1. Getting the Community Involved in Dealing with Current Financial Realities May 17, 2012 Mohsin Dada CFP® CFO North Shore School District 112, Highland Park, IL

2. Objectives  Create Awareness of our available Financial Resources  Think of ways to Balance the District Budget, while maintaining the current level of services to our students  Address Significant Financial Impacts  Obtain Philosophical Agreement as to Budget Approach

3. Financial Challenges Revenues not keeping pace with expenditures  Historically low CPI  Declining new construction  Stagnant or declining federal/state aid  Rising personnel costs  Rising special education costs  Uncertainty of future military impact aid Facilities Needs  Aging Buildings are Costly to Repair  Small Buildings are Inefficient to Operate

4. North Shore School District 112 Revenue by Type – FY12

6.  Property tax levy is capped at CPI plus any new property growth Low CPI in last 3 years: average 1.43% Nominal new property growth Declining Equalized Assessed Valuation (total property wealth of district)  Interest Earnings < 1%  No growth in state or federal funding Factors Affecting Revenues As of December 2011

7. Average CPI Increase, Last Three Years: 1.43% Historic CPI Average 2.50% Average New Construction, Last Three Years:.89% FY12 0.35% (estimated) FY11 0.94% FY10 1.39% 8 Year New Construction Average: 1.43% Investment earnings at Historic Lows Factors Affecting Revenues Property Taxes Capped at CPI Plus New Construction As of December 2011

8. Factors Affecting Revenues Property Taxes Capped at CPI Plus New Construction Average CPI Increase, Last Four Years: 1.83% Historic CPI Average (Since 1992) 2.53% Average New Construction, Last Three Years:.93% FY12 0.46% FY11 0.94% FY10 1.39% 10 Year New Construction Average: 1.43% Investment earnings at Historic Lows

9. Factors Affecting Revenues Fiscal Year 2012 General State Aid

10. State Categorical Reimbursements

11. 10 YEARS OF DEFICIT - SURPLUS SPENDING Our Financial History Operating Surplus or Deficit after adjustment from Bond Proceeds, Capital Leases and Transfers

12. Operating Fund Projections with Fund Balance Target Operating Funds – Education, Operations & Maintenance, Transportation, Illinois Municipal Retirement Fund, Tort and Working Cash

13. North Shore School District 112 Expenditures by Type – FY12

14.  Salaries and benefits account for close to 70% of budget – Salaries have risen by more than CPI – Medical insurance rates have risen by an average 9.34% in past 3 years  Unfunded government mandates – Special Ed Costs – Transportation costs – ELL, NCLB, RtI  Repair and Maintenance of Aging Facilities Factors Affecting Expenditures

15. Salaries by Staff Type

16. Salaries  Increase in base salary 1.55%  Average step (with 0 base increase) 3%  Number of columns 11  Lowest Salary $ 41,149  Highest Salary $ 110,446  Ratio of lowest to highest 268%  Total cost of teachers $ 31,271,907  Retirement incentive for teachers 6%  Number of teachers on retirement incentive 30

17. Cost of Lane Changes

19. Medical Insurance Costs

20. HMO/PPO Participation Ratio By Category 2011 All Employees

22. North Shore School District 112 Operating Statistics – Last Ten Fiscal Years Fiscal Year Average Daily Attendance Operating Expenditures Cost Per Pupil Percentage Change Expenses Cost Per Pupil Percentage Change Teaching Staff Pupil- Teacher Ratio 2011 3,935 $ 59,988,835 15,2455.17% $ 75,153,235 19,0993.50% 4778.3 2010 4,073 59,038,008 14,4952.79% 75,159,464 18,4537.60% 4598.9 2009 4,109 57,944,941 14,102-0.87% 70,466,445 17,1491.56% 4289.6 2008 3,815 54,268,458 14,2260.18% 64,412,553 16,8860.56% 4249.0 2007 3,917 55,624,748 14,201-0.65% 65,775,534 16,7921.76% 4219.3 2006 3,861 55,187,860 14,29413.43% 63,714,933 16,50212.46% 4109.4 2005 3,929 49,509,540 12,6016.27% 57,654,848 14,6741.94% 4099.6 2004 3,951 46,849,473 11,8585.70% 56,876,465 14,39514.00% 37510.6 2003 4,026 45,166,005 11,2193.38% 50,837,161 12,6274.29% 37710.7 2002 4,028 43,711,307 10,852-0.14% 48,768,151 12,1070.29% 36711.0 2001 3,937 42,783,578 10,8674.21% 47,529,999 12,0732.78% 36310.9

23. North Shore School District 112 Current Situation

24. Compounding Effect of Expenditures Exceeding Revenues

25. North Shore School District 112 Summary of Major Expenditures Assumptions  No Shift of Pension Obligation to the local Board of Education from the State of Illinois  Pension Rate for Employer to stay at 0.58%  THIS (TRS Health) Employer Rate 0.66%  TRS Federal Fund pension rate 25.12%  Health Insurance increase 10%  Dental Insurance increase 6%  Enrollment no significant change  Staffing no change  No significant change in Impact Aid  Retirees FY13 – 5, FY14 – 6, FY 15 – 9, FY 16 – 0  New hire replacement BA-Step 6 $48,435

26. SCFAC Recommendations  District must address key cost drivers. Items the committee identified that can be addressed in the FY13 budget include: – Personnel o Consider further personnel reductions to obtain student/staff ratios that are more in line with district guidelines o Consider reviewing allocation guidelines for special education related personnel: teachers, social workers, speech therapists, classroom aides and paraprofessional staff – Compensation o Consider restructuring employee healthcare benefits

27.  Strong reserve balance  Strong tax base  Good financial management  Low debt level / Capacity for additional debt  Valuable real estate assets  Strong credit rating  High tax collection rates  High revenue per student  Engaged community perceives high value Financial Strengths

28. ANY QUESTIONS???