“Serving the Public’s Financial Leaders”Public Finance Resources, Inc.

What We Have Learned from Financial

Forecasting and Long-Term Sustainability

“Serving the Public’s Financial Leaders”Public Finance Resources, Inc.

Presenters: Matt Bunting, Mike Sobul & Ernie Strawser

Southwest County Auditors’ AssociationMarch 15, 2013

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Today’s Economic Environment• Property Values Stagnant to Declining• Pent-up Budgetary Demands• Per-Capita Income Flat• Unemployment Still High• Key Areas of Inflation

– Energy, Food and Health Care

Today’s economy makes planning essential.

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Multi-Year Financial Forecasting• Does your financial plan address…

– Economic Uncertainty?– Sustainability?– Priorities and Goals?

“Your governmental entity is perfectly aligned to get the results you are

getting.”

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Single Year Financial Planning

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Multi-Year Financial Planning

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PRACTICAL APPLICATION EXAMPLES

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Change in “Customer” Demographics

2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/20101,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

Granville School Enrollment

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Change in “Customer” Demographics

2000/2001 2001/2002 2002/2003 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/20100.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

Indexed Number of Pupils and Teachers2000/2001 School Year=1

PupilsTeachers

9

Change in “Customer” Demographics

2000/2001

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

2012/2013

2013/2014

2014/2015

2015/2016

2016/2017

1000

1200

1400

1600

1800

2000

2200

2400

2600

2800

Granville School Enrollment

10

Change in “Customer” Demographics

2000/2001

2001/2002

2002/2003

2003/2004

2004/2005

2005/2006

2006/2007

2007/2008

2008/2009

2009/2010

2010/2011

2011/2012

2012/2013

2013/2014

2014/2015

2015/2016

2016/2017

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

Indexed Number of Pupils and Teachers2000/2001 Schoolyear=1

PupilsTeachers

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“Cash Reserves” – Now what?

8,314,680 4,921,918 120,781

(5,469,439)

(12,078,998) $(15,000,000)

$(10,000,000)

$(5,000,000)

$-

$5,000,000

$10,000,000

2012 2013 2014 2015 2016

Fiscal Years

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“Cash Reserves” - Sustainable?

8,314,680 4,921,918 120,781

(5,469,439)

(12,078,998) $(15,000,000)

$(10,000,000)

$(5,000,000)

$-

$5,000,000

$10,000,000

2012 2013 2014 2015 2016

Fiscal Years

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“Cash Reserves” – Sustainable? No.

8,314,680 4,921,918 120,781

(5,469,439)

(12,078,998) $(15,000,000)

$(10,000,000)

$(5,000,000)

$-

$5,000,000

$10,000,000

2012 2013 2014 2015 2016

Fiscal Years

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Reversing the Trend?

• Looking Ahead, modeling the trends forward

• Expenditures exceed revenue

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Revenue vs. Expenditures

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“After” Operating Margin

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“Cash Reserves”

(356,304)

($15,000,000)

($10,000,000)

($5,000,000)

$0

$5,000,000

$10,000,000

2012 2013 2014 2015 2016

Fiscal Years

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HOW TO GET STARTED -- A LOCAL GOVERNMENT EXAMPLE

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Components to Consider

• Significant Revenue & Expenditure Categories

• Analysis – Historical Variances, Uncertainty

• Cash Flow• Communication and Financial

Statements– Informing policy makers, constituents and

stakeholders– External market “agencies”

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Significant Revenue Source?

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Sales Tax - Historical Comparisons

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Sales Tax & Year-Over-Year Trends

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Sales Tax – Forecast Basis

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“The More You Knew -- The More You Will Know”

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“The More You Knew -- The More You . Will Know”

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“The More You Knew -- The More You Will Know”

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Goals & Priorities

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Local Government Example

Earlier and Better Sense of Next Year’s Challenges• Operating Margin• Order of Magnitude• Goals and Priorities• Understanding of Revenue and

Expenditure Categories

– One time money

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Financial Forecasting Benefits• Consistency for record keeping and

tracking– Record last year’s variables

• Grows a sense of overall historical/projected financial perspective– Versus department by department

• Modeling priorities over time• Employee FTE tracking, wages and

benefit costs– Keeping in mind demographics

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Financial Forecasting Benefits

• Better planning and design for local government decisions

• Help avoid allegations and embarrassment of “lack of planning”.

