Capital Revenue Projections Presented to the Finance Committee May 31, 2008
Millage Growth as of June 4, 2008 The FY 2008 Five Year Plan was based on growth of 4.5% per year. The state projection for the School Taxable Value for Palm Beach County for FY 2009 is 0.36%. The preliminary estimate from the Property Appraiser s Office is a decrease of 2.62% This will result in a reduction of both millage and COPs revenue. COPs borrowing allows the District to leverage millage dollars. As millage revenue is reduced, the impact on COPs capacity is compounded. Revenue projections are further impacted by the recently approved property tax legislation. 2
Palm Beach County Tax Roll Growth 25.00% 23.79% 20.00% 15.00% 16.84% 10.00% 11.14% 11.54% 12.93% 5.00% 5.57% 5.57% 0.00% 0.36% -2.62% -5.00% FY03 FY04 FY05 FY06 FY07 FY08 FY09 State Projection Preliminary Tax Roll Actuals FY03 FY04 FY05 FY06 FY07 FY08 FY09 Gross Taxable Assessed Value $ 88,507,775,931 $ 98,725,683,959 $ 111,489,842,579 $ 130,262,743,363 $ 161,252,193,452 $ 170,229,136,344 $ 170,848,264,425 Change from prior year 11.14% 11.54% 12.93% 16.84% 23.79% 5.57% 0.36% Preliminary Tax Roll $165,769,845,131-2.62% 3
Financial Impact of State Tax Roll Estimate and Legislative Changes Five Year Plan 4.5% growth State Projection 0.36% growth Preliminary Tax Roll Financial Impact 2008 Taxable Property Value $177,889,447,479 $170,841,961,235 $165,769,845,131 ($12,119,602,348) Adjusted for collections x 95% $168,994,975,106 $162,299,863,173 $157,481,352,874 Impact to Capital Projects Funds Budget: Property Values 2.000 mills $337,989,950 $324,599,726 $314,962,706 ($23,027,244) Millage Reduction 1.75 mills $337,989,950 $275,592,368 ($62,397,583) 4
Debt Policy C. Measures of Debt Levels and Debt Issuance Limits 2. Long Term Debt b) For Certificates of Participation The measure shall be lease payments as a percentage of Capital Outlay Millage dollars and shall not exceed 50% of the authorized Capital Outlay Millage, unless approved by a supermajority of the School Board. Additionally, the District will comply with the various Florida statutory requirements and education regulations, and take into account other factors suggested or required by the credit rating agencies and/or bond insurers when preparing its capital budget and each specific plan of finance. 5
Debt Policy Implications and Considerations Florida Statue limits the debt service of COPs to three-fourths of the capital millage levy (now 1.31 mills). The current debt policy further limits the debt service of COPs to half of the capital millage levy. That was added based on the recommendation of rating agencies and financial advisor to provide adequate debt coverage and to ensure that funds were available for other capital needs. Past practice has been to divide the capital millage in half. Half was used for construction or the debt associated with construction projects. The other half was used for non-construction items such as maintenance, school busses, and technology. As the capital millage levy has been reduced to 1.75 mills, the current policy would dictate that only half, or.875 mill should be used for debt service of COPS. The debt service for currently outstanding COPS will equate to.95 mills in FY09 which is greater than allowed under our current debt policy. 6
Debt Service Analysis COPs Currently Outstanding COPs Issued as Planned in FY09 Reduced COP Issuance in FY09 Outstanding COPs 2,003,198,634 2,209,833,533 2,084,198,634 COPS Issued in FY09-206,634,899 81,000,000 FY09 Debt Service 149,740,333 158,518,034 155,839,216 Millage Required Millage Required for Debt Service 0.95 1.01 1.00 % Millage Required Projected Revenue (4.5% growth) 44.30% 46.90% 46.11% Preliminary Revenue (2.62% decline) 47.54% 50.33% 50.00% Preliminary Revenue and Millage Reduction (1.75 mils) 54.33% 57.52% 56.55% 7
Debt Service Analysis The previous slide illustrates that even if no COPs are issued in FY09, the District will need more than 50% of the capital millage level for debt service. The Debt Policy will need to be revised to accommodate the new millage levy. The allocation of capital monies between construction and non-construction projects will need to be modified as more than half of the revenues are needed for the current debt service payments. If the allocation was changed so 1 mill was used for construction, not only would debt service be met but some of the planned projects could be built..75 mills would be allocated to non-construction projects. If the millage levy is returned to 2 mills in the future, the allocation could be increased. 8
Capital Revenue Projections for FY2009 Estimated Revenue Original Projection Revised Projection Decrease State Sources Class Size Reduction - - - CO & DS 1,043,974 1,043,974 - PECO Bonds - Maintenance 9,030,522 5,358,606 (3,671,916) PECO Bonds - Construction 2,025,574 3,794,778 1,769,204 12,100,070 10,197,358 (1,902,712) Local Sources Special Millage 337,989,956 $275,592,368 (62,397,588) Impact Fees 14,000,000 2,739,310 (11,260,690) Interest Income 8,000,000 3,500,000 (4,500,000) 359,989,956 281,831,678 (78,158,278) Other Revenue Sources COPs Proceeds 206,634,899 81,000,000 (125,634,899) Referendum** 121,000,000 121,000,000-327,634,899 202,000,000 (125,634,899) TOTAL REVENUES 699,724,925 494,029,036 (205,695,889) ** Referendum proceeds are directed towards repayment of commercial paper. 9
Construction Revenue Projections for 2009-2013 Estimated Revenue Original Projection Revised Projection Variance State Sources CO & DS 5,219,870 5,219,870 - PECO Bonds - Construction 8,225,252 9,994,456 1,769,204 13,445,122 15,214,326 1,769,204 Local Sources Special Millage 924,522,455 795,279,413 (129,243,042) Impact Fees 70,000,000 13,696,550 (56,303,450) Interest Income 20,000,000 9,142,857 (10,857,143) 1,014,522,455 818,118,820 (196,403,635) Other Revenue Sources COPs Proceeds 735,466,901 277,000,000 (458,466,901) Referendum** 167,000,000 167,000,000-902,466,901 444,000,000 (458,466,901) - TOTAL REVENUES 1,930,434,478 1,277,333,146 (653,101,332) ** Referendum proceeds are directed towards repayment of commercial paper. 10
Non-Construction Revenue Projections for 2009-2013 Estimated Revenue Original Projection Revised Projection Variance State Sources PECO Bonds - Maintenance 39,573,199 34,489,654 (5,083,545) 39,573,199 34,489,654 (5,083,545) Local Sources Special Millage 924,522,455 596,459,560 (328,062,895) Interest Income 20,000,000 6,857,143 (13,142,857) 944,522,455 603,316,703 (341,205,752) TOTAL REVENUES 984,095,654 637,806,357 (346,289,297) 11
Closing Comments Since 2002, the School District has built 28 new schools, replaced or modernized 34 existing schools and built 28 additions. There are currently 3 new schools, 11 modernizations and 18 additions under construction. The District is well ahead of other Florida School Districts in meeting class size reduction and improving the condition of our schools. However, there is still work to be done. The FY08 Five Year Plan included 6 new schools, 7 modernizations and 9 additions that have yet to be fully funded. Other projects were planned beyond the five year window. 12
Discussion 13