1. the way forward… …all things are possible dreams start here… not just classes… learn expand grow

2. Review Calendar The Way Forward DateGroupAgenda x 1/10/2013BOTPreview of some elements x2 1/25/2013Planning CommitteePreview of some elements PRELIMINARY DRAFTS OF TWF x3 1/29/2013Academic Senate Feedback on Instructional reorganization. May also be an opportunity for reviewing other elements. x4 1/30/2013Council of PresidentsReview of preliminary document x5 1/30/2013President’s StaffFeedback on working draft. To include discussion of budget process x6 1/31/2013BOTWork session – working document x7 2/1/2013Planning CommitteePresent preliminary doc/info x8 2/5/2013Foundation Executive CommitteePresent Draft (PPT and/or Doc) x9 2/12/2013Academic SenatePresent Draft (PPT and/or Doc) x10 2/14/2013BOTUpdate on comments rec’d, progress, other x11 2/19/2013ASNVC/Student BodyOpen forum for students x12 2/20/2013Classified SenateReview Final Draft (PPT and/or Doc) x13 2/25/2013Council of PresidentsReview Final Draft (PPT and/or Doc) x14 2/28/2013BOTWork session - financial context & projections, YTD budget review, x15 3/1/2013Planning CommitteeReview highlights - financials, YTD budget, etc 16 3/7/2013Information SessionReview highlights - gather feedback 17 3/14/2013BOTReview highlights - gather feedback FINAL TWF 18 4/11/2013BOTPresent Final Draft document 19 4/12/2013Campus communityFinalize & Circulate Final draft document 20 4/25/2013BOTEndorse & Support The Way Forward

3. Objectives of The Way Forward Presentations

4. Planning Priorities The Way Forward In December of 2012, the Planning Committee approved the 2013/2014 Planning Priorities for recommendation to the Board of Trustees & the Board adopted them as presented. The Planning Priorities list included Goals 2.4, 6.1, and 7.1 under the heading “Fiscal Planning: Develop a long-term, comprehensive fiscal plan”

5. Viability, Stability, Vitality The Way Forward

6. Developed by the Planning Committee & Board Approved 2011-2014 Strategic Plan Added to the SP by the Planning Committee and Board Approved Goal 7 – Fiscal Stability Proposed strategic initiatives per Goal 7 The Way Forward 2013/2014 and beyond Budget & Unit Plans Background of The Way Forward

7. Planning Priorities The Way Forward NumberStrategy Activities/Measures (To Report Progress) 7.1 Develop a comprehensive plan to create long-term fiscal viability, stability and vitality. 7.1.1 Reorganize and realign the institutional structure to increase efficiency and reduce costs. 7.1.2 Identify programs and services for discontinuance, suspension, or reduction to reduce costs. 7.1.3 Pursue enhanced (“braided”) revenue opportunities. (see also: Strategies 2.1, 2.3, 6.1, 6.2, 6.3. 7.1.4 Consider personnel related budget reduction actions. Goal 7. Fiscal Stability Napa Valley College will maintain fiscal stability and maintain a 5% reserve. In order to achieve this goal the college will assess and evaluate programs, courses, services using staffing matrices, policies, procedures, best practices, legal and contractual guidelines to maintain expenditures within the approved budget and maintain a minimum of a 5% reserve.

8. Planning Priorities The Way Forward NumberStrategy Activities/Measures (To Report Progress) 2.4 6.1 Prepare students for licensure, certification, continuing education, and advanced education Secure additional funding from private sources through the Napa Valley College Foundation 2.4.1 Develop fee-based classes and workshops as needed for training, community education, and to improve success on licensure exams. 6.1.1 Implement the Napa Valley College Foundation Strategic Plan 6.1.2 Annual reports by the Foundation will measure success to goal completion including funding sources, funds raised, and projects funded. Goal 2. Partnerships for Economic and Workforce Development Napa Valley College will collaborate with community partners to identify current and emerging labor market needs. In order to achieve this goal, the college will create innovative practices for workforce education, respond to local needs for economic development and workforce preparation, develop targeted workforce skills training; and, encourage industry specific professional development opportunities for workers. Goal 6. Resource Development Napa Valley College will augment financial resources. In order to achieve this goal the college will increase philanthropy from the community, develop contract education, expand fee-based education, and seek financial assistance from diverse sources.

