001community meeting. Uh so, uh can we have the roll call? >> Uh can we do the pledge of allegiance first? >> Okay. Yeah, sure. I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. >> Can I call the meeting to order? And can we have the roll call? Mr. Davis. >> Certainly. Mr. Marks >> here. >> Mr. Singh >> here. >> Mr. Summer. >> Mr. Tullis >> here. >> Mr. Warfl >> here. >> Can I have a motion to adopt the agenda? >> So moved. Second. >> All in favor? Hi. >> Hi. >> So, for the work session, can we to Mr. Davis? >> Certainly. I want to thank everyone for coming to the
002uh special meeting today. Uh we have a couple of items that are due at the towards the end of May and uh just happened to fall with not great timing in relationship to our regularly scheduled meeting. Um the first item is a resolution to accept the amounts and rates as determined by the budget commission. Uh this is the conclusion of the tax budget work that we started back in January. Um that item went to the budget commission and was approved by that commission and sent the uh the amounts and rates as determined by that commission back to us for approval. This is an annual item and uh we will need it for the uh fiscal year 2026. Are there any questions? >> Can I >> make a motion to approve the amounts and reads determined?
003>> Seconded. >> Mr. Marks. >> Yes. >> Mr. Tullles. >> Yes. >> Mr. Warfl. >> Yes. >> Mrs. Singh. >> Yes. >> Thank you. And then the second item that's also due towards the end of May is the five-year forecast. So with that, I would like to do the presentation today, get the approval so we can get that to the uh get that on the agenda to get on the Ohio State website uh the Department of Education and Workforce. So with that, I'm actually going to take my presentation to the podium. >> There's no microphone. >> Just take it. So, thank you again. Five-year financial forecast presentation is a state requirement by Ohio Revised Code that we do this once in November and then again in May and then have it approved by the board
004of education so we can get that submitted to the Ohio Department of Education and Workforce. So, as always, I always put uh some important dates in this presentation for everyone. Uh the expiration of the current CBA with the HPO will expire in about another month and a couple weeks. Um we already have the new CBA in place that will start on July 1st. We completed that last spring. On November 20 uh the November 2025, we'll have a board of education election. December 31st, 2026 will be the expiration of the current expense levy that we passed back in May of 2021. November 2027 will be another board of education election. Then on December 1st of 2027 will be the final payment of the 2016 bond refunding. And then finally June 30th, 2028 uh three years out
005will be the expiration of the CBA that we just did back in the spring of 2024. And that was uh negotiated and completed July of 2024 at the board meeting held in June. uh overview of my forecast for today. We're going to discuss the district revenue forecast, um investments in our future, and then finally a summary of everything that's going on in regards to the financial situation. You can see under district revenue forecast, I put the word uncertainty in there. As I go through my presentation, you will uh understand uh the meaning of that word as it relates to school finances in general and to Indian Hill in specific. First item is the district revenue forecast. Um under this I always like to take a look at the general property taxes. Um as you know
006it comprises about 85 to 90% of the total revenue of Indian Hill. Um you see there it's at 68.12. This is property taxes collected. But in addition, we also receive a tiff um tax increment financing uh for about nine or 10 properties in Kenwood that are also part of property tax collection and then also we receive the amount from the state that they pay in lie of some some credits that they give. So all in all we go about 85 to 90% of reliance on property taxes within our district. uh we get very little revenue from the state and federal income. Here's a property value breakdown trend. I did put in the new numbers for the tax year 2024. Made that actual there was an increase from 2023 to 2024. Um I've I've put in
007there some estimated small increases for tax year 2025. Tax year 2026 will again represent the reappraisal period. That will be the three-year interim reappraisal. Um not the full appraisal that we had in 2023. I do expect an increase um at that time, but more in line with historical values that we've seen here within the district. Um maybe not quite as much as we've seen over the past 3 to six years statewide. And then as you see the 2027 and 2028 again are estimated for small increases as we move towards the next reappraisal after that. As we talk about property taxes, I always want to bring up two important definitions. Um, we are guided by House Bill 920. House Bill 920, if you remember, is a tax reduction factor. Uh, what that does will allow the
