BUSINESS INTELLIGENCE PROJECT Installment 1: The Leading Component of School Expenditures

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1 BUSINESS INTELLIGENCE PROJECT Installment 1: The Leading Component of School Expenditures Presented By: Todd Puster, Treasurer/CFO March 28, 2016

2 Business Intelligence Defined Ø Business Intelligence is: Ø A set of techniques and tools to transform raw data into meaningful and useful information. Ø A support mechanism for operational and strategic business decisions. Ø A way to provide a more complete picture that cannot be derived by any singular data set.

3 Business Intelligence Project Purpose Ø Pertinent Financial Information Ø Supports sound decision making. Ø Guides courses of action. Ø Sustains desired outcomes.

4 Business Intelligence Limitations Ø Even Similar School Communities Are Unique Ø Orange serves 5 diverse communities. Ø Orange enjoys the benefits of a large campus school environment. Ø Orange Community Education & Recreation provides services atypical for Ohio schools.

5 Business Intelligence Comparisons Ø Comparative groups are defined based on relevant subject matter and may vary based on the topic under study. The groups considered today are defined below. Ø Nearby Most Similar Districts Ø Chagrin Ø Orange Ø Beachwood Ø 8 Statewide Similar Districts Ø Chagrin Ø Orange Ø Beachwood Ø Solon Ø Copley-Fairlawn Ø Hudson Ø Indian Hill Ø New Albany-Plain

6 Similar District Commonalities Ø Components of Similarity Ø Demographic profiles. Ø Robust property tax bases. Ø High median incomes. Ø Nominal State funding. Ø Top tier college matriculation rates.

7 Similar District Analytics Ø Comparisons and Contrasts Chagrin Falls-Orange-Beachwood Selected Analytics Analytic Orange Beachwood Chagrin Falls Enrollment 1 2,146 1,496 2,021 Tax Revenue Per Student 2 $17,799 $17,832 $10,666 Property Tax Base 3 $1,054,272,420 $720,078,250 $328,892,550 Tax Rate (mills) Adjusted Gross Income 5 $84,900 $67,570 $73,768 AGI School District Rank 5 1 st 15 th 8 th 1 Total District Enrollment (ADM) for Fiscal Year Source: Ohio Department of Education via Forecast 5. 2 General Fund, Property Tax Revenue Per Student Data for Fiscal Year Source: Ohio Department of Education via Forecast 5. 3 General Fund, Total Property Tax Base, Tax Year Source: Cuyahoga County Auditor. 4 General Fund, Residential Effective Rate, Tax Year Source: Cuyahoga County Auditor 5 Federal Tax Year 2013 Returns. Source: Internal Revenue Service via Ohio Department of Taxation. High-Low Ranking.

8 Drilling Down Through Data Ø The Funnel Approach Ø Start at top-line costs per pupil Ø Drill to Layer 1: Instructional Costs. Ø Drill to Layer 2: General Instructional Costs. Ø Drill to Layer 3: General Instructional Teacher Salary Costs.

9 Total Costs Per Pupil Drill Down Ø Major Cost Categories Ø Instruction Ø Support Services Ø Extracurricular Activities Ø Facilities & Other Costs

10 Total Costs Per Pupil Cost Per Pupil Comparison: Beachwood-Chagrin Falls-Orange Orange $23,287 $11, $8, $ $2, Chagrin Falls $12,979 $7, $4, $ $ Beachwood $21,330 $11, $8, $ $ $0.00 $5, $10, $15, $20, $25, Instruction (1000) Supporting Services (2/3000) Extracurricular Activities (4000) Facilities Services & Other (5/7000) Ohio Department of Educatoin Fiscal Year 2014 Data

11 Total Costs Per Pupil Cost Per Pupil: Statewide 8 Similar Districts Solon $13,586 Orange $23,287 New Albany-Plain $11,165 Indian Hill $15,591 Hudson $10,110 Copley-Fairlawn $9,779 Chagrin Falls $12,979 Beachwood $21,330 $0.00 $5, $10, $15, $20, $25, Instruction (1000) Supporting Services (2/3000) Extracurricular Activities (4000) Facilities Services (5/7000) Ohio Department of Education Fiscal Year 2014 Data

12 Total Cost Comparison Ø An Overview Ø $10 Million Spend Down is a driving factor for Orange. Ø Orange and Beachwood have similar costs. Ø Larger districts trend toward lower costs.

