FIVE YEAR FINANCIAL FORECAST OCTOBER 2012 Cleveland Municipal School District The primary goal of the Cleveland Municipal School District is to become a premier school district in the United States of America. 1

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

Cleveland Municipal School District 3 Major Assumptions

4 Revenue: Forecast assumes no new levy revenue. Forecast assumes that the property tax current collection rate will remain at 78.87%. Current economic conditions continue to have a significant impact on tax collection rates. In 2012 Cuyahoga County will complete the six year reappraisal of all property. The impact on the District should be minimal. Projections are based on the bridge formula to determine state funding in all years. Forecast assumes the Average Daily Membership for K-12 to be: FY13 – 38,182 FY14 – 36,615 FY 15 – 35,117 FY16 – 34,095 FY 17 – 33,233 Forecast assumes that Charter School ADM will increase by 70% of CMSD decrease.

Major Assumptions continued 5 Expenditures : Forecast assumes a total of 2,591 classroom teachers in FY13 (2,300 are budgeted within the General Fund). Forecast assumes 50 less employees each year in FY14-17 due to attrition. Forecast shifted $4.3 million of personnel costs to the General Fund in FY13 due to a decline in Title I funding. Forecast shifts $2.0 million of personnel cost to the General Fund in FY14 due to a decline in federal funding. Healthcare rates are forecasted to increase 7.7% in FY13 and 9.7% in FY Forecast assumes all union agreements as currently defined including step increases. Forecast assumes a $3.2 textbook budget for all fiscal years. $13.1 million of adjustments are necessary to balance the budget for the 2012 – 2013 school year.

Cleveland Municipal School District 6 General Fund Revenues

Cleveland Municipal School District FY

General Fund Revenue Decline 8 *Projected

Cleveland Municipal School District Local Taxes – Property Tax Revenue 9

Cleveland Municipal School District Property Taxes – Current Collection Rate Current Collection Rate Year 10

Cleveland Municipal School District Property Taxes – Total Collection Rate Current Collection Rate Year 11

Cleveland Municipal School District State Foundation Revenue Revenue (In Millions) Fiscal Year 12

Cleveland Municipal School District State Foundation Revenue – Excluding Charter School Portion Revenue (In Millions) Fiscal Year 13

Cleveland Municipal School District Education Jobs 14

Cleveland Municipal School District Property Tax Allocation – State Hold Harmless Reimbursements 15

Cleveland Municipal School District Other Revenue Revenue (In Millions) 16

Cleveland Municipal School District Total Revenue – Excluding Charter School Portion Revenue (In Millions) Fiscal Year 17

Cleveland Municipal School District 18 General Fund Expenditures

Cleveland Municipal School District Where the Money Goes 19

Cleveland Municipal School District Salaries 20

Cleveland Municipal School District Fringe Benefits 21

Cleveland Municipal School District Purchased Services Expenditures (In Millions) 22

Cleveland Municipal School District Supplies, Textbooks, Equipment, and Other Expenditures 23

Cleveland Municipal School District Total Expenditures– Excluding Charter School Portion 24

Cleveland Municipal School District 25 Five-Year Forecast Summary

Cleveland Municipal School District October 2012 Five-Year Forecast (in millions of dollars) 26

Summary 27 Fiscal Year $13.1 million of adjustments are necessary to balance the budget. Fiscal Year A significant deficit of $56.8 million is projected for the school year

Fiscal Caution, Watch and Emergency 28 Fiscal CautionFiscal WatchFiscal Emergency  Lower bond ratings  State control  Higher Class Sizes

QUESTIONS THE PRIMARY GOAL OF THE CLEVELAND MUNICIPAL SCHOOL DISTRICT IS TO BECOME A PREMIER SCHOOL DISTRICT IN THE UNITED STATES OF AMERICA. 29 Cleveland Municipal School District Five-Year Financial Forecast – October 2012