008the the taxes that are voted upon voted upon to have certain roll back factors as property values increase in order to make sure that we are we are getting the same amount of taxes that were voted on. Uh the only exception to that is new construction and the inside millage that's collected. Uh what that what it means broken down is that the district does not collect uniformally with the taxes that are that are with the property values that are increased over time. 20 mil floor definition is a definition used for school districts. And what this means is that the school districts in Ohio do not go under what's called the 20 mil floor when they levy taxes. So as those property taxes and levies are rolled back, they keep getting closer and closer to the
00920 to the 20 mil levies the levied and once they hit 20 mil, then they start collecting uniformally as property values rise. We can never go below 20 mills of collected t property taxes. Any questions on those two definitions? very important for what we're going to talk about here in a second. So, this chart represents the 20 mil floor in relationship to Indian Hill School District. Uh for the past uh approximately 15 years, the district had operated above the 20 mil floor. Over time, as property values increased, we got closer and closer to the 20 mil floor. As you can see, with the 2023 reappraisal, class one rate was down to 20 mills. So we have now hit the floor as of that reappraisal. Class two which represents business and commercial activity has not reached
010that 20 mil floor yet. But as you can see uh with predicted increases over time that is also getting closer and closer to that 20 mil value. Very important for our district because as the 23 reappraisal uh we were not at the 20 mil floor. We did not increase taxes uniformly on property values but it is important that we we have made it there and now over time as property values rise we will see that uniform growth of revenue. If you remember at last uh last April's board meeting we talked about house bill 96. House Bill 96 is the bianual budget created by the state of Ohio. Um it is first presented by the governor, sent to the house of representatives who then do um some changes make new proposals and then they present that
011vote upon it send that to the Senate which will do the same. They then go into committee if there's any differences between the two bills and try to rectify those changes. Then it goes to the governor for a final vote. Typically done in June so it's ready for the July 1 fiscal year. Uh this one is done will be for fiscal years 26 and 27. Uh the interesting part of this is as it came out of the house of representatives um as we presented at the last board meeting they had proposed a 25% budget roll back proposal which meant that they were going to multiply your finances at the end of the school year by 25% and then equate that to the amount of carryover. If you had more carryover, they were going to reduce
012your property tax collection by the difference of those two numbers. Since then, the then the number has been moved to 30%. So, that's good news in the short term for the district where we were going to lose about 3 million. Um, that number is down to about 500,000 in the first year. Um, which is which is like I said, good news in the short term. Uh but what it does there's a there's a fundamental problem that it creates as we look at at at uh in our income side moving forward. So as you know um as a district levies school taxes and chooses to do additional levies in the future, they typically do five-year property tax levies. And what a school district has to do to make a b make a budget work is they
013have to come up with a number that's significantly over what would balance that budget in the first year. And then as that goes down over time, you think of it in the terms of here's a school district's budget and expenses. Here's the situation when you go to get a levy, you're in deficit spending. So if you have a successful levy, revenue goes here, expenses stay here. The next year, revenue comes to this level. As your expenses rise, sorry, I went the wrong way. Revenue will stay here, expenses will rise. The next year, you're about even. So you're in year three of your levy. Your expenses and revenue are close to even. Now, if you think of year four, you're back to as expenses rise, revenue dips below again. That's a typical five-year levy cycle. With
014this proposal, what it would do if it stays in law beyond the two years is it would not allow you to have revenue here and expenses here because it would take away a percentage of any of that carryover. So, it creates sort of a a crisis when looking at how we're going to uh predict how to do any kind type of levy, what our revenue is going to look like in the future. So, that's the number one. after the $500,000 reduction, if that were received, that would be the ongoing problem with this with this roll back proposal moving forward. Are there any questions with this? So, then there's another item out there that creates a lot of uncertainty, and this one's fairly new. Um, this is a constitutional amendment that's been proposed to eliminate property