9. Document Overview Section I – Introduction & Purpose Section I—Overview  Introduction  Purpose & Premise of the TWF Multi-Year Plan  Guiding Principles (Includes overview of reorg/realign)  Process & College Governance  Viability Phase  Stability Phase  Vitality Phase The Way Forward is a multi-year comprehensive financial plan that will provide a roadmap for NVC to establish & maintain a balanced budget through increased efficiencies and braided funding sources. Section I of The Way Forward document will present an introduction, overview, processes and definitions.

10. Viability, Stability, Vitality The Way Forward The ultimate goal of Viability is to achieve financial equilibrium through a balanced budget. The ultimate goal of Stability is to maintain financial equilibrium with a balanced budget. The ultimate goal of Vitality is to fund growth with a balanced budget.

11. Sequence The Way Forward Revise graphic – show TWF as a response to Goal 7 – not in the process…

12. Document Overview Section II – Historical Context Section II—Historical Context of College  Five Year History of College Finances  FON/50% Law  General Fund Reserves & Uses (Offset Budget Deficits)  Other Post-Employment Benefits and Actuarial Studies  Retiree Liability Funding Plan  MEASURE N – Facilities Bond (Series A, B, & C)  Capital Outlay and Unfunded Scheduled Maintenance  FTES and Current Funding Mechanisms – Apportionment, Grants, etc. Section II of The Way Forward will describe NVC’s current financial realities and begin to identify challenges and opportunities.

13. Revenue Section II – Historical Context & Projection for 12/13 Between fiscal year 2007/2008 and 2011/2012, total college revenue fell from $43.3 million to $38.8 million, a reduction of $4.5 million or 10%.

14. Revenue 2012/2013 (projected) Section II – Historical Context Total Projected Revenue: $39,556,018

15. Grant & Categorical Funding Section II – Historical Context Fiscal YearRevenueExpendituresInc./Dec. FY 07-08$8,927,804$7,927,804 FY 08-09$8,936,122$7,936,122$8,318 FY 09-10$7,812,753$6,812,753($1,123,369) FY 10-11$7,448,956$6,448,956($363,797) FY 11-12$7,441,088$6,441,088($7,868)

16. Expenditures Section II – Historical Context & Projection for 12/13 Between fiscal year 2007/2008 and 2011/2012, total college expenditures fell from $45.1 million to $40 million, a reduction of $4.4 million or 11%.

17. All Funds – Total College Budget Section II – Historical Context Surplus or (Deficit) ($1,908,174) $1,094,100 $127,567 $ 1,576,483 ($1,539,510) ($490,300)

18. Reserve Balance Section II – Historical Context

19. General Fund Apportionment Section II – Historical Context

20. Grant & Categorical Funding Section II – Historical Context SLIDE NOT FINAL

21. Grants & Categoricals Section II – Historical Context

22. Other Post Employment Benefits (OPEB) Funding Plan Section II – Historical Context Sample ten-year funding plan of ARC shortfall based on March 2011 Actuarial Valuation ($1,808,294): BOARD APPROVEDDEC 2011 (Please note, the amount of ARC liability will vary based on future actuarial studies.) Year2011-122012-132013-142014-152015-162016-172017-182018-192019-202020-21 Projected Shortfall$1,808,294 % to be funded10%20%30%40%50%60%70%80%90%100% Total per Year$180,829$361,659$542,488$723,318$904,147$1,084,976$1,265,806$1,446,635$1,627,465$1,808,294 Fund allocations for 2011-12 & 2012-13 are complete. The 2013-14 Budget is in development & a recommendation on OPEB funding is pending. Fund allocations for 2011-12 & 2012-13 are complete. The 2013-14 Budget is in development & a recommendation on OPEB funding is pending.

