Consolidation Financial Analysis ONE YEAR ANALYSIS FOX POINT J2, GLENDALE-RIVER HILLS, MAPLE DALE-INDIAN HILL AND NICOLET UHS SCHOOL DISTRICTS Presented by: Debby Schufletowski Senior Vice President Baird 715-552-3567 (office) 715-557-2580 (cell) dschufletowski@rwbaird.com Robert W. Baird & Co. Incorporated is providing this information to you for discussion purposes. The materials do not contemplate or relate to a future issuance of municipal securities. Baird is not recommending that you take any action, and this information is not intended to be regarded as “advice” within the meaning of Section 15B of the Securities Exchange Act of 1934 or the rules thereunder.
Our Team – School Business Solutions Debby Schufletowski Diane Pertzborn Keith Lucius Marleen Clark School Business Specialist School Business Specialist School Business Specialist School Business Specialist 715-552-3567 608-886-8572 715-450-1956 920-634-6999 dschufletowski@rwbaird.com dpertzborn@rwbaird.com mclark@rwbaird.com klucius@rwbaird.com Knowledge Transfer Stand-in Services Business Office Services On-site training Budgeting Multi-year Budget Planning Business office consulting Board and state reporting Operational referendum analysis Board and community presentations Bank reconciliations Consolidation Analysis School finance resources and materials Audit assistance Planning and communication tools 2 2
Our Team – School Finance Lisa Voisin Brian Brewer Michel Clark Managing Director Director Managing Director 414-765-3801 414-765-7326 414-298-7030 lvoisin@rwbaird.com bbrewer@rwbaird.com mdclark@rwbaird.com Financial Management Debt Issuance Planning Municipal Bond Market Access Referendum planning Financing alternatives National sales force Debt monitoring and analysis Market analysis Diverse investors Capital improvement planning Debt structuring options Active in all types of fixed income securities Investment alternatives Credit rating consultation Dedicated purchaser of cash flow notes Document and disclosure guidance 3 3
Setting the Stage • Financial analysis part of comprehensive analysis • Main questions: • Tax impact • Budget impact • Tonight’s presentation will: • Review key variables • Discuss potential consolidation impact • Address FAQs • Identify potential next steps Watch for notes further clarifying key terms and concepts 4 4
Background • The study: • Focuses on the potential financial impact • Uses current knowns to estimates potential impact • Should be used to review trends • Results could change if districts choose to consolidate and variables drastically change 5 5
Background Budget Levy/Mill Rate Educational Opportunities 6 6
FTE TE = Resident student count prorated for part-time enrollment About the Districts Fox x Point nt J2 Nicolet let UHS Maple ple Dale le-India Indian n Glendal ale-Rive iver r • K-8 School • Union High Hill Hills ls District School • K-8 School • K-8 School • 687 FTE • 1079 FTE District District • 419 FTE • 936 FTE Reflects 2017-18 actual data 7 Source: Department of Public Instruction 7
Key Question: Tax Impact Referendum Community Approved Debt Service Tax Levy Levy (Fund 39) (Fund 80) Revenue Limit Tax Levy Other Levy (Funds 10, 38 Total & 41) School- Based Tax Levy The revenue limit levy is controlled by state formulas 8 8
State Equalization aid determines the revenue limit levy Key Question: Tax Impact Aid as a % o of Revenue enue Li Limit t Auth thority ority 100% 2% 5% 5% 6% 15% 80% 60% 98% 95% 95% 94% 85% 40% 20% 0% Nicolet UHS* Fox Point J2* Glendale-River Maple Dale- Sample Hills* Indian Hill* Consolidated Revenue Limit Levy State EQ Aid *Reflects 2017-18 actual data 9 *Source: Department of Public Instruction 9
Key Question: Tax Impact Total School- Equalized Mill $1,000 Based Tax Levy Property Value Rate 10 10
Key Question: Tax Impact Estim timated ated Mill l Rate te $14.00 $12.57 $12.09 $12.21 $11.80 $12.00 $4.74 $10.00 $4.74 $4.74 $8.00 $6.00 $4.00 $7.83 $7.47 $7.06 $2.00 $0.00 Fox Point J2* Glendale-River Maple Dale- Sample Hills* Indian Hill* Consolidated K-8 District Nicolet UHS Mill rate e = rate per $100,000 property value *Reflects 2017-18 actual data 11 *Source: Department of Public Instruction 11
Key Question: Tax Impact Non-Recurring Operational Referendum Authority Glendale- Maple Dale- Nicolet UHS Fox Point J2 River Hills Indian Hill 2017-18 $3,150,000 $950,000 $980,000 $800,000 2018-19 $3,150,000 $950,000 $980,000 $800,000 2019-20 $3,150,000 $0 $980,000 $0 2020-21 $3,150,000 $0 $0 $0 2021-22 $3,150,000 $0 $0 $0 2022-23 $0 $0 $0 $0 Operational referendum authority increases districts’ revenue limit tax levy. 12 Source: Department of Public Instruction 12
