1. Board of Trustees Committee of the Whole Meeting June 22, 2015 Budget Resolutions

2. For Consideration and Vote Final Amended 2014-2015 Budget Initial 2015-2016 Budget Millage Authorization (Operating, Debt) Tuition and Fee Recommendation beginning Winter 2016

3. FINAL FY14-15 AMENDED BUDGET: G ENERAL F UND

4. Final FY14-15 General Fund Budget R EVENUES Overall downward amendment to revenue is $137,000; (-0.18%) change from February 2015 amendment Tuition and Fees Grants and Other $150 thousand due to lower than anticipated enrollment & contact hour decrease $13 thousand due to slightly higher activity than expected

5. Final FY14-15 General Fund Budget E XPENDITURES Amended downward by $233,000; (-0.31%) Savings in contracted services, materials & supplies, and bad debt expense $170,529 due to course section management and release of open position pool $146 thousand net, increase of $150,000 to capital outlay and a reduction of $3,500 in designated scholarships. Non- salary related expenses Transfers Salary & Fringe Benefits

6. Final FY14-15 General Fund Budget SUMMARY 13-14 A CTUAL 14-15 A MEND #1 14-15 A MEND #2 Revenues $ 74,945,931$ 75,699,657$ 75,562,182 Expenditures 75,239,218 75,538,814 75,305,519 Excess (Deficit) Revenues Over Expenditures $ (293,287)$ 160,843$ 256,663 Budgeted Increase in Net Assets 0.00 (250,000) Final Surplus $ 0.00 $ 6,663 Net Assets– Beginning $ 6,581,160$ 6,287,877 Net Assets – Ending $ 6,287,873$ 6,448,720$ 6,544,540 Net Asset Balance Percent* 8.36%8.54%8.69% * Target = 5% - 10% of expenditure budget

7. Final FY14-15 General Fund Budget NET RESULTS OF AMENDMENT:  6/30/2015 projected to end with $256,663 increase in Net Assets  NET ASSETS: $95,820 higher than the February Amended Budget

8. MCC 8

9. Funding Sources 2015 -2016 State Aid Tuition Property Taxes Debt Operating

10. THEN and NOW State Funding $15,344,107 State Funding $15,813,494

11. Projected Property Tax Funding FYE 2010 through FYE 2016 ($19.4 Million lost since 2009-2010) $3.1 M $1.3 M $500K

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

13. Rise in Costs MCC 13

14. % Budget to Cover Fixed/Variable Costs MCC 14

15. Salaries/Benefits as % of Budget +4%+6%+8% +7% +2% MCC 15

16. Tuition & Financial Aid Total aid comprises 77% of MCC’s total tuition revenue

17. Pell Awards

18. Pell Award & Cost of Tuition M OTT C OMMUNITY C OLLEGE I N -D ISTRICT (P UBLISHED F OR 14-15) E ASTERN M ICHIGAN U NIVERSITY Pell Awarded (14-15) $5,730 Tuitions & Fees (30 contact hours) $4,402$8,244 Books & Supplies $1,000 Difference $328- $3,514 Student receives remaining balance Student needs unmet

19. Pell Distribution – 2014/2015 A WARDED E DUCATIONAL T UITION & F EES E DUCATIONAL B OOKS & S UPPLY C HARGES R EMAINING AWARD RETURNED TO STUDENTS $ 20,033,668 $ 16,346,346$ 2,179,537$ 1,507,786 2015/1 to 2015/4 - Preliminary Approximately 6,500 Students

20. Deferred Maintenance  Planned maintenance not performed when scheduled  Usually lack of funding – liability to college  Leads to earlier asset replacement due to premature end of life

21. 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.”

22. Deferred Maintenance w/o ITS (72) MCC 22 *Does not include maintenance issues that will accumulate annually

23. Reserve Savings Levels Mandated by Board Policy MCC 23 $7,250,000 General Fund (01) 5 – 10% $725,000 Rainy Day (02) 1% $5,594,642 Capital Reserve (72 & 78) 1 - 3% + + = $13,569,642 $10,191,435 06/30/2014 Actual Balance

24. Projected Reserve Balances 24 June 30, 2014 Actual $6,287,873 GF $750,000 Rainy Day $3,226,911 Capital Reserve Balance $10,264,784 June 30, 2015 Projected $250,000 GF$0 Rainy Day ($232,998) Capital Reserve 1 Balance $10,281,786 June 30, 2016 Projected $250,000 GF$0 Rainy Day $100,000 Capital Reserve ($232,998) Capital Reserve 1 Balance $10,398,788 June 30, 2017 Projected $250,000 GF$0 Rainy Day $500,000 Capital Reserve ($232,998) Capital Reserve 1 Balance $11,015,790 1 Lapeer Installment Purchase Payment

