1. Mott Community College Finance/Personnel Committee Meetings June 20, 2012 2012-2013 Budget/Finances

2. 2 STRATEGIC PLAN 7-0. Budget/Finance 7-1. Focus on controllable revenues and costs to sustain our current reputation and facilities and provide funding for strategic priorities 7-2. Establish short and long-term budget and finance priorities that provide a balanced approach to the needs of a learning organization with the flexibility to realign resources 7-3. Implement a comprehensive strategy to address the long-term deficit which enables us to continue to provide affordable high quality education A balanced approach _____________________________________________________________________

3. PRIOR YEAR BUDGET IMPACT 3

4. Prior Year Impact in Dollars 4 $8,128,656

5. Tuition Keeps Up with Lost Funding/Increase in Non-controllable costs for prior year 5 $54.61 $153.29

6. Prior Years Budget Balancing Steps 6

7. Prior Year Budget Cuts Decreased Hiring (Open Position Pool)$ 750,000 Cut funding to Reserves$1,150,000 Capital Funding Reduction$3,000,000 Debt Contribution$ 850,000 Cut Contingency $ 750,000 Total budgetary expenditure cuts$6,500,000 7

8. Prior Year Budget Cuts (continued) Total Budgetary Expenditure Cuts (from previous slide) $6,500,000 Prior Year Shortfall ($8,100,000) Shortfall Remaining ($1,600,000) Received from tuition increase 8

9. FUNDING SOURCES (2012-2013) State Aid Property Taxes -Operating -Debt Tuition 9

10. Trends in Funding Sources & Enrollment

11. Trends in Funding Sources & Enrollment, Fiscal Year Equated Students (FYES) 11

12. State and Local Funding Does Not Keep Up With Enrollment 12

13. Projected Property Tax Funding FYE 2010 through FYE 2016 13

14. Percentage of Property Tax and State Aid of Total Funding 14

15. CURRENT YEAR BUDGET IMPACT 15

16. FYE 2013 Impact in Dollars 16 $5,795,000

17. Tuition Keeps Up with Lost Funding/Increase in Non-controllable costs for FYE 2013 17 $40.87 $148.92

18. What if Tuition Covered State Aid Losses?

19. Current Year Budget Balancing Steps 19

20. Current Year Budget Considerations Decreased Hiring (Open Position Pool)$ 350,000 Health Insurance Savings$ 600,000 State Aid Increase$ 637,000 Cut Reserve Funding$ 620,000 Capital Funding Reduction$1,060,000 Cut Contingency $ 900,000 Total budgetary expenditure cuts$4,167,000 Beginning shortfall ($5,795,000) Shortfall remaining ($1,628,000)

21. BUDGET SHORTFALL 2012-2013 Shortfall Remaining $ 1,628,000 Tuition To Cover $9.18/contact hour

22. Tuition and Financial Aid 22

23. FEDERAL FINANCIAL ASSISTANCE PELL GRANTS 23

24. Increased Five-Fold in Ten Years

25. Pell Distribution – 10/11 Awarded Educational Tuition & Fees Educational Books & Supplies Charges Non- Educational Govt. Refund $27,919,272$18,729,369$4,491,705$4,698,199 Sample of Approx. 9,540 Students

26. Pell Distribution – 11/12 Awarded Educational Tuition & Fees Educational Books & Supplies Charges Non- Educational Govt. Refund $31,013,885 $21,128,548$4,493,632$5,391,705 Sample of Approx. 9,700 Students

27. Pell Award & Cost of Tuition Mott Community College In-District (Published 12/13) Saginaw Valley State University In-State Pell Awarded$5,550 Tuition & Fees (30 contact hours) $3,644$8,134 Books & Supplies$1,000 Difference$906-$3,584 Student Needs Unmet Student Receives Remaining Balance

