Franklin Community

SchoolsThe “New Normal” in Franklin Schools

FCS Financial Status Presentation

Circuit Breaker and the “New Normal”

Interpreting the Financial Data

The Good News:

• General Fund Operating Balance at its highest point since at least 1997• We advanced past our 7% General Fund Operating Balance to 9.3%• 7% of our 2012 General Fund Operating Balance is $2,087,769

• Rainy Day Balance at its highest point ever

• We moved over $900,000 out of Capital Projects to the Rainy Day Fund (Cost avoidance)

General Fund Operating Balance History

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

7.67%

6.40%6.69%

6.13%6.51%

4.24%

2.67%

4.26% 4.12%

5.15%

9.32%

General Fund Operating Balance 2002-2012

Rainy Day History (Operating Balance)

2004 2005 2006 2007 2008 2009 2010 2011 2012 $-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

$790,000

$1,105,500

$812,505

$1,162,505

$1,557,156 $1,800,000

$2,023,918

$3,671,591

$4,601,342

Rainy Day History (Operating Balance)

Interpreting the Financial Data (con’t.)

The Not so Good News:

• The General Fund Operating Balance has increased dramatically due in part to:• Frozen wages for teachers and administrators since 2008• Increased medical costs for teachers and administrators• Full-day Kindergarten monies found by the General Assembly and

distributed in December (we hope this funding will continue?)

• Rainy Day Balance has increased dramatically over the past couple of years due to the impending Circuit Breaker loss. This has required frozen CPF spending, and now Bus Replacement spending is frozen as well.

• We are upside down for our June, 2013 Debt Service payment by $2,322,000 due to our Circuit Breaker loss. This will be replicated in December, 2013. We will have depleted our current Rainy Day dollars by the end of 2013.

Circuit Breaker Loss Per Pupil

School Corporation School Enrollment Estimated Loss Per Pupil Loss

Indianapolis Public Schools 31998 14,375,105$ 449.25$ Gary Community School Corporation 10221 12,707,208$ 1,243.25$ MSD Wayne Township Schools 16277 9,095,205$ 558.78$ Anderson Community School Corporation 7142 8,557,855$ 1,198.24$ Muncie Community School Corporation 6871 6,587,114$ 958.68$ Westfield-Washington School Corporation 6403 6,235,052$ 973.77$ Avon Community School Corporation 8521 5,792,827$ 679.83$ Mt. Vernon Schools 3513 5,785,693$ 1,646.94$ Ft. Wayne Community School Corporation 30820 5,522,506$ 179.19$ South Bend Community Schools 20156 5,175,393$ 256.77$ MSD Decatur Township Schools 6316 5,008,973$ 793.06$ Elkhart Community School Corporation 12567 4,846,081$ 385.62$ Brownsburg Community School Corporation 7629 4,434,919$ 581.32$ East Chicago City School Corporation 5467 4,104,206$ 750.72$ Vigo County Schools 15599 3,845,589$ 246.53$ Zionsville Community Schools 5750 3,697,706$ 643.08$ Noblesville School Corporation 9444 3,663,360$ 387.90$ MSD Franklin Township Schools 8478 3,515,509$ 414.66$ MSD Lawrence Township Schools 14878 3,440,083$ 231.22$ Clark-Pleasant Community School Corporation 5891 3,076,379$ 522.22$ Concord Schools 4951 2,732,336$ 551.88$ Beech Grove Schools 2734 2,720,374$ 995.02$ Goshen Schools 6450 2,531,724$ 392.52$ Northwest Allen Schools 6517 2,481,064$ 380.71$ MSD Warren Township Schools 11899 2,398,116$ 201.54$ Greater Clark Schools 10589 2,325,735$ 219.64$ Franklin Community School Corporation 5159 2,318,827$ 449.47$