015taxes. So, as you can see, it would add to the constitution, no real property shall be taxed, and no law shall impose any taxes on real property. It defines real property is land, crops, buildings, and other permanent improvements. So, when you think about property taxes, the biggest the biggest amount does go to public schools. Uh but we have to think about property taxes also pay for emergency services, parks, libraries, uh local governments, and there's other entities out there that also rely on property taxes in order to fund their entities. So, it's not just public schools that would be thrown into a crisis situation, but there's also other entities out there that would be in the same situation. Now what's happening throughout the state a lot of place a lot of school districts that are at
016that 20 mil floor already as property taxes were going up 3540% those school districts were receiving the same amount of revenue increase at that same time. So as a taxpayer you rece you look at your tax bill and you see a huge increase. It's created a lot of angst throughout the state. Um, so there's been a lot of outcry to let's let's look at property taxes. How do we how do we sort of look at them again and and make things um correct, make things more even? So there are some I want to point out already that when we think of property taxes, they're also they're reduced already at 35%. So if your home's worth $100,000, you're only paying property taxes on $35,000 of it. The second item is there's other exemptions out there such
017as homestead, non-b businessiness credit, and the the owner occupancy credit which are reimbursed by the state. So these were all items that were done in the 70s, early 80s when property taxes at that time were on the rise. House Bill 920 occurred around that same time. So all these things happened and the state government said, "We're going to give you some property tax relief. We're going to do these items." So, as they look at it now, they're trying that's what they're trying to do with House Bill 96. They're trying to give some short-term property relief. There's no real reform there. It's just simply a one-time credit. Um, so, a group of folks went out and they said, "Let's do a const constitutional amendment to get rid of property taxes." Now, as you can imagine, that
018throws our budget into uncertainty because we are at 85 to 90% collection through property taxes. The other item that hasn't really been looked at yet is what about all the debt the debt that's secured throughout the state. It's all it's all, you know, held by property taxes. Every every community votes for a levy. They get bonds and then those bonds are are held through property taxes. We have a AAA rating through Moody's right now. That would be in shambles because we would we would no longer be able to collect property taxes that secures our debt and the debt. Would it go to default? What would happen with the debt if that happened? So, there's a lot of things out there that are very very uh perilous with this constitutional amendment. Um hopefully cooler heads prevail
019at some time and hopefully we sit down and have some real property tax reform as opposed to a lot of ideas that are just kind of get thrown out there and say let's fix it right now. Um I think the first thing we have to do um in my opinion and this is strictly my opinion. it's not the opinion of the board or Indian Hill School District is that we really need to go back to the 1970s and look at it from the beginning again and talk about House Bill 920 and talk about how we start to fund schools and make sure that every school district is able to fund themselves over a period of time without constantly going back to taxpayers to levy. Because the reason that the 20 mil floor was invented in
020the first place is because some schools were not able to secure levies back in the six or 70s and needed some kind of thing in order to be able to continue to operate. So that's really where reform starts in my opinion with property taxes. Are there any questions about this? Wrong way. So, we've talked a lot about revenue and I'll just briefly touch on the expenditure side. So, this is another graph that shows our expenses over time. You can see we're we're increasing um at a pretty uniform rate. Um you look at the top and it talks about personnel cost. We at about 74% salaries and benefits. So, we're we're doing about 74% investment in human resources. Um, another significant place is our purchase services. Uh, purchase services include things like subs, uh, special education,
021um, legal services, and of course, I didn't bring my glasses, so I'm having a hard time reading it. Maintenance, um, our custodial services, that's an outside service. Um, insurance is part of this, PD, travel, our electric, water, gas. um tuition for students who are placed outside of the district. So, as you can see, there are a few areas in here that we can look at to help um control cost, but a lot of these areas are controlled by inflation, which is water, gas, and electric. Um some of these things are controlled by individual education plans, which we have to make sure we're meeting. So, there's a lot of things within this area that we can begin to work on, help cut cost, but this isn't going to help bring our revenue, bring our expenditures back
