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Board of Trustees Committee of the Whole Meeting June 18, 2014 Budget Resolutions.

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Presentation on theme: "Board of Trustees Committee of the Whole Meeting June 18, 2014 Budget Resolutions."— Presentation transcript:

1 Board of Trustees Committee of the Whole Meeting June 18, 2014 Budget Resolutions

2 For Consideration and Vote Final Amended Budget Initial Budget Millage Authorization (Operating, Debt) Tuition and Fee Recommendation beginning Winter 2015

3 FINAL FY13-14 AMENDED BUDGET: G ENERAL F UND

4 Final FY13-14 General Fund Budget R EVENUES Overall upward amendment to revenue is $2.0 Million; 2.28% change from January 2014 amendment Transfers In State Aid Up $400k$350,000 Decrease from Reserves $1.6 Million for the UAAL Rate Stabilization Payments Tuition, Grants, Property Taxes

5 Final FY13-14 General Fund Budget E XPENDITURES Amended upward by $1.3 Million; 1.73% Salaries & Fringe Benefits Savings in contracted services, materials & supplies, and utilities, increase in bad debt expense, equipment $1.6 Million for the UAAL Rate Stabilization Payments Non- salary related expenses

6 Final FY13-14 General Fund Budget SUMMARY A CTUAL A MEND # A MEND #2 Revenues $ 73,746,195$ 73,313,454$ 75,078,928 Expenditures 73,671,482 73,896,751 75,265,897 Excess (Deficit) Revenues Over Expenditures $ 74,712$ (583,297)$ (186,969) Fund Balance – Beginning $ 6,506,447$ 6,581,160 Fund Balance – Ending $ 6,581,160$ 5,997,863$ 6,394,191 Fund Balance Percent* 8.92%8.18%8.52% * Target = 5% - 10% of expenditure budget

7 Final FY13-14 General Fund Budget NET RESULTS OF AMENDMENT:  6/30/2014 projected to end with ($187,000) reduction  FUND BALANCE : $400,000 higher than the January Amended Budget

8 Reserves as Required by Board Policy #3930 F UND Fund Name General Operating Reserve Maintenance & Replacement Fund Building & Site Fund Requires 5-10% of annual operating expenses 1-3% of College depreciated assets or $3 M Amended Budget Reserve 8.5%$1.6 million$1.8 million Amount Needed to Fully Fund$1.4 million$1.2 million

9 Funding Sources State Aid Tuition Property Taxes Debt Operating

10 THEN and NOW State Funding $15,344,107 State Funding $15,306,817

11 What if Tuition Covered State Aid Losses?

12 Projected Property Tax Funding FYE 2010 through FYE 2016 ($19.4 Million lost since ) $3.1 M $1.3 M $500K

13 Enrollment and State and Local Funding per Fiscal Year Equated Students (FYES)

14 Percentage of Property Tax and State Aid of Total Funding

15 Based on 2012 – 2013 ACS Data

16 Current Year Comparison of Millage Rates / Property Tax Declines with State Grouping MCC is 3rd Highest Millage Rate, and has the Largest Property Tax Decline

17 Current Year Comparison of State Peer Group Total Revenue 4 th Lowest

18 Current Year Comparison of State of Michigan Peer Group Property Tax Revenue

19 Comparison of State of Michigan Peer Group Revenue Percentages Based on ACS Data

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21 Expenditure Reductions Eliminating and restructuring food service Was losing approximately $100K per yearNow generating $48K per year in revenues Change in timing of custodial shift Savings of approximately $170K per year Hold on vacant positions Average savings of $750K per year Energy Conservation Project Utility costs averaged 8.2% in 2003; now they are 3.1%

22 More Expenditure Reductions Discretionary budget cuts Average savings of $400K per year Course Section Efficiency Maximizing section seat count before adding new sections 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 Utility Reduction Analyst Project Resulted in $720K savings between on Telecommunications/IT, Water & Waste

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

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25 Tuition & Financial Aid Total aid comprises 78% of MCC’s total tuition revenue

26 Pell Awards

27 Pell Award & Cost of Tuition M OTT C OMMUNITY C OLLEGE I N -D ISTRICT (P UBLISHED 13-14) S AGINAW V ALLEY S TATE U NIVERSITY I N -S TATE Pell Awarded $5,730 Tuitions & Fees (30 contact hours) $4,271$7,985 Books & Supplies $1,000 Difference $459- $3,255 Student receives remaining balance Student needs unmet

28 Pell Distribution – 2013/2014 A WARDED E DUCATIONAL T UITION & F EES E DUCATIONAL B OOKS & S UPPLY C HARGES N ON - EDUCATIONAL $$ GIVEN TO STUDENTS $ 22,570,894 $ 17,655,767$ 2,659,748$ 2,255, /1 to 2014/4 - Preliminary Approximately 7,282 Students

29 THE AMERICAN OPPORTUNITY TAX CREDIT (AOTC) THE AMERICAN OPPORTUNITY TAX CREDIT (AOTC) “PELL for Most EVERYONE ELSE ?”

30 Available Financial Aid (Pell & American Opportunity Tax Credit) Pell American Opportunity Tax Credit (AOTC) “Pell for Most Everyone Else” Maximum Award$5,730$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

31 Tuition & Fee Recommendation 2013 CY R ATE 2014 CY R ATE I NCREASE Per Contact Hour In-District Rate$ $ $ 3.80 Out of District Rate$ $ $ 5.52 Out of State Rate$ $ $ 7.86 Institutional Technology Fee$ 7.02$ 7.24$ 0.22 Student Services Fee$ $ $ 3.80 Student Administrative Fee$ 8.50$ 8.76$ 0.26

32 Tuition & Fees: Local Comparison Tuition & Fees: Local Comparison MCC’s annual cost is approximately 48% of that of the next most affordable college/university in our area Cost is based on rates published from the Peterson’s Guide at as of 6/11/2014.