27th in total dollars lost

Circuit Breaker 2011 Pay 2012 Loss

Total Circuit Breaker Loss

School Corporation School Enrollment Estimated Loss Per Pupil Loss

Mt. Vernon Schools 3513 5,785,693$ 1,646.94$ Gary Community School Corporation 10221 12,707,208$ 1,243.25$ Anderson Community School Corporation 7142 8,557,855$ 1,198.24$ Beech Grove Schools 2734 2,720,374$ 995.02$ Westfield-Washington School Corporation 6403 6,235,052$ 973.77$ Muncie Community School Corporation 6871 6,587,114$ 958.68$ MSD Decatur Township Schools 6316 5,008,973$ 793.06$ East Chicago City School Corporation 5467 4,104,206$ 750.72$ Avon Community School Corporation 8521 5,792,827$ 679.83$ Zionsville Community Schools 5750 3,697,706$ 643.08$ Brownsburg Community School Corporation 7629 4,434,919$ 581.32$ MSD Wayne Township Schools 16277 9,095,205$ 558.78$ Concord Schools 4951 2,732,336$ 551.88$ Clark-Pleasant Community School Corporation 5891 3,076,379$ 522.22$ Franklin Community School Corporation 5159 2,318,827$ 449.47$ Indianapolis Public Schools 31998 14,375,105$ 449.25$ MSD Franklin Township Schools 8478 3,515,509$ 414.66$ Goshen Schools 6450 2,531,724$ 392.52$ Noblesville School Corporation 9444 3,663,360$ 387.90$ Elkhart Community School Corporation 12567 4,846,081$ 385.62$ Northwest Allen Schools 6517 2,481,064$ 380.71$ South Bend Community Schools 20156 5,175,393$ 256.77$ Vigo County Schools 15599 3,845,589$ 246.53$ MSD Lawrence Township Schools 14878 3,440,083$ 231.22$ Greater Clark Schools 10589 2,325,735$ 219.64$ MSD Warren Township Schools 11899 2,398,116$ 201.54$ Ft. Wayne Community School Corporation 30820 5,522,506$ 179.19$

15th in Per Pupil Loss

Circuit Breaker 2011 Pay 2012 Loss

Interpreting the Financial Data (con’t.)

The Not so Good News:

• A 24 year analysis of our enrollment by grade leads us to the conclusion that our enrollment will drop 121.64 students in 2013-14. With a fairly aggressive 1% growth in enrollment for the subsequent school years our new dollars in our current Basic Grant environment would be as follows:

• 2011: $29,016,494.00• 2012: $29,734,909.00 +$718,415.00• 2013: $30,163,119.19 +$428,210.19• 2014: $29,939,026.00 -$224,093.19• 2015: $30,021,714.00 +$82,688.00• 2016: $30,281,947.00 +$260,233.00• 2017: $30,515,362.00 +$233,415.00

Interpreting the Financial Data (con’t.)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20174850

4900

4950

5000

5050

5100

5150

5200

50025014 5006.61

5093.75

5156.26

5086.7

4966.05

5026

5069.69

5113

5157

Projected Enrollment 2013 - 2017

Five Funds Now Operating as One

Debt Service

General Fund

Capital ProjectsTransportation

Bus Replacement

Supported by General

Fund/Rainy Day 4 of past 5 years

Frozen to assist with Circuit Breaker loss

Frozen to assist with Circuit Breaker

loss

Give it to me plainly and simply

Circuit Breaker Loss

• I anticipate a $2,600,000 to $2,800,000 loss (on the average) annually from 2013 to 2023. There will be a slight decrease from 2024-2026 and then Life is Good.

If we:

• Freeze CPF spending by at least $1,000,000 annually• Freeze Bus Replacement spending by $400,000 annually

Then we are:

• Still short of making our Debt Service payment by $1,200,00 - $1,400,000 annually

• This shortage would not include any raises or operational increases (utilities, etc.)

With that in mind…

1. We cannot operate in an environment where pay increases are forever on hold.

2. We must develop a financially sound strategy for addressing our 2013-2014 teacher contract and administrators pay range to complement our non-certified increases of 2012.

3. We must strike a reasonable balance for medical increases.

4. We must adhere (legally) to a balanced budget (Deficit Financing)

How do we decide what to do?

1. Building visits to discuss options with our employees

2. Take the next steps to collaborate, and research options completely (Our New Normal)

1. Six Sigma partnership with Cummins (Andy Lamm)1. General Fund Optimization analysis

2. Efficiency analysis in the following areas:1. Debt Service (Bond refunding and GO Bonds)2. Banking3. Procurement cards (credit cards with a rebate attached)4. Energy cost containment (Goal of 6% - $110,000)5. Workplace safety (Workers Compensation)6. Maintenance, Grounds, Custodial, Transportation7. Core functions in academics (culture)

So what are our options?

1. General Fund Operating Referendum 1. Would buy us 7 years2. Who is with me?

2. Refund Bond and/or Restructuring our Debt with the Distressed Unit Appeals Board1. Refund our 2004 Bond2. Limited assistance and limited chances of success

3. General Obligation Bonds1. Issue a GO Bond in 2013, and then every two years or as needed

4. Hybrid approach:1. Limit CPF and Bus Replacement spending2. Create a “New Normal” relative to spending in Franklin Schools3. Refund our 2004 Bond4. Wrap in periodic General Obligation Bonds

Refunding Bonds, GO Bonds, etc.

Our Financial Partners:

1. Jane Herndon – Ice Miller

2. Lonnie Therber – Therber & Brock

3. Mike Therber – Therber & Brock

4. Jay Ryals – Fifth Third Securities

5. Rose Stark – Fifth Third Securities