1 Seminar on School Finance – Financial Projections Presented by IASBO Principles of School Finance Committee Presented February 7, 2007

Seminar on School Finance – Financial Projections 2 Steve Miller CPA Senior Financial Advisor PMA Financial Network, Inc. (630) x6413 Ric King CPA Controller Schaumburg Elementary District 54 (847) Presenters

Seminar on School Finance – Financial Projections 3 Elements of a Financial Forecast Past – Present – Future Historical Data  Audited Revenue and Expenditures (AFRs)  Enrollment  EAV & New Property Growth, Tax Rates, Collection %  Other Trends – Fund Balances, capital spending, etc. Current  Budget  Enrollment  Staffing Levels  EAV & New Property, Tax Rates  Economic Indicators

Seminar on School Finance – Financial Projections 4 Elements of a Financial Forecast Past – Present – Future Future  Assumptions Trends  EAV & New Property Growth  Enrollment Consumer Price Index State Funding  Foundation Level (State Funding Per Pupil)  Categoricals (Other State Funds) Salary Agreements Employee Benefit Costs Capital Outlay / Life Safety Survey (Building Needs)

Seminar on School Finance – Financial Projections 5 How do you Forecast Accurately? Focus on the key variables Break it down into logical pieces by focusing on the big numbers – both on the revenue and expense sides. Use the most reliable sources for data Be conservative

Seminar on School Finance – Financial Projections 6 Revenue by Source State-wide Average

Seminar on School Finance – Financial Projections 7 Revenue by Source Suburban DuPage County Elementary District

Seminar on School Finance – Financial Projections 8 Revenue by Source Suburban Cook County Elementary District

Seminar on School Finance – Financial Projections 9 Revenue Projections Property Taxes Tax Capped – Key Variables:  Prior Year Extension  EAV  New Property EAV  CPI  Levy Strategy Not Tax Capped – Key Variables:  EAV  Maximum Tax Rates

Seminar on School Finance – Financial Projections 10 Revenue Projections General State Aid Prior Year Claims: Key Variables  EAV  Tax Rates  Average Daily Attendance (ADA)  Foundation Level  Poverty Count

Seminar on School Finance – Financial Projections 11 Revenue Projections Other State Aid Know your trends in the factors that impact categorical reimbursements:  Special Ed enrollment (Extraordinary, Private- Facility)  Special Ed staffing (Personnel)  Bilingual enrollment (TPI, TBE)  Transportation expenditures (Transportation) Estimated State proration levels

Seminar on School Finance – Financial Projections 12 Expenditures by Object Typical District

Seminar on School Finance – Financial Projections 13 Expenditure Projections Personnel Costs Focus on the biggest pieces Break salaries into bargaining units Factor-in future salaries that are known from current, multi-year contracts Build scattergrams to project teachers and other groups with Lane/Step salary schedules  Add/reduce staff as enrollment changes  Incorporate retirement costs/savings if significant Be as proactive as possible with benefit programs to control costs

Seminar on School Finance – Financial Projections 14 Expenditure Projections Non-Personnel Costs Contractual Services – Analyze big pieces:  Food Service contract  Custodial contract  Transportation contract  SPED professionals – Psych, Social Work, Speech Therapy Supplies – Usually a small piece  Look at utility trends Capital Outlay  Utilize multi-year technology replacement plans  Incorporate future facility needs Tuition – Project on the high side

Seminar on School Finance – Financial Projections 15 PMA Financial Network, Inc. Financial Planning Program Does your school district need a five-year financial plan? Is an Educational Tax referendum being considered? Are you unsure of the impact of teacher contract negotiations on your future financial health? Would you like to forecast and analyze your school district’s financial future? Do you need to respond to a State Board of Education request because of a Financial Profile score or Deficit Reduction Plan? Would a third party analysis improve community/faculty relations?

Seminar on School Finance – Financial Projections 16 PMA Financial Network, Inc. Financial Planning Program The Financial Planning Program’s goal is to provide an interactive planning tool for superintendents, business managers and boards of education by which governance decisions can be made by developing sound financial forecasting practices in these uncertain financial times.

Seminar on School Finance – Financial Projections 17 Thank You! Questions? For more information regarding PMA’s Financial Planning Program, please visit our website: