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Cleveland Metropolitan Schools Cleveland Metropolitan Schools Strong Schools ~ Strong Community ~ A Worthy Investment Board of Education Meeting Board of Education Meeting November 9, 2011 1

2 Our Challenge

THEIR FUTURE THEIR FUTURE � Critical Thinking � Collaboration � Creativity � Innovation 3

O t b October 2011 Projected Forecast 2011 P j t d F t (in millions of dollars) FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Beginning Cash $82.0 $50.4 $13.0 Balance $33.0 ($6.2) ($88.6) ($190.9) ($309.1) 668.2 662.7 666.4 611.1 608.2 610.2 613.3 Total Revenues 643.4 699.8 700.1 646.4 693.5 710.5 728.4 746.9 Total Expenses 682.6 Revenue over 20.0 Expenses (31.6) (37.4) (39.2) (82.4) (102.3) (118.2) (133.6) Ending Cash 50.4 13.0 33.0 Balance (6.2) (88.6) (190.9) (309.1) (442.7) Encumbrances/ 7 0 7.0 6 5 6.5 7 0 7.0 7.0 7 0 7.0 7 0 7.0 7 0 7.0 7 0 Reserves Reserves 7.0 7 0 Unencumbered $43.4 $6.5 $26.0 Balance ($13.2) ($95.6) ($197.9) ($316.1) ($449.7) 4

O Ongoing Reductions i R d ti Phase I (Immediate) Phase II (Second Quarter) • Reduce textbooks $2,450,937 Reduce meal choices $ 262,000 � Reduce central staff R d t l t ff $1 691 383 $1,691,383 • Reduce clubs/activities $ 418,768 R d l b / ti iti $ 418 768 � Reduce budgets $ 675,000 • Reduce cleaners $ 313,439 � Reduce maintenance $ 500,000 • Reduce security $ 888,125 � Single supply vendor $ 72,333 � Phase III (Second Semester) • Reduce principals/APs $ 727,000 Reduce principals/APs $ 727,000 • Eliminate HS busing $ 1,550,013 • Eliminate spring sports $ 568,260 • Eli i Eliminate pre ‐ school t h l $ 741 000 $ 741,000 Total Reductions: Eliminate summer school $2,447,000 • “ $13,305,258 5

Cleveland Municipal Public Schools Cleveland Municipal Public Schools October 2011 Five-Year Forecast (in millions of dollars) FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Beginning Cash $82.0 $50.4 $13.0 Balance $33.0 $7.1 ($59.0) ($144.7) ($246.1) 668.2 668.2 662.7 662.7 666.4 666.4 611.1 611.1 608.3 608.3 610.2 610.2 613.3 613.3 Total Revenues Total Revenues 643.4 643 4 699.8 700.1 646.4 677.2 694.0 711.6 729.8 Total Expenses 669.3 Revenue over 20 0 20.0 Expenses Expenses (31.6) (31 6) (37 4) (37.4) (25 9) (25.9) (66 1) (66.1) (85.7) (85 7) (101 4) (101.4) (116 5) (116.5) Ending Cash 50.4 13.0 33.0 Balance 7.1 (59.0) (144.7) (246.1) (362.6) Encumbrances/ Encumbrances/ 7.0 6.5 8.2 7.0 7.0 7.0 7.0 Reserves 7.0 Unencumbered $43.4 $6.5 $24.8 Balance $0.1 ($66.0) ($151.7) ($253.1) ($369.6) 6

Then and Now 1996 1996 2009/ 2010 2009/ 2010 Cost of a gallon of Gas $2.73 � Cost of a gallon of Gas $1.22 � Average Income per year $39,423.00 � Average Income per year $36,300.00 � Average Monthly Rent $675.00 � Average Monthly Rent $554.00 � Average Cost of new house $232,880.00 Average Cost of new house $118,200.00 � � Loaf of Bread $1.77 Loaf of Bread $1.77 Loaf of Bread $1.15 Loaf of Bread $1 15 � � � � Minimum Hourly Wage Raised To $ 7.25 � Minimum Hourly Wage Raised To $5.15 � US GDP (1998 dollars): $14,601 billion US GDP (1998 dollars): $7,661.60 billion � � Federal spending: $3,552 billion Federal spending: $1,572 billion � � Federal debt: $13,050 billion Federal debt: $5,207 billion � � Unemployment: 9.0% Unemployment: 9.0% Unemployment: 5.4% Unemployment: 5 4% � � � � Cost of a first ‐ class stamp: 44 cents Cost of a first ‐ class stamp: 32 cents � � 7

8 Where does the money come from?

Cleveland Municipal School District Cl l d M i i l S h l Di t i t Where the Money Comes From FY 2011-2012 State of Ohio Other, 2.9% Reimbursements Property Tax, 6.1% 22.9% Ed Jobs, 2.7% State, 65.1% 9

State Foundation Revenue – Excluding S e ou d o eve ue c ud g Charter School Portion ions) ue (In Milli Revenu Fiscal Year 10

Property tax collection by Cuyahoga p y y y g County Current collection rate has been trending downward Current collection rate has been trending downward Key facts Key facts Current collection rate is at 78.87% 78.87% For every 1% decrease in the collection rate, CMSD revenues go down by roughly d b hl $1.8M 11 11

12 12 Where does the money go?