Key Question: Tax Impact • In summary: • Typical, and true here, estimates show mill rate falling within current districts’ current mill rates • Current districts’ operational referendum authority prior to potential consolidation will affect estimate and comparison • Operational referendum needs of the potential consolidated district will affect estimate and comparison 13 13
Key Question: Budget Impact One-time Resident (Non- $ per pupil Membership recurring) (FTE) exemptions On-going Revenue Limit (Recurring) Authority exemptions The revenue formula comprises approximately 70% - 90% of 14 districts’ operational revenue. 14
Key Question: Budget Impact 2017-18 2017 18 Se Septe temb mber er FTE 3,500 3,000 418 2,500 956 2,000 3,130 1,500 675 1,000 500 1,081 - Sample Consolidated 2018 Nicolet UHS* Fox Point J2* Glendale-River Hills* Maple Dale-Indian Hill* *Reflects 2017-18 actual data 15 *Source: Department of Public Instruction 15
Key Question: Budget Impact Maxim imum m Revenue enue / Memb mber er $18,000 15,344 $16,000 14,468 13,743 13,023 $14,000 12,103 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 Nicolet UHS* Fox Point J2* Glendale-River Maple Dale- Sample Hills* Indian Hill* Consolidated *Reflects 2017-18 actual data 16 *Source: Department of Public Instruction 16
Key Question: Budget Impact Non-Recurring Operational Referendum Authority Glendale- Maple Dale- Nicolet UHS Fox Point J2 River Hills Indian Hill 2017-18 $3,150,000 $950,000 $980,000 $800,000 2018-19 $3,150,000 $950,000 $980,000 $800,000 2019-20 $3,150,000 $0 $980,000 $0 2020-21 $3,150,000 $0 $0 $0 2021-22 $3,150,000 $0 $0 $0 2022-23 $0 $0 $0 $0 Operational referendum authority increases districts’ revenue limit, and therefore, operational revenue. 17 Source: Department of Public Instruction 17
Key Question: Budget Impact Consolidation Aid • Aid equal to $150 / pupil Year 1 • Aid equal to $150 / pupil Year 2 • Aid equal to $150 / pupil Year 3 • Aid equal to $150 / pupil Year 4 • Aid equal to $150 / pupil Year 5 • Aid equal to 50% of Year 5 amount Year 6 • Aid equal to 25% of year 5 amount Year 7 • $0 consolidation aid incentive Year 8 Consolidation aid is in addit dition ion to the revenue limit revenue 18 and is defined in WI State Statutes 117.09(6) 18
Key Question: Budget Impact Consolidation Aid Estima timated ted Consolidat solidation ion Aid Outsid side e (in add ddition ition to) ) Reven venue ue Limit it Dollar llars $468,150 Estimate = 3,121 * $150 19 19
Key Question: Budget Impact • In summary: • Revenue limit authority for the sample consolidated district is estimated to be consistent with the sum of the individual districts • Operational referendum authority will affect this estimate • The current consolidation aid estimate is approximately $450,000. This estimate could change because of: • Resident student count changes • Changes in statutes 20 20
Other Notable Items FUND BALANCE 2018-19 2018 19 Budgete eted d Fund 10 Expend enditu itures es and Ending ng Fund d Balance ance (w (with th %) $25,000,000 50% 42% $20,000,000 40% 33% $15,000,000 30% 16% 15% $10,000,000 20% $5,000,000 10% $0 0% Nicolet UHS Fox Point J2 Glendale-River Maple Dale- Hills Indian Hill Ending Fund Balance Expenditures Fund Balance as a % of Exp. 21 Source: Department of Public Instruction 21
Other Notable Items GENERAL OBLIGATION DEBT Long Term Debt Capacity as of June 30, 2017 Legal Debt Available Debt Debt Outstanding Capacity %** Capacity % June 2017 Nicolet UHS* 5% 97% $6,296,012 Fox Point J2* 5% 95% $3,415,000 Glendale-River Hills* 5% 98% $2,646,480 Maple Dale-Indian Hill* 5% 95% $2,696,825 Sample Consolidated District 10% 97% $15,054,317 **K-8, UHS, & ZERO AID K-12 LIMIT = 5%, AIDED K-12 LIMIT = 10% PER WISCONSIN STATE CONSTITUTION: ARTICLE 11, SECTION 3 AND CHAPTER 67.03, WIS STATS *Reflects 2017-18 actual data 22 *Source: Department of Public Instruction 22
FAQ • This presentation only talks about the finances, what about the students, curriculum, programming, etc. • How do districts typically use the consolidation aid? • How do the long-term finances of the sample consolidated district compare to the individual districts? • How might the sample consolidated district compare to area districts? 23 23
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