28. THE AMERICAN OPPORTUNITY TAX CREDIT (AOTC) PELL for Most EVERYONE ELSE ?

29. Pell American Opportunity Tax Credit (AOTC) Pell for Most Everyone Else Maximum Award$5,550$2,500 EnrollmentSliding Scale up to full-timeAt least Half Time Income LimitsExpected Family ContributionModified AGI< $80,000 Single < $160,000 MFJ Program of StudyDegree or Certificate-Accredited Institution Can be used forTuition, fees, books, equipment, supplies, leftover can be for living expenses Tuition, fees, books, equipment, supplies Length of Award6 years4 years Other EligibilityNot convicted of a felony drug offense Available Financial Aid (Pell and American Opportunity Tax Credit) Estimated - $14.3 Billion available annually for AOTC

30. EXPANDED BENEFIT OF A REFUNDABLE CREDIT Tax Year 2011 Students Total Tax Liability equaled $1,658 They had Paid in (withheld from wages) $2,699 Refund without any credits would be $1,041 But Wait…… They were refunded with the AOTC $3,219 Only the Hope Credit?…… The refund would have been $2,348 Or a Federal Financial Aid Award of $871

31. American Opportunity Tax Credit (AOTC) How did they get this?

32. INTENT OF THE AMERICAN OPPORTUNITY TAX CREDIT That means reducing financial aid for 8 million students and leaving our community colleges without the resources they need to prepare our students for the jobs of the future. The Amelias, Maynards, Mahans…..How about the Students?

33. The Students Joe and Jane are 28 years old They are married and live in Genesee County They have a 3-year old daughter, Mary

34. More about Joe and Jane Joe went into construction right out of high school but unfortunately has been laid off more than employed for the past 4 years Jane is a paralegal, attending MCC at nights working on 3 + 1 transfer program

35. Joe and Jane in 2011 This was an especially rough year for the Students Joe was laid off most of the year and and had to collect nearly $11,000 in unemployment benefits $11K = almost 1/3 of their Household Income

36. Financial Aid Jane applied for a Pell Grant at MCC Unfortunately she was ineligible due in part to the fact that the EFC Formula considered their family earnings and Adjusted Gross Income of $39,787 too high for a family of 3 Fortunately, MCC offered a payment plan that helped tremendously Pell Grant

37. Tax Time March 2012 In March, 2102, the Students filed their tax return Due to their income level and a new Higher Education Tax credit, the Students were delighted to receive a refund of $2,178 for their tuition Net Tuition Cost for Full Time for 1 Year at MCC = $535 Comparable to Tuition and Fees in 1980-81 or $21/contact hour

38. More in 2012 Joe and Jane were advised by their CPA That Jane should reduce her federal withholdings to get more money throughout the year instead of waiting until tax time The Students were worried since Joe was back to work, their income would be too high. Their CPA informed them that the income limits were $160,000 MFJ and $80,000 Single Reduce withholdings CPA

39. More in 2012 Tax Year 2012 CPA calculated that tuition/fee amounts = $2,957 for 24 contact hours Higher Education Refund (from improved tax credit) = $2,239 Net tuition/fee for full-time = $718 or $29/contact hour or 1983-1984 rates

40. Total tuition/fees increase Annual Amount $ Increase AOTC Refundable Credit Year: 2011-2012 12 Contact Hours (PT)137.66634.79 24 Contact Hours (FT)256.60895.78 30 Contact Hours (FT)316.07964.33 Tuition Increases and Amount Refunded from the AOTC

41. $ Increase AOTC Refundable Credit 24 Hours Total tuition/fees increase 2008-2009 35.10 (826.32) 2009-2010 97.32 (836.05) 2010-2011340.73 (870.12) 2011-2012256.60 (895.78) 729.74(3,428.28) (2,698.54)

42. (2,782.79) $ Increase AOTC Refundable Credit 30 Hours Total tuition/fees increase 2008-2009 43.44 (880.05) 2009-2010 120.42 (892.09) 2010-2011406.30 (932.72) 2011-2012316.07 (964.33) 886.22(3,669.19) Tuition Increases and Amount Refunded from the AOTC