23. Headcount Section II – Historical Context

24. Faculty Obligation Number (FON) Section II – Historical Context In 2010, 2011, & 2012, NVC met the obligation through an alternate method of compliance (based on full-time faculty ratios).

25. Document Overview Section III – Financial & Non-Financial Indicators Section III—Financial & Non-Financial Indicators Financial Ratios o Primary Reserve Ratio o Net Income Operations Ratio o Viability Ratio Implications of the Financial Ratios for NVC Chancellor’s Office Fiscal Health Checklist Non-Financial Indicators o Audit Opinions o Community College Leadership Implications of Non-Financial Ratios for NVC Using financial ratios and other metrics, The Way Forward will identify areas of risk related to operating procedures, particularly those related to finance.

26. Financial Ratios Section III – Financial & Non-Financial Indicators Financial Ratios 2007-082008-092009-102010-112011-12 Primary Reserve: This ratio focuses on the ability to cover one year’s expenses with unrestricted net assets (those assets quickly available to the college). Is the institution operating within available resources? The Chancellor’s Office minimum is 5% reserve. A prudent threshold, based on historical data is closer to 10%. 6.37%7.55%9.96%15.75%10.76% Net Operating Revenues: This ratio focuses on the surplus (or deficit) revenues the college generates. A deficit in a single year does not necessarily indicate a problem, but deficits over several years are a cause for concern and suggest the need for restructuring institutional finances. -5.56%3.04%0.38%4.73%-4.89% Viability: This ratio represents the college’s capacity to support long- term debt if operational income changes. Is the institution able to meet its entire debt obligation with expendable assets? The acceptable minimum is 1.0. Dropping below 1.0 may identify the college as a potential credit risk. 1.561.862.313.452.22

27. Implications of Financial Ratios Section III – Financial & Non-Financial Indicators

28. Fiscal Health Checklist Section III – Financial & Non-Financial Indicators Pursuant to Education Code Section 84040, the Board of governors is required to adopt criteria and standards for the periodic assessment of the fiscal condition of California community college districts. In October 2005, the State Chancellor’s office, in accordance with this requirement, issued standards for the sound fiscal management and a process to monitor and evaluate the financial health of California’s community college districts. The purpose of these standards and the self-assessment results are multi- faceted: Early warning indicator for the Chancellor’s office -- to identify those districts that may benefit from preventative management assistance or that require fiscal crisis intervention A tool for local districts to prompt institutional dialogue and discussion about meaningful fiscal and management issues.

29. Fiscal Health Checklist Section III – Financial & Non-Financial Indicators Primary Criteria: General Fund Analysis that will include a review of the current, historical and projected fund balance. The main criteria for assessment will be the percentage of unrestricted general fund balance to all expenditures and other outgo of unrestricted general fund. The minimum prudent unrestricted general fund balance is 5 percent. This minimum prudent level is considered necessary to ease cash flow problems, to deal with unexpected cost increases, and other fiscal uncertainties.

30. Fiscal Health Checklist Section III – Financial & Non-Financial Indicators Secondary Criteria. Other factors that have an impact upon a district’s overall financial stability must be considered in evaluating whether or not a district has an adequate unrestricted general fund balance, including: 1. Analysis of spending patterns will include a review of the current, historical and projected revenues and expenditures. Attention will be given to districts that have a pattern of deficit spending in the current year, and greater scrutiny will be made if there is a history of deficit spending. 2. Full-Time Equivalent Students (FTES) review to include looking patterns in relation to statewide patterns and the potential impact upon revenue. 3. Staffing expenditures (salaries and benefits) increases that are expected to exceed projected revenue increases. 4. Other factors such as: a “going concern” audit finding, material internal control audit findings, pending legal actions, late filing of annual audit or financial & enrollment reports and other fiscal or administrative problems that are identified.

