Financial Presentation Five-Year Forecast October 17, 2005

REVENUE “LINE” & EXPENSE “LINE” Repeal of Cap on State Aid *Passage 5.5 mill levy *Building Carryover Critical Pt. HB66 & HB95 Critical Pt. Reduction to Programs

Ending Cash Balance Comparison 5/16/05 vs. 10/17/05 vs Target Balance

Graphical Summary of Five-Year Forecast (FY2000/01 – FY2004/05 Actual; FY2005/06 – FY2009/10 Estimate) 5.5-mill Levy Deficit New Levy 3-Year Levy Collection

Overview of Operating Revenue Mix Fiscal Year 2006 Key factor - limited revenue growth –Operating Revenue Mix - 1.Local Property Taxes (Includes H &R) 74% or $37.9M –Growth restricted by HB920 –Impacted by HB66 (State Legislature) »8% or $3.7M or 7.2% Represents Personal Tangible Receipts 2.State Revenue 23% or 11.8M –Growth influenced by State Legislature »HB66 3.Other Revenue (Interest, Payments in lieu of, etc.) 3% or 1.4M –Growth influenced by economy –HB66 will impact approximately 30% or 1/3 of the HCSD operating revenue.

Property Tax Revenue

HB66 Tangible Tax Reform (EFFECT continued) 5-Year 100% Hold-Harmless period tied to a Tax Year 2004 base level, beginning in Tax Year 2011 phase-out of hold-harmless begins until 0% in Tax Year –Over the 13-year phase-out period, Hudson CSD will need to replace $13.8M in lost tangible taxes with other local taxes Just to equal that which it otherwise would have received prior to HB66. Essentially, a 1-mill shift to remaining taxpayers. Hold-harmless does not factor in the previous legislated phase-out of inventory taxes. Hudson CSD will experience a tax base shift to residents to make-up tangible tax base loss with upcoming levies.

Review of Local Property Tax Base Class I Real (Residential/Agricultural) HB920 In 2005, represents 80% of tax base In 1987, represented 67% of tax base Class II Real (Commercial & Industrial) HB920 In 2005, represents 13% of tax base In 1987, represented 15% of tax base –FY2005 tax receipts $30.3M Business Tangible Personal Property (Equipment & Inventory) In 2005, represents 6% of tax base In 1987, represented 12% of tax base Public Utility Personal Tangible Property In 2005, represents 1% of tax base In 1987, represented 6% of tax base –FY2005 tax receipts $4.1M

HB66 Tax Base Effect Tax YearResidentialBusiness %49% %44% (1988 Terex closes) %27% %21% 2010*85%15% * Estimated & All district property valuation subject to the effects of HB920

Table 1.4– Property Tax Revenue Fiscal Year2005/06#2006/07&2007/082008/092009/10* Residential Real$27,346,491$27,826,154$28,379,584$29,004,788$29,566,477 % Chg. Last FY -0.48% 1.75% 1.99% 2.20% 1.94% $ Chg. Last FY$ -131,936$ 479,664$ 553,430$ 625,203$ 561,689 Other Real Estate$ 5,550,741$ 5,678,145$ 5,851,487$ 5,879,629 $ 5,883,054 % Chg. Last FY -1.05% 2.30% 3.05% 0.48% 0.06% $ Chg. Last FY$ -58,627$ 127,405$ 173,341$ 28,143$ 3,425 Public Utility+$ 1,313,283$ 786,204$ 755,296$ 721,612$ 552,502 % Chg. Last FY 13.77% % -3.93% -4.46% % $ Chg. Last FY$ 158,909$ -527,079$ -30,908$ -33,684$ -169,109 Pers Property (incl inventory)+$ 3,613,651$ 2,783,851$ 1,830,620$ 906,064$ 0 % Chg. Last FY % % % % % $ Chg. Last FY$ -507,399$ -829,800$ -953,231$ -924,555$ -906,064 TOTAL:$ 37,824,165$ 37,074,354$ 36,816,987$ 36,512,093 $ 36,002,034 % Chg. Last FY -1.41% -1.98% -0.69% -0.83% -1.40% $ Chg. Last FY$ -539,052$ -749,811$ -257,367$ -304,894 $ -510,059

STATE AID

HB66 Modified State Foundation Program EFFECT 23% or $11.8M The district is no longer a “formula” district and is subject to an FY2005 “guarantee” calculation –The lesser of the FY2005 Total Basic Aid $9.3M or Basic Aid per pupil of $1,767 All other non-basic aid state payments (transportation, preschool unit, etc.) is added to the $9.3M to arrive at $11.8M Over the next five forecasted periods, the district will receive subsidy payments totaling $3.4M in order to achieve a state aid amount close to that which was received in FY2005 “the guarantee”.

