Forecasting is very difficult, especially if its about the future. - - PDF document

May 2019 FYF / BOE presentation 5-8-19 5/7/2019 1

Columbus City Schools

FIVE YEAR FORECAST

MAY 2019 UPDATE

FISCAL YEARS 2016 – 2018 ACTUAL FISCAL YEARS 2019 – 2023 FORECAST

(FISCAL YEARS 2024 – 2026 PROJECTED)

FINANCE & APPROPRIATIONS COMMITTEE PRESENTATION, APRIL 11, 2019 BOARD OF EDUCATION PRESENTATION, MAY 8, 2019 BOARD OF EDUCATION ADOPTION, MAY 21, 2019

Treasurer’s Office Stanley J. Bahorek, Treasurer/CFO Michael McCammon, Controller Office of Budget & Financial Management Scott Gooding, Executive Director Board Services & Government Affairs Erik Roush, Ph.D., Supervisor, Policy And Government Affairs

“Forecasting is very difficult, especially if it’s about the future.”

─ Niels Bohr, Nobel Prize-winning physicist

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Legal Requirement

• O.R.C. §5705.391 and O.A.C. 3301-92-04
• Adopt prior to November 30 of each fiscal year
• Update between April 1 and May 31 of each fiscal year
• Update when events take place that will significantly

change the forecast

How to read a Five-Year Forecast

(Source: Ohio Department of Education)

• “A forecast is somewhat like a painting of the future based

upon a snapshot of today.”

• “…the further into the future the forecast extends, the

more likely it is that the projections will deviate from actual experience.”

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How to read a Five-Year Forecast

(Source: Ohio Department of Education)

• “A variety of events will ultimately impact the latter years
• f the forecast, such as state budgets …”
• “…encourages district management teams to examine

future years’ projections and identify when challenges will arise.”

Forecasting Environment

• Numerous variables which are difficult to predict
• Exogenous variables over which CCS has little to no

control

• Uncertainties of the future contribute to actual experience

being different than projected

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Our Forecast is …

• Our roadmap of the future based on our best snapshot of

today based on a certain set of assumptions … and is subject to change.

May 2019 Update to the Five Year Forecast

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Since May 2018 Forecast

• Actual results for FY18
• Revenue

– State Aid: Capped, +4% annually – Very favorable Other Local Revenues for FY19

• Expenditures

– Personnel running under plan – Non-personnel running under budget

Since May 2018 Forecast

• Adjusting May 2019 FYF to reflect positive results – which

carry forward into future years

• Removing a portion of the “conservative nature” of our

forecasting

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Changes May ‘18 FYF to May ‘19 FYF

• +7.4 million actual FY18 ending cash balance
• +98 million increased revenue estimates over 5 years

– ~$20 million/year, ~2% of total annual revenues

• +101 million decreased expenditure estimates over 5 years

– ~$20 million/year, ~2% of annual expenditures

• $207 million improvement in 2022 ending cash balance

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Revenues

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Expenditures

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Early Warning Indicators

• Expenditures begin to exceed Revenues in FY 2021
• FY2023 projected ending cash balance = $173 million = 60

days operating cash

• Ending cash balance drops below 30-days cash FY2025

– A November 2020 operating levy would be intended to fund 4 fiscal years, FY2022 - FY2025

• FY2027 ending cash balance will be negative

NOVEMBER 2016 LEVY FUNDING NOVEMBER 2020 LEVY FUNDING

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Unknowns / Uncertainties

• Dominion-North-Brookhaven costs
• State Budget and a possible new school

funding formula

• Collective Bargaining
• Academic program changes