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FIVE YEAR FINANCIAL FORECASTOCTOBER 2011

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.

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Five Year Forecast - Contents

Major AssumptionsGeneral Fund RevenuesGeneral Fund ExpendituresFive Year Forecast Summary

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Cleveland Municipal School District

Major Assumptions

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Major Assumptions

Revenue: Budget Bill:

Eliminated the evidenced based model State Stabilization Dollars will not be replaced by the State of Ohio. Commercial Activity Tax Reimbursement phase out has been accelerated. Utility Tax Reimbursement has been phased out.

Forecast uses bridge formula to determine state funding in all years. Forecast assumes Average Daily Membership for K-12 to be:

FY12 – 40,461FY13 – 39,014FY 14 – 37,775FY15 – 36,893FY 16 – 36,164

Forecast assumes Charter School ADM to increase 1,100 students each year. Property tax current collection rate is currently 80.90%. Forecast assumes

no change. Education Jobs (Ed Jobs) was a federal program to save or create education

jobs for the FY 11 and/or FY 12 school years. This is one-time money that is being utilized in FY 12 to pay for approx 192 teachers.

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Major Assumptions continued

Expenditures: 246 teachers were shifted from stimulus dollars in Title 1 back to

the General Fund in FY12. Forecast assumes a total of 3,170 classroom teachers in FY12.

(2,691 are budgeted within the General Fund) Forecast assumes an attrition rate of 50 employees per year. Healthcare rates are forecasted to increase the 5% in FY12 and

9.7% in FY13-16. Forecast assumes all union agreements as currently defined. Charter School Pass-Through increases $8.4 million each year. Forecast assumes budget reduction plan as presented to the Board

on October 25, 2011 will be passed.

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Cleveland Municipal School District

General Fund Revenues

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Cleveland Municipal School DistrictFY 2011-2012

Local Taxes; 23.2%

State; 65.1% Education

Jobs; 2.7%

Property Tax Allo-

cation, 6.1%

Other; 2.9%

Where the Money Comes From

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Cleveland Municipal School DistrictLocal Taxes – Property Tax Revenue

2009 2010 2011 2012 2013 2014 2015 20160.0

25.0

50.0

75.0

100.0

125.0

150.0

175.0

148.9 147.1 148.1 148.1 148.1 148.1 148.1 148.1

11.2 4.3 1.0 0.2

Real Estate Personal TangibleFiscal Year

R e v e n u e ( I n M i l l i o n s )

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Cleveland Municipal School DistrictProperty Taxes – Current Collection Rate

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

80.0081.0082.0083.0084.0085.0086.0087.0088.0089.0090.0091.0092.0093.0094.0095.0096.0097.0098.0099.00

98.6

84.04

80.9

Cu

rren

t C

oll

ecti

on

Rate

Year

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Cleveland Municipal School DistrictProperty Taxes – Total Collection Rate

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

80.00

82.00

84.00

86.00

88.00

90.00

92.00

94.00

96.00

98.00

100.00

102.00

104.00

106.00

Current Collection Rate Delinquencies

Cu

rren

t C

oll

ecti

on

Rate

Year

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Cleveland Municipal School DistrictState Foundation Revenue

2009 2010 2011 2012 2013 2014 2015 2016$400

$405

$410

$415

$420

$425

$430

$435

$440

433.2

408.2404.5

416.4412.4 411.4 413.0 415.7

27.3 34.1

State Foundation Fiscal Stabilization Fund

Reve

nu

e (

In M

illi

on

s)

Fiscal Year

12

Cleveland Municipal School DistrictState Foundation Revenue – Excluding Charter School Portion

2009 2010 2011 2012 2013 2014 2015 2016$250

$260

$270

$280

$290

$300

$310

$320

$330

$340

337.2

309.9298.5 302.0

289.6280.2

273.4 267.7

27.3

34.1

State Foundation Fiscal Stabilization Fund

Reve

nu

e (

In M

illi

on

s)

Fiscal Year

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Cleveland Municipal School DistrictEducation Jobs Fund

2009 2010 2011 2012 2013 2014 2015 2016$0

$5

$10

$15

$20

17.2

Education Jobs Fund

R e v e n u e ( I n M i l l i o n s )

Fiscal Year

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Cleveland Municipal School DistrictProperty Tax Allocation – State Hold Harmless Reimbursements

2009 2010 2011 2012 2013 2014 2015 2016$0

$10

$20

$30

$40

$50

$60

12.3 12.4 12.4 12.5 12.5 12.5 12.5 12.5

4.5 4.5 4.4

28.938.6 39.8

26.9

13.9 13.9 13.9 13.9

Property Tax Reimbursements Utility Tax Reimbursements HB 66 CAT Reimbursements

R e v e n u e ( I n M i l l i o n s )

Fiscal Year

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Cleveland Municipal School DistrictOther Revenue

2009 2010 2011 2012 2013 2014 2015 2016$0

$5

$10

$15

$20

$25

7.6 7.5

14.1 13.5 12.8 13.2 13.5 13.9

4.0 3.1

2.3 2.3 2.3 2.3 2.3 2.34.8

2.4

2.10.9

0.5 0.5 0.5 0.53.5

1.7

1.92.0

6.2 4.0 4.0 4.0

Other Catastrophic Aid Interest Medicaid

Fiscal Year

Reve

nu

e (

In M

illi

on

s)

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Cleveland Municipal School District

General Fund Expenditures

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Cleveland Municipal School DistrictWhere the Money Goes

Salaries & Bene-fits; 65.3%

Charter School Pass-

Through; 17.1%

All Other; 17.6%

FY 2011-2012

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Cleveland Municipal School DistrictSalaries

2009 2010 2011 2012 2013 2014 2015 2016$250

$270

$290

$310

$330

$350

$370

360.2 359.3

312.7 312.0 312.2 313.6 315.1 316.7

Salaries

Fiscal Year

E x p e n d i t u r e s ( I n M i l l i o n s )

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Cleveland Municipal School DistrictFringe Benefits

2009 2010 2011 2012 2013 2014 2015 2016$0

$20

$40

$60

$80

$100

$120

$140

$160

49.5 50.2 47.9 49.0 46.0 46.0 46.3 46.4

58.6 60.755.0 58.8 64.5 70.6 77.1 84.2

4.2 4.44.0

3.9 3.94.0

4.04.2

7.9 6.65.2 3.3 5.2

5.15.1

5.1

3.6 3.57.8 10.0 3.9

3.93.9

3.9

STRS/SERS Employee Insurance Benefits MedicareWorkers Compensation Other

Fiscal Year

E x p e n d i t u r e s ( I n M i l l i o n s )

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Cleveland Municipal School DistrictSupplies, Textbooks, Equipment, and Other Expenditures

2009 2010 2011 2012 2013 2014 2015 20160.0

5.0

10.0

15.0

20.0

25.0

11.7 12.69.0

10.8 10.8 10.8 10.8 10.8

1.9 1.3

0.8

1.0 1.0 1.0 1.0 1.0

6.0 6.6

8.3

8.1 8.1 8.1 8.1 8.1

Supplies and Textbooks Equipment Other Expense

E x p e n d i t u r e s ( I n M i l l i o n s )

Fiscal Year

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Cleveland Municipal School DistrictPurchased Services

2009 2010 2011 2012 2013 2014 2015 2016$0

$50

$100

$150

$200

$250

13.5 15.1 14.2 14.1 14.3 14.4 14.7 14.99.2 9.3 7.8 9.0 9.2 9.4 9.6 9.8

70.1 63.4 56.5 65.8 66.4 67.0 67.3 67.8

96.0 98.3 106.0114.4 122.8 131.2 139.6 148.0

Utilities Student Transportation (Contract)Other Purchased Services Charter School Pass-Through

Fiscal Year

Exp

en

dit

ure

s (I

n

Mil

lion

s)

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Cleveland Municipal School District

Five-Year Forecast Summary

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October 2011 Five-Year Forecast

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016$570

$590

$610

$630

$650

$670

$690

$710

$730

$750

$679$672 $668

$663 $666

$643

$611 $609 $610 $613

$651

$681

$700 $700

$646

$669$677

$694

$712

$730

Revenues Expenditures

M i l l i o n s o f D o l l a r s

Fiscal Year

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Cleveland Municipal Public SchoolsOctober 2011 Five-Year Forecast

(in millions of dollars)

Beginning Cash Balance $82.0 $50.4 $13.0 $33.0 $7.1 ($59.0) ($144.7) ($246.1)