Table 2.2– State Basic Aid Fiscal Year2005/062006/072007/082008/092009/10 ADM & 5, , , , , Basic Aid Per Pupil# $5,283 $5,399 $5.518 $5,639$5,763 Cost of Doing Business Factor Gross: Basic Aid$28,466,886$28,561,321$28,643,985$29,245,956$29,860,549 Adjust Recognized Valuation $866,605,072$868,605,072$885,722,164$907,219,748$922,114,468 Local Millage Less: Local Charge Off ($19,937,872)($19,977,917)($20,371,610)($20,866,054)($21,208,633) Net Basic Aid (calculated)$8,574,783$8,583,405$8,272,375$8,379,901$8,651,916 STATE GUARANTEE the lesser of a or b: a.) 2005 Total$9,318,228$9,318,228$9,318,228$9,318,228$9,318,228 b.) 2005 per Pupil$9,190,457$9,182,505$9,173,669$9,164,833$9,155,997 NET BASIC AID (w/2005 Guarantee)$9,190,457$9,182,505$9,173,669$9,164,833$9,155,997 State Hold-Harmless Reimbursement $ 615,675$ 599,100$ 901,294$ 784,931$ 504,080

Table 4.2– Hold-Harmless/Guarantee Payment HB66 Fiscal Year2005/062006/072007/082008/092009/10 Personal Tangible Property Tax Reimbursement $ 146,975$1,152,807$2,103,510$2,887,586$3,945,207 State Foundation Hold-Harmless Reimbursement $ 615,675$ 599,100$ 901,294$ 784,931$ 504,080 TOTAL STATE HOLD-HARMLESS/ GUARANTEE REIMB$ 762,650$1,751,907$3,004,804$3,672,517$4,449,297 TOTAL GUARANTEE OF $13.64M over the next 5-years

Estimated Revenue Effects of Tax Law Changes in HB66 Source: ETPI, August 2006 Revenue Impact (In Millions) FY06FY07 BienniumFY2010 Tax Reductions Personal Income Tax-$306-$622-$928-$2,025 Sales Tax-$719-$752-$1,471-$850 Corp Franchise Tax-$142-$292-$434-$790 Tax Increases CAT$265$550$815$1,550 Cigarette Tax$499$423$922$400 Repeal 10% Bus. Prop$155$319$474$365 Net State Impact-$248-$374-$622-$1,350 Tang Pers Prop Tax-$71-$527-$598-$1,700 COMBINED EFFECT-$319-$901-$1,220-$3,050

Table 4.1– General Fund Revenue Summary Fiscal Year2005/ / / /092009/10 TOTAL REVENUE $51,119,727 $51,095,381 $51,602,262 $52,174,972$52,783,715 % Chg. Last FY -1.60% -0.05% 0.99% 1.11% 1.26% $ Chg. Last FY ($833,057) ($24,346) $506,881 $ 572,710 $ 658,743 HISTORICAL FISCAL YEAR CHANGES 2002/ % 2003/04* 6.34% - HB95 resulted in a calculated loss in future revenue of $2.18M 2004/05* 7.06% * Passage of 5.5 mill operating in November 2003

Overview of Operating Expenditure Mix Fiscal Year 2006 Operating Expenditure Mix Salary & Benefits - 85% Purchased Services – 11% –Utilities (20%) –Contracted Transportation (44%) –Repairs & Maintenance Agreements (9%) Supplies, Materials, & Equipment – 3% Other Expenses – 1% –Auditor & Treasurer’s Fees (66%) –Summit County ESC Deduction (15%)

Table 6.1– Personnel Services Fiscal Year2005/ / / /092009/10 Certified Payroll $26,544,203 $28,091,680 $29,735,094 $31,480,065 $33,332,794 % Chg. Last FY 5.76% 5.83% 5.85% 5.87% 5.89% $ Chg. Last FY $1,446,282 $1,547,477 $1,643,414 $1,744,971 $1,852,730 Classified Payroll $5,213,418 $5,531,560 $5,867,180 $6,221,244 $6,594,144 % Chg. Last FY 6.44% 6.10% 6.07% 6.03% 5.99% $ Chg. Last FY $315,337 $318,142 $335,620 $354,065 $372,899 TOTAL PERSONNEL SERVICES$31,757,622 $33,623,240 $35,602,274 $37,929,894 $39,926,938

Table 7.1– Employees Retirement/Insurance Benefits Fiscal Year2005/062006/072007/082008/092009/10 Certified Retirement$ 3,905,772$ 4,130,348$ 4,367,838$ 4,618,981$ 4,884,567 % Chg. Last FY 3.82% 5.75% 5.75% 5.75% 5.75% Classified Retirement$ 895,135$ 937,656$ 982,514$ 1,029,840$ 1,079,708 % Chg. Last FY 6.05% 4.75% 4.78% 4.82% 4.84% Medical $ 5,092,829$ 5,551,183$ 6,050,790$ 6,595,361$ 7,188,944 % Chg. Last FY 8.58% 9.00% 9.00% 9.00% 9.00% Dental $ 239,303$ 256,054$ 273,978$ 293,156$ 313,677 % Chg. Last FY 7.10% 7.00% 7.00% 7.00% 7.00% Term-Life$ 91,130$ 97,473$ 104,064$ 111,105$ 118,625 % Chg. Last FY 7.20% 6.96% 6.76% 6.77% 6.77% Medicare$ 460,827$ 525,342$ 598,890$ 682,735$ 778,318 % Chg. Last FY 22.12% 14.00% 14.00% 14.00% 14.00% WorkersComp$ 158,627$ 167,674$ 177,237$ 187,345$ 198,029 % Chg. Last FY 62.31% 5.70% 5.70% 5.70% 5.70% Other $ 18,313$ 89,728$ 179,593$ 291,730$ 430,719 % Chg. Last FY % % % 62.44% 47.64% TOTAL BENEFITS$ 10,861,934$ 11,755,458$ 12,734,904$ 13,810,253$14,992,585