• Sustainable operations

Casino RevenueCounty Per Capita Casino Tax Distributions

Payment Month

Quarterly Per Capita

Annual Per Capita

Jul-12 $0.87Oct-12 $1.74 $2.62Jan-13 $2.32Apr-13 $2.43Jul-13 $3.24Oct-13 $3.21 $11.19Jan-14 $3.20Apr-14 $3.20Jul-14 $3.20Oct-14 $3.20 $12.80

Casino Revenue

• Major Assumptions– Cincinnati casino will generate about 60% of

original projections (Toledo 70%, Cleveland 84%, Columbus 55%)

– No long-term growth built in because of competition from new Racinos (Thistledowns in April, Northfield Park in December, River Downs, Dayton, and Warren County in 2014)

“Serving the Public’s Financial Leaders”

Public Finance Resources, Inc.

Debra Hoelzle, Chief Operations Officer of Public Finance Resources, provides direct services to clients, and oversees the day-to-day operations of PFR. She brings with her operational experience from both the public and private sectors, including a school district and multiple corporations in the financial services industry. Debra holds her Masters of Business Administration from Ohio University, and her Bachelors of Science in Business Administration from The Ohio State University.

Stacy Overly, Consultant, provides direct financial services to clients. He has over 20 years of experience serving as school district treasurer, including 15 plus years of developing financial forecasting tools, and providing instruction and training opportunities attended and used by over two hundred of Ohio’s public school treasurers. Stacy works with clients to analyze trends and review local economic data to help determine a long-term operating strategy for the organization. He holds his Masters of Business Administration and his Bachelors of Business Administration in Finance from Ohio University.

Ernie Strawser, Consultant, provides direct services to our public finance clients. He has over 30 years of public finance experience as a CFO, consultant, and developer and instructor of financial forecasting techniques and tools which have been used by over two hundred Ohio school district CFOs. Ernie works with clients to facilitate their understanding of local financial results , trends, and strategies. He holds both a Masters of Science in Administration from Central Michigan University and a Bachelor of Science in Finance from Ohio University.

Matt Bunting, Consultant, has over 25 years of experience in the public finance sector. This includes 15 plus years as a school district treasurer, and 11 years with the Auditor of State where he led financial, legal compliance, and Federal single audits of government entities. Matt has served as interim school treasurer several times, as well as worked with Ernie and Stacy to test their forecasting software and instruct at their yearly seminars. He holds an Associates Degree in Accounting from Hocking College, and is a Certified Government Financial Manager.

Mike Sobul, Consultant, brings 30 years of experience in public finance and tax analysis. Currently a school district treasurer, Mike spent nearly 25 years with the Ohio Department of Taxation where he led revenue forecasting efforts and provided analysis , training, and fiscal services to schools and local governments. Mike holds a Masters Degree in Public Policy from the University of Michigan and a Bachelors Degree in Economics and Political Science from Wittenberg University.

Ryan Ghizzoni, Consultant, began his career with the Auditor of State’s Office and has served as a school district treasurer for the past 10 years. During his career, he has been the recipient of six Association of School Business Officials International Meritorious Budget Awards and was the recipient of the Ohio Association of School Business Officials 2011 Outstanding Treasurer of the Year Award. Ryan holds a Bachelors of Business Administration from the Youngstown State University, and is a Certified Administrator of School Finance and Operations.

Public Finance Resources Employee Bios

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“Serving the Public’s Financial Leaders”

Public Finance Resources, Inc. 34

Ernie Strawser Matt Bunting Stacy Overly Ryan Ghizzoni Mike Sobul Debra Hoelzle

PFR Contact Information

Debra HoelzleChief Operating Officer

Public Finance Resources, Inc.PO Box 1822

Columbus, OH 43216debra@pfrcfo.com

Phone: 614-732-5948

Ernie StrawserConsultant

Public Finance Resources, Inc.PO Box 1822

Columbus, OH 43216ernie@pfrcfo.com

Phone: 614-732-5948

 www.PFRCFO.com