31. Fiscal Health Checklist Section III – Financial & Non-Financial Indicators 1. Deficit Spending - Is this area acceptable? Yes / No No Is the district spending within their revenue budget in the current year? No Has the district controlled deficit spending over multiple years? No Is deficit spending addressed by fund balance, ongoing revenue increases, or expenditure reductions? Yes Are district revenue estimates based upon past history? Yes Does the district automatically build in growth revenue estimates? No 2. Fund Balance – Is this area acceptable? Yes / No No Is the district’s fund balance stable or consistently increasing? No Is the fund balance increasing due to on-going revenue increases and/or expenditure reductions? No 3. Enrollment - Is this area acceptable? Yes / No No Has the district’s enrollment been increasing or stable for multiple years? No Are the district’s enrollment projections updated at least semiannually? No Are staffing adjustments consistent with the enrollment trends? Yes Does the district analyze enrollment and full time equivalent students (FTES) data? No Does the district track historical data to establish future trends between P-1 and annual for projection purposes? No Has the district avoided stabilization funding? Yes 4. Unrestricted General Fund Balance – Is this area acceptable? Yes / No Yes Is the district’s unrestricted general fund balance consistently maintained at or above the recommended minimum prudent level (5% of the total unrestricted general fund expenditures)? Yes Is the district’s unrestricted fund balance maintained throughout the year? No 5. Cash Flow Borrowing - Is this area acceptable? Yes / No Yes Can the district manage its cash flow without interfund borrowing? Yes Is the district repaying TRANS and/or borrowed funds within the required statutory period? Yes

32. Fiscal Health Checklist Section III – Financial & Non-Financial Indicators 6. Bargaining Agreements - Is this area acceptable? Yes / No Yes Has the district settled bargaining agreements within new revenue sources during the past three years? N/A Did the district conduct a pre-settlement analysis identifying an ongoing revenue source to support the agreement? N/A Did the district correctly identify the related costs? Yes Did the district address budget reductions necessary to sustain the total compensation increase? 7. Unrestricted General Fund Staffing - Is this area acceptable? Yes / No Yes Is the district ensuring it is not using one-time funds to pay for permanent staff or other ongoing expenses? Yes Is the percentage of district general fund budget allocated to salaries and benefits at or less than the statewide average (i.e. the statewide average for 2003-04 is 85%)? Yes 8. Internal Controls - Is this area acceptable? Yes / No Yes Does the district have adequate internal controls to insure the integrity of the general ledger? Yes Does the district have adequate internal controls to safeguard the district’s assets? Yes 9. Management Information Systems - Is this area acceptable? Yes / No Yes Is the district data accurate and timely? Yes Are the county and state reports filed in a timely manner? Yes Are key fiscal reports readily available and understandable? No 10. Position Control – Is this area acceptable? Yes / No Yes Is position control integrated with payroll? Yes Does the district control unauthorized hiring? Yes Does the district have controls over part-time academic staff hiring? Yes

33. Fiscal Health Checklist Section III – Financial & Non-Financial Indicators 11. Budget Monitoring - Is this area acceptable? Yes / No Yes Is there sufficient consideration to the budget, related to long-term bargaining agreements? Yes Are budget revisions completed in a timely manner? Yes Does the district openly discuss the impact of budget revisions at the board level? Yes Are budget revisions made or confirmed by the board in a timely manner after the collective bargaining agreements are ratified? Yes Has the district’s long-term debt decreased from the prior fiscal year? Yes Has the district identified the repayment sources for the long-term debt? Yes Does the district compile annualized revenue and expenditure projections throughout the year? No 12. Retiree Health Benefits - Is this area acceptable? Yes / No Yes Has the district completed an actuarial calculation to determine the unfunded liability? Yes Does the district have a plan for addressing the retiree benefits liabilities? Yes 13. Leadership/Stability - Is this area acceptable? Yes / No No Has the district experienced recent turnover in its management team (including the Chief Executive Officer, Chief Business Officer, and Board of Trustees)? Yes 14. District Liability – Is this area acceptable? Yes / No No Has the district performed the proper legal analysis regarding potential lawsuits that may require the district to maintain increased reserve levels? No Has the district set up contingent liabilities for anticipated settlements, legal fees, etc? No 15. Reporting – Is this area acceptable? Yes / No Yes Has the district filed the annual audit report with the System Office on a timely basis? Yes Has the district taken appropriate actions to address material findings cited in their annual audit report? Yes Has the district met the requirements of the 50 percent law? Yes