022down to revenue. Going to get it closer, but probably not going to get us balanced over time. Any questions with our expenditures? So again, in summary, this is a look at our the black line is revenue, the gray line is expenditures, and then you see uh the yellow line flow through there. That's our carryover. As we talk about House Bill 96, the carryover is what they would like to see reduced throughout the state in public schools. um as we look at it, we make sure that that's a wellont controlled um savings account, if you will, to make sure we have uh the ability to pay for things. An example of expenditures that are going to happen in the near future, I've added about $400,000 in this cycle to $600,000 I added in the last cycle
023for roofs. Um we have a large roof repair at the primary school that needs to be done. Um, we are going to talk about that in length at the June work session. And then the uh roof over the wrestling area at the back of the high school. When we did the high school or when we did the middle school project, we had determined at that time that that area was going to be an area that probably wasn't going to get used. We moved the wrestling team in there as a temporary place. They love the facility. They've done great things to improve that area, but now we've got roof issues in that same area. So, those are some of the things that we need to talk about. some of the things that the carryover does for
024us. Um, you can see over time it gets lower and lower and at the end of 2029 we're projected at about 7.3 million based on the current forecast and that brings it in >> does not get renewed. So right now the interesting thing with the levy is as we look at the 2021 levy um that should be taken care of with the 20 mil floor. So what could happen is we allow that levy to expire and then the other the other levies that are out there would then assume the the the millillage that's taken care of with that levy. So at this point there's really no need to renew a levy. It's a talking about that future income that we may need >> unless we change the 20 mil floor. >> And that's part of
025discussions as well is that the that that the 20 mil floor could potentially become 18 mills and then at that at that point we would then have to talk about renewing a levy because then we wouldn't have enough millage to make up in the other areas. So as you can see there's more uncertainty that I didn't even even touch upon. And I guess that's my question is worst case scenarios. House Bill 96 passes, constitutional amendment is is enacted. What what do we what's our plan? >> So that is a great question and this is probably one of the worst answers I will ever give to you as the CFO treasurer of Indian Hill School District. But I want to be honest, I don't know. I don't know at this point. I don't have a plan.
026Um it's speculation that this will pass. Um, so I went ahead with this forecast in the in this the terms of doing business as usual. Um, obviously if House Bill 96 passed, we would have to come up with the plan B. Um, right now our our carryover does make sure that we are not in any situation that's dire at this point. So we have a little bit of safety net, but I am just being truthful. I don't know what to do at this point. I I'll go a step further, Mick, and and I think to Rob's question, this is great. Um I first I appreciate that our treasurer put together a five-year forecast early this year because of all the legislative uncertainty that's going on uh in the state of Ohio. It's a lot of
027work to do this and treasurers all over the state are sharing this sentiment. Um and and so are the superintendents. Um, if a proposed amendment to the Ohio Constitution were to abolish or modify property tax collections, it would be the dismantling of public education as we know it. It would it would be a sea change like we've never seen uh in our careers. Um, it is a constant attack on the funding of public schools. That's what that proposed amendment really is. And again, that's Kirk Kcki's opinion, not necessarily the board of education of Indian Hill. Um, and if House Bill 96 passes, I think what Mick said earlier, which is the most important thing, is there is no mechanism beyond short-term relief for one year for our community members who voted Millich to support the
028schools of this community. And so then the question becomes well what do we do annually in order to support our community who has supported the schools through these mechanisms that we call levies or bonds that can no longer operate the way that we're used to operating. So when he says I don't know that's the answer because we don't know the mechanism and quite frankly neither do the legislators. Um I want to go back to House Bill 920 for a minute. It's sometimes we joke when we say let's go back to the 70s, but Mick's exactly right. I heard people talking last week and and the media was capturing their quotes and they were saying House Bill uh there was actually a county uh auditor who said this was concocted by public schools. That is not