43. What Have We Done Regarding Controlling/Cutting Costs? 43

44. Expenditure Reductions 1)Energy Conservation Project - Utility costs averaged 8.2% in 2003, Now they are 3.1% 2)Hold on vacant positions Average savings of $750K per year 3)Change in timing of custodial shift Savings of approximately $170K per year 4)Eliminating and restructuring food service Was losing approximately $100K per year Now generating $48K per year in revenues 44

45. Expenditure Reductions 5)Utility Reduction Analyst Project Resulted in $720K savings between 2004-2010 on Telecommunications/IT, Water, and Waste 6)Employee Contract Bargaining Employees agreed to pay freezes with incremental increases over 9 years at 1.35% Industry average is 2.8% – Savings of $460K per year 7)Course Section Efficiency Maximizing section seat count before adding new sections 8)Discretionary budget cuts Average savings of $400K per year 45

46. Expenditure Reductions 9)Reduction of ORP (optional retirement plan) costs Average annual savings of $400K 10)Combining Deans position Fine Arts and Social Science combined saving $168K per year 12)Outsourcing custodial and grounds work at sites Savings of approx. $350K per year 13)Health Insurance changes to coverage and plans Savings $550K 14)New print shop lease Savings of $200,000 per year 15)New Auditors Savings of $60,580 over five years 46

47. Compensation as a Percentage of the General Fund Budget Compensation expense would be $1.25 M higher if it was at 2001 levels as a percentage of budget. Ten year average salary increases are 1.35%.

48. A Comparison to 7 Other Michigan Peer Community Colleges Based on 2010 –2011 ACS Data

49. Fall 2011 Tuition and Fees MCCBOA Group 3

50. 2011-2012 Out of District Tuition and Fees

51. MCC is 3 rd Lowest in Millage Rate, and has the Largest Property Tax Decline

54. 54

56. MCC is 4 th lowest in Total Revenue

57. Tuition & Fees: Local Comparison CollegeYearly Tuition & Fees Mott CC 3,644 Saginaw Valley University 8,134 Eastern Michigan University8,637 University of Michigan - Flint 9,182 Oakland University 9,938 Baker College - Flint10,080 Ferris State University 10,440 Central Michigan University 10,950 University of Michigan – Ann Arbor12,634 Michigan State University12,821 Davenport University 15,150 ITT Technical of Flint31,272 Kettering University 33,946 Cost as based on in district/state rates from the Colleges web sites MCCs annual cost is approximately 45% of that of the next most affordable college/university in our area. 57

58. COMPARISON PRIOR YEAR/CURRENT YEAR 58 20122013

59. Reserve Requirements 59 In millions Still need $757K Still need $1 mil Still need $92K Adequately funded

60. 60

61. Key Assumptions – Revenue Tuition and fee revenue increases at 3.9% each year Property tax revenue decreases for 1 year with flat and slight increases (1.5-2.5%) thereafter 0.6410 Mill Voted Operating Millage is renewed for 10 years starting with FY08-09 State appropriations increase at 3% for two years and 2% increases thereafter Other revenues increase by 2% each year Total revenue increases by avg. of 2.8% 61

62. Key Assumptions - Expenses Salaries and wages increase by an average of 3.35% Fringe benefits increases at a historical average rate of 4.5% each year Other expenses increase by avg. of 3% each year Total expenses increase by avg. of 3.7% each year 62

63. Projected General Fund Deficit would be $12.9 Million at end of FY18-19, if current trends continued (Revenue growth of 2.8% vs. expenditure growth of 3.7%) Based on an average projected gap of $3.2 million per year to be filled with budget-balancing solutions Short-term savings and flexibility continues to be key Long-term strategy of managing total compensation costs 63

64. 7 Year Forecast at June 2012 Forecasts:>>>>>>>>>>>>>>>>>>> Note: the forecast illustrates proforma data if current trends were to continue. The College is obligated to balance its budget each year and will take necessary steps to do so. 64

65. COMMENTS/QUESTIONS? 65