34. Non-Financial Indicators Section III –Financial & Non-Financial Indicators Non-Financial Indicators Audit opinions: Is there a qualified or adverse opinion in either a recent financial statement or single audit? This indicator addresses issues like: Poor internal controls, financial controls, and leadership can quickly lead to the mismanagement and breakdown of a community college’s financial strength College leadership: Leadership is a critical factor for any institution. Have the CEO or CFO positions been stable and held by only one or two people over the prior 5 years? Limited turnover in key positions is critical to providing a consistent direction for the institution. Planning: Having current, documented, available, and results oriented planning materials provides a clear, consistent direction for the institution. Does the college have a deferred maintenance schedule updated within the last 3 years? Does the Board approve the strategic plan and deferred maintenance schedule? Does it use a quantitative method to assess the college’s progress toward those plans at least annually?

35. Leadership Checklist Section III –Financial & Non-Financial Indicators Have the CEO or CFO positions been stable and held by only one or two people over the prior 5 years? Does the college have a strategic plan updated within the last 3 years that is posted online and available to the public? Does the college have a deferred maintenance schedule updated within the last 3 years? Does the Board approve the strategic plan and deferred maintenance schedule? Does it use a quantitative method to assess the college’s progress toward those plans at least annually? Does the college have Board-approved policies, including formal financial policies that have been reviewed within the last 3 years? Is the Board informed about any instances of fraud or litigation and actions taken in response? Is at least one member of the Board trained in reviewing public financial statements?

36. Fiscal YearBuilding/AreaProject Type Cost 2014PoolFilters $100,000 2014600Roof $230,000 20143100Roof $110,000 2014800/1000Roof $209,000 2014600HVAC $687,000 2014600Controls $130,000 2014Bus StopSouth Approach $100,000 2014600Carpet $33,000 2014600Lower floor plumbing $450,000 20141500ADA elevator replace $486,000 2014PoolExpansion joints/deck $120,000 2014UVCA Boiler $50,000 2014UVCB Boiler $40,000 2014Parking LightsSouth & East $450,000 2014Parking LotsResurface $80,000 2014Tennis CourtResurface $40,000 2014 Total$3,315,000 NVC annually updates the Deferred Maintenance list for submission to the Chancellor’s Office. Deferred Maintenance has not been funded by the state since 2009/2010. Financial Indicators – Deferred Maintenance Section III –Non-Financial Indicator - Planning

37. Section IV— ‘Ensuring Viability’2012/13-2013/14 Objectives & Timelines Cost Reduction Strategies Personnel Reductions – deferred replacements, elimination of part-time hourly employees Reorganizations/realignments In-house Educational Master Plan; Funding Strategies Development of Braided Funding: Consolidated Fee-Based Services, Programs & Grants, Related Revenues The ultimate goal of Viability is to establish and maintain financial equilibrium through a balanced budget. Overview Section IV – Ensuring Viability

38. President’s Area Reorganization

39. Four Area Planning Model College Planning Areas Implemented Fall 2012

40. Previous President’s Area Structure

41. Current President’s Area

42. OIA Area—Communications The strategic communications office serves to inform students about programs, services and events that are resources to achieving their educational goals and thus contributing to their learning and success; inform employees about issues and events that help them be effective in their roles to support student learning; and keep the community aware of Napa Valley College so that it will support the college and participate in partnership opportunities

43. OIA Area—Grants The grants department supports grant-project development and implementation at the college. The office assists faculty and staff in identifying and pursuing (seeking) grant funding for programs that further institutional, divisional, departmental and programmatic goals.

44. OIA Area—Development The development department supports the cultivation of institutional resources for the college. The office works with the Napa Valley College Foundation and through the college auxiliary services foundation, external partnerships, private foundations, the college alumni association and other sources to identify and secure resources in support of the institution’s mission.