13 Instructional Cost Factors Ø Instructional costs refer to those expenditures directly applied to classroom education. They include following: Ø General Instruction Ø Special Programs Instruction Ø Vocational Instruction Ø Kindergarten Ø All elementary grade levels Ø Core college prep courses Ø Fine arts courses Ø Special needs Ø Gifted Ø Preschool Ø English as a second language Ø Visual Art & Design Ø EXCEL TECC programs

14 Orange Instructional Costs Ø Costs stayed within a narrow range in recent years. Ø Total Instructional Costs were $24,625,507 in 2011 Ø Those costs were $24,848,529, an increase of $223,022 (0.9%) over 5 years. Orange City Schools Instructional Expenditures 1 Fiscal Year General Instruction Special Education Vocational Education Other Education Total Instruction Total Annual Change 2015 $18,332,272 $6,268,938 $246,319 $0 $24,848, % 2014 $17,634,788 $6,492,430 $248,350 $10,235 $24,385, % 2013 $17,493,695 $6,071,600 $353,004 $15,784 $23,934, % 2012 $18,256,039 $5,955,819 $418,238 $41,055 $24,711, % 2011 $18,203,774 $5,916,207 $343,283 $162,243 $24,625,507 1 General Fund Expenditures Only. Source: District Accounting Records.

15 Orange General Instructional Costs Ø Costs also stayed within a narrow range in recent years. Ø Total General Instructional Costs were $18,203,773 in 2011 Ø Those costs were $18,333,272 in 2015, an increase of $129,499 (0.7%) over 5 years. Fiscal Year Salaries Benefits Orange City Schools General Instructional Expenditures 1 Purchased Services Supplies & Materials Equipment Other Annual Total 2015 $13,026,179 $4,055,283 $810,508 $302,388 $138,914 $0 $18,333, $12,826,229 $3,964,506 $302,096 $350,707 $191,249 $0 $17,634, $12,798,153 $3,979,565 $311,652 $173,377 $230,948 $0 $17,493, $13,369,030 $4,172,229 $260,268 $216,979 $237,533 $0 $18,256, $13,337,143 $4,042,071 $237,423 $281,003 $306,135 $0 $18,203,773 1 General Fund Expenditures Only. Source: District Accounting Records.

16 General Instructional Is Labor Intensive Ø Teacher compensation is the primary way funds are spent in the classroom. Ø All other spending amounts to 5% of general instructional costs.

17 Similar Districts Similar Proportions Ø Higher purchased services costs for some districts usually will reflect the following: Ø Substitute fulfillment services Ø Outside paraprofessional services 8 Similar Statewide Districts General Instructional Costs Per Pupil 1 District Salaries Benefits Purchased Services Supplies Equipment Other Orange $5,977 $1,847 $141 $172 $89 $0 Chagrin Falls $4,257 $1,521 $103 $167 $115 $4 Beachwood $5,392 $1,593 $143 $126 $176 $0 Solon $4,768 $1,312 $356 $140 $77 $1 Copley-Fairlawn $3,256 $1,004 $430 $187 $55 $6 Hudson $3,902 $1,204 $61 $162 $28 $0 Indian Hill $4,899 $1,656 $127 $144 $20 $0 New Albany-Plain $3,610 $1,142 $231 $62 $7 $4 1 General Fund Expenditures for Fiscal Year Source: Ohio Department of Education via Forecast 5

18 The Leading Driver of Costs Per Pupil Ø General Teacher Salaries Ø Regular Salaries, including sick and personal leave. Ø Some Supplemental Compensation payments. Ø Severance Pay under certain circumstances.

19 Similar District Total Teacher Salaries $20,000,000 Instructional Salaries Cost Total: 8 Statewide Similar Districts $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Orange Beachwood Chagrin Falls Solon Copley-Fairlawn Husdon Indian Hill New Albany-Plain Ohio Department of Education Fiscal Year 2014 Data

20 Teacher Salaries Drive School Spending Ø Similar Districts Yet Dissimilar Spending Ø Smaller Similar Districts trend toward spending more per pupil. Ø The difference ties closely to curriculum offerings and class size. 8 Similar Statewide Districts General Teacher Salary Costs 1 District General Teacher Salaries Total Salaries Per Pupil Per Pupil Difference to Orange Orange $12,343,290 $5,752 $0 Chagrin Falls $8,320,391 $4,117 $1,635 Beachwood $7,853,469 $5,250 $502 Solon $19,258,192 $3,960 $1,792 Copley-Fairlawn $9,739,434 $3,064 $2,688 Hudson $15,370,797 $3,355 $2,397 Indian Hill $8,761,697 $4,549 $1,203 New Albany-Plain $16,918,571 $3,548 $2,204 1 General Fund Expenditures for Fiscal Year Source: Ohio Department of Education via Forecast 5

21 The Bounds of Business Intelligence Ø A lens for viewing data Ø Business Intelligence is about deploying Quantitative information for analysis. Ø Proper decision making also requires deploying Qualitative information. Ø Synthesizing both is essential for achieving desired results.

22 BUSINESS INTELLIGENCE PROJECT Installment 1: The Leading Component of School Expenditures Presented By: Todd Puster, Treasurer/CFO March 28, 2016