Cleveland Municipal School District p Where the Money Goes FY 2011-2012 All Other, 17.6% Charter School Pass-Through, 17.1% Salaries & S & Benefits, 65.3% 13

14 October 2011 Five-Year Forecast

Fact We cannot expense our way out We cannot expense our way out of this significant budget challenge!

An integrated approach is needed � Cost containment � Structural change g � New revenue 16

17 Levy Information

CMSD levy history Election History (Current Expense Levies -- Last 30 Years) Election Millage Duration Result Vote (For - Against) 11/08/83 9.0 Continuing g Passed 69,917 - 64,563 , , 08/04/87 8.0 Continuing Failed 20,150 - 27,620 05/03/94 12.9 Continuing Failed 30,203 - 45,788 11/08/94 9.0 Continuing Failed 48,580 - 60,552 11/05/96 13.5 Continuing 76,954 - 63,748 Passed 11/02/04 11.4 Continuing Failed 80,089 - 96,653 08/02/05 8.0 Continuing Failed 15,366 - 27,877 Operating Millage (CY 2010) Levy Type Nominal Mills Effective Mills (Class I) Unvoted ("Inside Millage") 4.0 4.000000 Voted (Pre-1976) 31.7 7.992933 Voted (1983) Voted (1983) 9 0 9.0 3 751515 3.751515 Voted (1996) 13.5 9.175410 TOTAL 58.2 24.919858 18

Bond Levy 2001 y Issue 14 � CMSD passed a 335 million bond issue in May 2001 � Locally funded source for CMSD Master Facilities Pl Plan � The Bond Accountability Commission (BAC), Th B d A bili C i i (BAC) created to monitor the Cleveland Municipal School District's spending for school construction and District s spending for school construction and renovation 19

Primary priorities for new revenue � Student services and supports that ensure that S d i d h h our students are college and career ready � Improving quality � Sustaining core services � Completing the master facilities plan � Completing the master facilities plan 20

Types of Levies Operating Levy – is a levy used for day-to-day operating expenses (salaries, Operating Levy is a levy used for day to day operating expenses (salaries, � � benefits, utilities, textbooks and supplies), academic achievement initiatives and transformation. Incremental Levy Incremental Levy – is a kind of operating levy. Most operating levies require is a kind of operating levy. Most operating levies require � � taxpayers to pay at a constant rate for several years. This allows the school system to build up a cash reserve and to use those reserves to fund increased costs in later years. The Incremental Tax Levy starts small and gradually rises to match the real needs of the school. It collects money from taxpayers in a “stepped” fashion, a “ “pay-as-you-go” version. Taxpayers get to hold onto their money until it is ” i T t t h ld t th i til it i needed. Permanent Improvement Levy – is used to maintain buildings, purchase busses, � technology and other educational equipment. It cannot be used for day-to-day h l d h d i l i I b d f d d operations of the schools. Bond Issue – is used to pay for major renovations and new school buildings. � Income Tax – State law permits Ohio school districts to levy a tax on income as � well as property. A school district income tax uses as its base the same taxable 21 income as reported for state income tax purposes.

Types of Operating Levies Additional Current Expense Levy Additional Current Expense Levy � � � The standard current expense levy approach, used by CMSD in the past � The duration of the levy can be any number of years not exceeding five or a continuing period of time Replacement Current Expense Levy � � Takes levied millage from effective millage to nominal (originally voted) millage “Emergency” Levy “E ” L � � Typically used by school districts at the “20-mill floor” (CMSD is not at the 20-mill floor) to raise a specified dollar amount each year School District Income Tax Levy � � Tax does not reach commuters � Duration can be any specified number of years, or a continuing period of time 22

L Levy : The Process Th P F For a levy to be placed on the ballot, the Board will need l t b l d th b ll t th B d ill d � to adopt two resolutions, with intervening certifications from the Cuyahoga County Fiscal Officer All Board action will need to be concluded and all � documents need to be filed with the Cuyahoga County documents need to be filed with the Cuyahoga County Board of Elections 2 months before the election date Any levy passed (regardless of ballot timing) would take A l d ( dl f b ll t ti i ) ld t k � effect the following January Would provide half-year impact in the first fiscal year (e.g., passage � i 2012 in 2012 would take effect in Jan 2013—the last 6 months of FY2013) ld t k ff t i J 2013 th l t 6 th f FY2013) 23