45. Modifications to President’s Area Functions Function ending as bond projects wind down Function modified and name changed to Research, Planning & Institutional Effectiveness Function expanded and name changed to Office of Institutional Advancement Functions moved to Office of Institutional Advancement & Facilities Services

46. Modifications to President’s Area Personnel Dean not replaced Exec. Director reclassified Secretary IV temporarily reassigned to interim Assoc. Director Director not replaced Director, Assistant Planner & Secretary positions eliminated Project Manager to be moved to Facilities Services Administrative support shared across units

47. Instructional Area Reorganization

48. Existing Instructional Area Structure Too many direct reports ORANGE: Position proposed to be moved in reporting structure GREEN: Position proposed to be moved and modified BLUE: Position unchanged GREY: Programs associated with moved positions (not shown on “Proposed Reorganization” chart)

49. Proposed Instructional Area Structure Streamlined reporting structure ORANGE: Position proposed to be moved in reporting structure GREEN: Position proposed to be moved and modified BLUE: Position unchanged GREY: Programs associated with moved positions (not shown on “Proposed Reorganization” chart) Programs not shown here & will remain under existing divisions

50. Administrative Services Area Reorganization

51. Previous Administrative Services Area

52. Modifications to the Administrative Services Area Title Change to VP Administrative Services Moved to Director Level to address Fiscal Services

53. Current Administrative Services Area

54. Replacement Plan Vice President of Administrative Services Area Spring 2013 Campus at Large will provide input on desirable qualifications for position and timing Director of Fiscal Services – daily operations, PO’s, payments, budget development support, etc President’s Office – contracts, travel, etc. Consultant – budget development, growth/Prop 30 analysis, other as needed Interim Risk Manager – Worker’s Compensation, Self-Insurance JPA, etc. Summer 2013 Develop and advertise for the vacant position Summer/Fall 2013 Hire new VP of Admin Services

55. Current Initiatives The Way Forward Viability:  Summer School – adding classes  Veterans Services -- +/- 10% of student body are vets  Bookstore Management Services  Request for Proposal circulating. Possible new vendor by 7/1/13. Student and staff representation on screening committee  Food Services – exploring alternatives

56. Section V – Stability2014/15-2015/16 Introduction Stability restoration building blocks (To include: GO bond/Meas L) Strategic Initiative 1: Maximize and stabilize FTE/Cap/Growth… Strategic Initiative 2: Secure Financial Strength Strategic Initiative 3: Leverage NVC’s Resources through Partnerships & Collaboration—NVC will adopt a structure to attract partnerships The ultimate goal of Stability is to maintain financial equilibrium with a balanced budget Document Overview Section V – Stability

57. Student Services Area Reorganization

58. 58 Current Student Services Area

59. 59 Proposed (Stability &Vitality) Student Services Area Position added in Stability or Vitality. Possible grants and matching funds Program/Activities in development. Program in development for Stability or Vitality.

60. 60 Other Future Plans Under Consideration (Stability &Vitality) Student Services Area Rename area to Student Affairs Reorganize area into 2-3 tiers for better efficiency on direct reporting to VPSS (i.e., enrollment services, student support programs, retention services) Infuse restored (categorical) and new funds to enhance services and encourage innovation.

61. Section VI – Vitality2016/17-2017/18 Introduction Strategic Initiative 1: Diversify, Restructure, and Strengthen Academic Programs based on the Educational Master Plan Strategic Initiative 2: Build Institutional Advancement Capacity Strategic Initiative 3: The ultimate goal of Vitality is to fund growth with a balanced budget. Document Overview Section VI – Vitality

62. Section VII – Summary References Appendices Organizational Charts Supplemental materials Budgeting & Planning Model/Processes Document Overview Section VII – Summary & References

63. Next Steps The Way Forward February 2013 Continued Constituent Group Review – through employee senates and the Planning Committee Board of Trustees Workshop – follow up workshop on 2/28/13 Campus Circulation – the final draft document will be posted and shared with the campus community March 2013 Board of Trustees Final Review – the final document will be presented to the Board for consideration and endorsement. Separate action items related to departmental reorganizations, employee position reclassifications, and out-of-class pay assignments will be included in the final review.

64. Thank You