029correct or factual. House Bill 920 was passed by the Ohio legislators. It was not passed by school personnel or officials. It was passed by law by Ohio legislators. And then the 20 mil floor was created because they realized they didn't have a mechanism in place to protect all schools in Ohio from the legislation they passed. So they concocted another mechanism and they passed that into law. Ohio schools did not create that mechanism or pass it into law. Ohio legislators did. So I I have to tell you this is really frustrating. We're going to continue to talk and engage with our legislators. We're going to continue to advocate for Indian Hills position, but truly this is a bigger issue. As Mick is pointing out, this will affect all public schools in Ohio, not private schools. We're
030not talking about private right now. We're talking about public schools in Ohio. And we're going to need to seek remedies and seek solutions. And they can't just come from us. But we are in a mode where we're advocating aggressively. Um, as you know, the board has sent a letter already to Ohio legislators. We've modified that letter for the 30% roll back. We've sent that to all legislators. Uh I'll be meeting with superintendents with some of our legislators this week to continue to advocate our position. Um this is a big deal for public schools all across Ohio. So we need to continue to monitor it and hopefully by June we'll have some more answers at least in the short term about which way we're headed. >> I think on this >> that will be a continuing
031conversation with the board of education. I say of the short term, I don't know, but as we know more facts, you know, that's we're going to have to come up with that plan. I >> I I appreciate that response. The the bottom line is is just that it keeps moving, right? And we don't know what that will be, but my concern is that in the hypothetical that both of these move forward, one garers momentum for the second, um then we're in a we're in a really tough spot. So, So what are we what I guess that's kind of the plan or the thought process is we ought to be thinking about that now before waiting for that potential eventuality so that we've got those trajectories at least on the map >> right I would have
032to think that if this citizen-led initiative to abolish the real estate tax I mean that forget for a second just the schools that cripples so many things it will there is a whole I mean in my professional world real estate development is centered around tax financing incentives and that will change the game for everything in both the public and the private sector. I can't imagine this actually once people sit down and think through the consequence that would have anybody would be in favor of this. Um it sounds nice. Sure, I don't want to pay real estate taxes. It's like states without income tax. Like that's great, but the money's got to come somewhere else. Um, you know, obviously we'll see where that goes, but hopefully this is a political whim and that kind of dies
033down because it is I mean it would be devastating to everything. I mean everything. So M question for you I I mean I think the more as I see it as an individual like the constitutional amendment I don't see a ton of legs right although it carries a lot of conversation I do think that the current proposal with the 30% roll back I think has got some real traction I know that there's peers of ours that also look at an earned income tax um and that's starting to kind of gain momentum you know as you talk to other CFOs you know across the state are more starting to look at that. I know that that's that gives us more of a long-term projection and being able to have more consistency in revenue growth. And >>
034what does that look like with your peers? >> Tax throughout the state has traditionally been a more rural type um way to levy taxes. Um tra uh districts that are traditionally agricultural in nature uh tend to uh put their favor in income tax more than property taxes because farmers have lots of property. Um those are get starting to gain some favor favor within your urban communities. um within school districts there's a there's an understanding um that there is some revenue growth to that and that is you know comforting to a budget that you can actually see revenue growth over time um as opposed to the traditional property tax. Um Wyoming who is a similar district to us currently has an income tax. Um Southwest City Schools has an income tax and there's two ways to
