No acceptable plan in place to avoid the potential current year deficit. • Failure to submit a sufficient plan to address potential future year deficit. • Auditor of State certifies a deficit between 2% and 8% of prior year general fund revenue and elects not to place District in Watch or Emergency. • Fiscal Watch - May be declared, if all are met: • Operating deficit for current FY certified by Auditor of State exceeds 2% but does not exceed 8%. • Voters have not approved a levy that would raise sufficient funds in next succeeding year. • Auditor of State determines there is no reasonable cause for deficit or that declaration is necessary to prevent further decline.

38. Fiscal Caution, Watch and Emergency Fiscal Emergency– A fiscal emergency is the last resort and most severe stage of a school district’s financial solvency problems. Following a declaration by the Auditor of State, a commission is created that may assume all or part of the powers of the board of education. The commission develops a financial plan to alleviate the school district's financial crisis.

39. Cleveland Municipal School DistrictDefinitions CAT Tax – Commercial Activity Tax: The commercial activity tax (CAT) is an annual tax imposed on the privilege of doing business in Ohio, measured by gross receipts from business activities in Ohio. Businesses with Ohio taxable gross receipts of $150,000 or more per calendar year must register for the CAT, file all applicable returns, and make all corresponding payments. Ed Jobs – The Education Jobs Fund: This fund was included as part of federal legislation passed on Aug 10, 2010. The program provides $10 billion for states to save or create education jobs. Ohio is estimated to receive $361 million from the program. The district is estimated to receive $17.7 million. Funds can be used in FY 11 or FY 12. State Hold Harmless Reimbursements: The provision under which the State of Ohio agreed to reimburse the Cleveland Municipal School District for any loss associated with a change in law.

40. Cleveland Municipal School DistrictFive-Year Financial Forecast – May 2012 QUESTIONS The primary goal of the Cleveland Municipal School district is to become a premier school district in the United States of America.