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34 Relevant Board Policies Budget revisions will be brought forward for Board action as necessary, but not less than twice per year B UDGET A DOPTION The College will designate and set aside appropriate fund reserves to support plans for long-term capital and operating commitments 3920 F INANCIAL S TABILITY & 3930 F ISCAL R ESERVES The Board has determined based on long-term budget projections, and other related budget data, that total compensation/ benefits should not exceed 77% of the total operating budget 5100 C OMPENSATION P HILOSOPHY

35 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 priorities7-2 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 resources7-3 Implement a comprehensive strategy to address the long-term deficit which enables us to continue to provide affordable high quality education7-4 Seek and cultivate alternative resources to supplement and/or increase existing revenue streams and funding sources

36 Proposed FY14-15 General Fund Budget R EVENUES – K EY A SSUMPTIONS Grants & Other Property Taxes Tuition & State Aid unchanged$1.5 million in tuition & fees; $430,000 in State Aid ($100,000) decrease in transfers in

37 Proposed FY14-15 General Fund Budget E XPENDITURES – KEY ASSUMPTIONS Salaries & Fringe Benefits Additional bad debt expenseNo across the board increases, minimal increase in health insurance (hard cap), and blended MPSERS rate Other Expenses

38 Initial FY14-15 General Fund Budget A MEND #2 I NITIAL Revenues 75,078,92875,430,356 Expenditures 75,265,89775,424,741 Excess (Deficit) Revenues Over Expenditures (186,969)5,615 Fund Balance – Beginning 6,581,1606,394,191 Fund Balance – Ending 6,394,1916,399,806 Fund Balance Percent* 8.52%8.45% * Target = 5% - 10% of expenditure budget

39 Proposed “Other Funds” FY14-15 Budgets Main Point is Impact on Operating Budget  Designated Fund $2.7Million Revenue Budget  Scholarships, Student Enrichment, Copy Machines, Paid Parking, Designated Technology Fee  Auxiliary Enterprise Fund $994,000 Budget  $751,750 Net “Profit” Supplements General Fund  Catering, Vending, Bookstore, Computer Lab Printing, Lapeer Campus Auxiliary

40 Proposed “Other Funds” FY14-15 Budgets Main Point is Impact on Operating Budget  Debt Retirement Fund  Millage rate remains at 0.87 mill to meet debt obligations  Capital Funds repair, upgrade of buildings, equipment, technology & vehicles ($101 million in net value)  Instructional Technology Fee = $1.55 Million per year  $765,000 per year planned transfer from General Fund (minimum required annual expenses)

41 Capital Funding Regional Technology Center

42 Link to Mission and Strategic Plans MCC’s mission statement directs the college to… “maintain its campuses, state-of-the-art equipment, and other physical resources that support quality higher education. The college will provide the appropriate services, programs, and facilities to help students reach their maximum potential.”

43 Capital Asset Funding Current 10 year needs are approximately $85 million  Taxable Values Declining  Bond Millage passed in November 2013 ($50 M)  Approx. $1.6 million in tech fees annually

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45 7 – Year Forecast  Key Assumptions – Revenue  Tuition and fee revenue increases at 1.0% each year  Property tax revenue remain flat for 1 year with slight increases ( %) thereafter  Mill Voted Operating Millage is renewed for 10 years starting with FY08-09  State appropriations increase at 1%  Other revenues increase by 2% each year  Total revenue increases by an average of 1.4%

46 7 – Year Forecast  Key Assumptions - Expenses  Salaries and wages increase by 2.5% each year  Fringe benefits increase at a rate of 2.0% each year  Total expenses increase by avg. of 2.4% each year

47 7 – Year Forecast  Projected General Fund Balance would be ($12.7) million at end of FY20-21, if current trends continued (Revenue growth of 1.4% vs. expenditure growth of 2.4%)  Based on an average projected gap of $823,000 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

48 7 Year Forecast at June 2014 R EVENUES A MENDED B UDGET I NITIAL B UDGET Tuition & Fees Property Taxes State Appropriations All Others T OTAL R EVENUE Revenue Increase (Decrease) 0.5%1.2%1.3%1.4% E XPENDITURES Salaries Fringe Benefits All Others T OTAL E XPENDITURES Expenditure Increase (Decrease) 0.1%2.6%2.4% 2.5% Surplus/(Deficit) (0.19)0.06(1.0)(1.9)(2.7)(3.6)(4.5)(5.5) Fund Balance (2.9)(7.4)(12.9) 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.

49 Board of Trustees Committee of the Whole Meeting June 18, 2014 Questions or Comments? Larry Gawthrop, CFO (810) Details Provided with Board Resolutions 1.39 and 1.40


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