035do income taxes within the state of Ohio. There's a traditional income tax which taxes all income. There's also an earned income tax, income tax which taxes um basically earned income instead of things like retirement um which is beneficial for um residents who uh live off of retirements. So there's there's a couple of different ways to do that. The the other unique thing I've seen is that part of the conversation of property tax reform has said we want to put income tax in the 20 mil floor. So I don't know if they would create some form of calculation that would say you're earned your income tax creates three mills of revenue therefore you are at you're collecting 23 mills now. um those things haven't been sort of sort of debated yet at this point, but there
036is some some steam with that as well. So there there's all kinds of things out there that's creating this uncertainty that we don't know. You know, even as we're trying to create a revenue plan going forward, you know, with these ideas out here, we could have the best plan in the world. And if some of these things are are taken in and and instituted, it may change our plan immediately. I mean, it sounds like what I'm hearing from you say is that um you know, one of the biggest challenge, right? Everyone when properties values go up, they're impacted. I think our retired folks are probably impacted more than others because so many of them are on a fixed income. Um and so it sounds like what I'm hearing, there's communities that already have that in
037place, but that an earned income is more where people are starting to look potentially to um to be able to protect the retired folks, but also have some consistent revenue growth. Correct. >> Yes. >> And to state the obvious, the one thing we can control to a degree is our expenses. So I think with the uncertainty coming on the revenue side, while always important to monitoring our expenses, it's heightened importance now and taking a hard look at everything. Um because all the little things will eventually add up and we're talking, you know, potential $500,000 hit. like that's real dollars we'll lose that we have to figure out what to do about them. >> Yeah, just as a reminder board members, I think good point. Um that's one of the reasons that we went into the
038negotiations we went into proactively a year ago with our own staff. Um it's one of the reasons that the board has approved a retirement options uh program for staff. We're also dealing with generational turnover. Um the best levers that we can put in place to save money when it comes to people in a people organization is long range planning and the board has supported our our goals with that which we appreciate. Um committee work that Mick is doing uh now with folks to look at uh long-term forecasting of insurance costs. All of those things uh to be proactive and obviously to protect the team is always the goal. um we want to make sure that we're always doing that in a people organization. >> The one thing I did find as I did this forecast,
039there were some savings from my November forecast for retirements. Um as we did the early retirement incentive plan and also the state state teachers retirement system lowered their age of retirement or their years of retirement to 32. So those were things that were able to save some money. The bad news is for the first time since I've been the CE CFO here, um, we are looking at a double-digit increase in health insurance. Um, so that added some to my forecast because I did not have that amount planned. Um, there was one other time in our our history that I've been here that we were looking at a double digit um, increase. That was the year we switched from PO to full high deductible health plan and we actually decreased our health spend that year. Um
040but as we look as we've moved forward um there's been some changes in uh especially pharmacy that have added some some major impact to our health insurance. We are looking at that item as both a consortium that we do our self-und plan through and then also as a district uh we've had two meetings of the insurance committee which is a group of staff along with myself that we are looking at options to help uh save both in the short term and long term in health insurance. Um but that's another critical critical place that we are you know finding expenses going up faster than we hoped they would. Is >> there any other good news I can deliver while I'm up here? >> I I just want to thank uh Mick again. Some of you may
041know this already, maybe for the public's benefit. I mean, Mick sits with that consortium and and reports and goes to these board meetings and and you know, again, is is being as proactive as possible with this forecast, uh which takes a long time to put together each cycle. It's due twice a year by law. Uh we don't even know if that will continue uh depending on some of the legislation how they they want to mess with it. But really appreciate all the work and detail that goes into it. >> Thank you for your time. I appreciate it. >> Thank you. >> So can I have a motion to accept the approval of May 2025? I'm making a motion to approve the May 2025 5-year forecast. >> Seconded. >> Mr. M. Martin. >> Yes. >> Mr.
042Tullis. >> Yes. >> Warful. >> Yes. >> Mrs. Singh. >> Yes. >> Thank you. >> With that, if we don't have any other questions, can I have the motion to adjurnn? >> So moved. >> Second. >> All in favor? Nice.