Page 34 - Hudson CAFR Report 2018

HUDSON CITY SCHOOL DISTRICT
SUMMIT COUNTY, OHIO

MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2018

(UNAUDITED)

Governmental Activities

The information necessary to restate the 2017 beginning balances and the 2017 OPEB expense amounts for the effects of
the initial implementation of GASB 75 is not available. Therefore, 2017 functional expenses still include OPEB expense
of $156,992 computed under GASB 45. GASB 45 required recognizing OPEB expense equal to the contractually
required contributions to the plan. Under GASB 75, OPEB expense represents additional amounts earned, adjusted by
deferred inflows/outflows. The contractually required contribution is no longer a component of OPEB expense. Under
GASB 75, the 2018 statements report negative OPEB expense of $2,646,817. Consequently, in order to compare 2018
total program expenses to 2017, the following adjustments are needed:

Total 2018 program expenses under GASB 75 $ 39,478,263
2,646,817
Negative OPEB expense under GASB 75 193,642
2018 contractually required contributions
42,318,722
Adjusted 2018 program expenses 70,461,481

Total 2017 program expenses under GASB 45 $ (28,142,759)
Decrease in program

expenses not related to OPEB

Net position of the District’s governmental activities increased $37,194,494 due to an increase in revenues combined
with a decrease in expenses.

Total revenues for governmental activities increased $10,043,862 or 15.07%, mostly due to an increase in property taxes
revenue. Collections increased in fiscal year 2018 as a result of higher assessed property values in addition to a new debt
service tax levy which became effective January 1, 2018. The increase in property taxes was sufficient to cover a
decrease in unrestricted grants and entitlements, which resulted from the continued phase-out of tangible personal
property tax loss reimbursements from the State.

Expenses of the governmental activities decreased $30,983,218 or 43.97%. This is primarily the result of the State
Teachers Retirement System (STRS) indefinitely suspending the Cost of Living Adjustment (“COLA”) and the School
Employees Retirement System (SERS) lowering the COLA from 3.00% to 2.50%. On an accrual basis, the District
reported $(24,817,454) in pension expense and $(2,646,817) in OPEB expense mainly due to these benefit changes.

The following graph presents the District’s governmental activities revenues and expenses for fiscal years 2018 and
2017.

Governmental Activities - Revenues and Expenses

$80,000,000 $76,672,757 $70,461,481 $66,628,895
$60,000,000 $39,478,263
$40,000,000 Expenses
$20,000,000 2018 Revenues

$-

2017

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