Total Revenues 668.2 662.7 666.4 643.4 611.1 608.3 610.2 613.3

Total Expenses 699.8 700.1 646.4 669.3 677.2 694.0 711.6 729.8

Revenue over Expenses (31.6) (37.4) 20.0 (25.9) (66.1) (85.7) (101.4) (116.5)

Ending Cash Balance 50.4 13.0 33.0 7.1 (59.0) (144.7) (246.1) (362.6)

Encumbrances/Reserves 7.0 6.5 8.2 7.0 7.0 7.0 7.0 7.0

Unencumbered Balance $43.4 $6.5 $24.8 $0.1 ($66.0) ($151.7) ($253.1) ($369.6)

FY 2016FY 2014 FY 2015 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

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Cleveland Municipal School DistrictOctober 2011 Five-Year Forecast Summary

Property Taxes Current economic conditions continue to have a significant impact

on tax collection rates

State Foundation Revenue The Evidenced-Based Model was eliminated with the new budget

bill. A new funding model is currently being developed. Projections are based on the Bridge formula.

Education Jobs (Ed Jobs) A federal program to save or create education jobs for the FY 11

and/or FY 12 school years. This is one-time money that is being utilized in FY 12.

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Cleveland Municipal School DistrictOctober 2011 Five-Year Forecast Summary -Continued

Salaries and Benefits In FY 12, 246 teachers will be shifted from stimulus dollars in Title 1

back to the General Fund. Forecast assumes 3,170 total classroom teachers in FY12. (2,691 in

the General Fund) Forecast assumes all union agreements as currently defined. Healthcare rates are forecasted to increase 5% in FY12 and 9.7% in

FY13-16.Charter School Tuition Charter school tuition is projected to increase $8.4 million per year

over the forecast period.Financial Summary A balanced budget is currently forecasted through June 30,

2012. A $66.0 million deficit is currently forecasted through June 30,

2013.

Fiscal Caution, Watch and Emergency

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Fiscal Caution Fiscal Watch Fiscal Emergency

Lower bond ratingsState controlHigher Class Sizes

Fiscal Caution, Watch and Emergency

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Fiscal Caution Fiscal Watch Fiscal Emergency

Fiscal Caution – may be declared when:• No acceptable plan in place to avoid the potential current year

deficit.• Failure to submit a sufficient plan to address potential future year

deficit.• Auditor of State certifies a deficit between 2% and 8% of prior year

general fund revenue and elects not to place District in Watch or Emergency.

Fiscal Watch - May be declared, if all are met:• Operating deficit for current FY certified by Auditor of State

exceeds 2% but does not exceed 8%.• Voters have not approved a levy that would raise sufficient

funds in next succeeding year.• Auditor of State determines there is no reasonable cause for deficit

or that declaration is necessary to prevent further decline.

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Cleveland Municipal School DistrictDefinitions

ARRA – Education Stabilization Fund – SFSF: Ohio has been allocated $845 million from the ARRA in State Fiscal Stabilization Fund (SFSF) to help stabilize state and local budgets in order to minimize and avoid reductions in education and other essential services. Education SFSF will be distributed to school districts as part of the foundation settlement payments each month – total foundation support will include both state and federal SFSF funds. The District received $27.3 million in FY 10 and $34.1 million in FY 11.

CAT Tax – Commercial Activity Tax: The commercial activity tax (CAT) is an annual tax imposed on the privilege of doing business in Ohio, measured by gross receipts from business activities in Ohio. Businesses with Ohio taxable gross receipts of $150,000 or more per calendar year must register for the CAT, file all applicable returns, and make all corresponding payments.

Ed Jobs – The Education Jobs Fund: This fund was included as part of federal legislation passed on Aug 10, 2010. The program provides $10 billion for states to save or create education jobs. Ohio is estimated to receive $361 million from the program. The district is estimated to receive $17.2 million. Funds can be used in FY 11 or FY 12.

State Hold Harmless Reimbursements: The provision under which the State of Ohio agreed to reimburse the Cleveland Municipal School District for any loss associated with a change in law.

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QUESTIONS

T H E P R I M A R Y G O A L O F T H E C L E V E L A N D M U N I C I PA L S C H O O L D I S T R I C T I S T O B E C O M E A P R E M I E R S C H O O L D I S T R I C T I N T H E U N I T E D S T A T E S O F

A M E R I C A .

Cleveland Municipal School District

Five-Year Financial Forecast - October 2011