Table 8.1– Purchased Services Fiscal Year2005/062006/072007/082008/092009/10 Health Services$ 300,734$ 309,756$ 319,049$ 328,621$ 338,479 Contracted Professional$ 299,947$ 388,406$ 397,118$ 406,092$ 415,335 Repairs & Maintenance$ 537,514$ 542,889$ 548,318$ 553,801$ 559,339 Copier Leases$ 356,111$ 366,524$ 377,250$ 388,298$ 399,677 Pupil Transportation$ 2,633,596$ 2,712,604$ 2,793,982$ 2,877,802$ 2,964,136 Property & Fleet Insurance$ 127,049$ 133,401$ 140,071$ 147,075$ 154,429 Utilities$ 1,185,025$ 1,246,372$ 1,287,817$ 1,330,667$ 1,374,972 Tuition$ 387,866$ 411,996$ 440,398$ 473,974$ 513,827 Other$ 186,901$ 186,901$ 186,901$ 186,901$ 186,901 TOTAL$ 6,014,743$ 6,276,739$ 6,467,910$ 6,669,315$ 6,907,094

Table 9.1– Supplies Fiscal Year 2005/ / / / /10 Educational $538,691 $547,902 $557,298 $566,881 $576,657 Textbooks $245,000 $245,000 $245,000 $245,000 $245,000 Library Books & Periodicals, etc. $102,900 $102,900 $102,900 $102,900 $102,900 Software $90,000 $90,000 $90,000 $90,000 $90,000 Building & Grounds $300,000 $300,000 $300,000 $300,000 $300,000 Fuel $224,700 $262,700 $269,540 $276,585 $283,842 TOTAL $1,501,291 $1,548,502 $1,564,738 $1,581,367 $1,598,399

Table 10.1– New & Replacement Equipment Fiscal Year2005/062006/072007/082008/092009/10 TOTAL EQUIPMENT$122,947$122,947$122,947$122,947$122,947 Table 11.1– Other Expenditures Fiscal Year2005/062006/072007/082008/092009/10 TOTAL OTHER EXP$799,117$811,421$823,812$836,444$849,322

Table 13.1– General Fund Expense Summary Fiscal Year2005/ / / /092009/10 TOTAL EXPENSES$51,095,153 $54,197,917 $57,377,080 $60,783,050 $64,434,785 % Chg. Last FY 6.05% 6.07% 5.87% 5.94% 6.01% $ Chg. Last FY $2,916,712 $3,102,764 $3,179,163 $3,405,971$3,651,735 HISTORICAL FISCAL YEAR CHANGES 2002/034.74% - $925K perm cut, $274K result of mid-year State Aid reduction 2003/043.89% - $900K cut to base-line budget 2004/050.52% - Made perm $900K from 2003/04, $1.0M of perm cuts primarily via a reduction in force, $154K mid-year reductions, $200K increased utilization of Federal monies.

Expenditure Per Pupil – FY2004 (LRC 2005) (Summit County Schools)

Exp Per Pupil – FY2004 (LRC 2005) (Cuy. Co. Schools)

Unreserved Fund Balance (w/hold-harmless/guarantee payments) Fiscal Year2005/ /07*& 2007/ / /10 TOTAL UNRESERVED FUND BALANCE:$10,342,713 $7,240,176 $1,465,359 ($7,142,720)($18,743,791) * - Deficit spending anticipated, -$3,102,536. & - Successful levy passage necessary during calendar year 2006 to receive ½ collection in FY2006/07 and full collection 2007/08 to offset escalating deficit. _______________________________________________________________________ _ Unreserved Fund Balance (w/o hold-harmless/guarantee payments) Fiscal Year2005/ / /082008/ /10 TOTAL UNRESERVED FUND BALANCE:$ 9,580,163 $4,725,720 ($4,053,901) ($16,334,496) ($32,384,863)

REVENUE “LINE” & EXPENSE “LINE” Repeal of Cap on State Aid *Passage 5.5 mill levy *Building Carryover Critical Pt. HB66 & HB95 Critical Pt. Reduction to Programs *Higher Millage Rate *Further Reductions to expenses & Programs *???????