25. Michigan Community College Fund Balances (Peer Group) MCC 25 1 Total includes General Fund, Auxiliary Fund, Designated Funds and Plant Funds

26. Enrollment Trends 2008 – 2016 Unduplicated Head Count Contact Hours MCC 26

27. THE IMMEDIATE STRATEGIC PLAN MCC 27 Recruiting & Branding/Marketing Dual Enrollment EC Strategy

29. Relevant Board Policies Budget revisions will be brought forward for Board action as necessary, but not less than twice per year. 3100 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

30. Long Term 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

31. Current Year Budget Priorities Planned Decrease in Hiring $ (452,000) Reduction in Contracted Services $ (680,475) Reduction in Federal Work Study $ (270,000) Reduction in Bad Debts $ (215,000) Reduction in Internal Food $ ( 25,000) Transfer to Maintenance and Replacement $ 230,000 Transfer to Capital Reserves $ 100,000 Add to General Fund Fund Balance $ 250,000

32. Tuition & Fee Recommendation 2015 CY R ATE 2016 CY R ATE I NCREASE Per: Contact Hour In-District Rate$ 126.30$ 130.34$ 4.04 Out of District Rate$ 183.48 $ 0.00 Out of State Rate$ 261.40 $ 0.00 Institutional Technology Fee$ 7.24$ 7.47$ 0.23 Student Administrative Fee$ 8.76$ 9.04$ 0.28 Per: Semester Student Services Fee$ 126.30$130.34$ 4.04

33. Tuition & Fees: Local Comparison Tuition & Fees: Local Comparison MCC’s annual cost is approximately one half of the next lowest cost college/university in our area Cost is based on rates published from the Peterson’s Guide at www.petersons.com as of 6/11/2015. www.petersons.com

34. Proposed FY15-16 General Fund Budget R EVENUES – K EY A SSUMPTIONS Grants & Other Property Taxes & State Aid $225,000 property taxes and $148,000 for State Aid ($1.2) million in tuition & fees; enrollment decline Decrease in Grants & Other mostly due to a decrease in transfers in; $51,000 increase in Ballenger Trust Tuition and Fees

35. Proposed FY15-16 General Fund Budget E XPENDITURES – KEY ASSUMPTIONS Increase of $490,000 with the majority of the increase in transfers to Maintenance & Replacement and capital reserves ($453,000) No across the board increases, minimal increase in health insurance (hard cap), and blended MPSERS rate Other Expenses Salaries & Fringes Contracted Services, Materials & Supplies, & Equipment ($680,475) in contracted services; ($84,000) in materials and ($76,000) for equipment

36. Initial FY15-16 General Fund Budget 14-15 A MEND #2 I NITIAL 15-16 Revenues $ 75,562,182$ 74,602,968 Expenditures 75,305,51974,352,968 Excess (Deficit) Revenues Over Expenditures $ 256,663$ 250,000 Budgeted Increase in Net Assets (250,000) Final Surplus $ 6,663$ 0.00 Fund Balance – Beginning $ 6,287,877$ 6,694,540 Fund Balance – Ending $ 6,544,540$ 6,944,540 Fund Balance Percent* 8.69%9.34% * Target = 5% - 10% of expenditure budget

37. Proposed “Other Funds” FY15-16 Budgets  Designated Fund $2.5 Million Revenue Budget  Scholarships, Student Enrichment, Copy Machines, Paid Parking, Designated Technology Fee  Auxiliary Enterprise Fund $913,000 Budget  $587,500 Net “Profit” Supplements General Fund  Catering, Vending, Bookstore, Computer Lab Printing, Lapeer Campus Auxiliary

38. Proposed “Other Funds” FY15-16 Budgets  Debt Retirement Fund  Millage rate remains at 0.87 mill to meet debt obligations  Capital Funds repair, upgrade of buildings, equipment, technology & vehicles  Instructional Technology Fee = $1.47 Million per year  $995,000 per year planned transfer from General Fund (minimum required annual expenses plus reserves)

39. Based on 2013 – 2014 ACS Data

40. Current Year Comparison of State of Michigan Peer Group Property Tax Revenue

41. Current Year Comparison of State Aid

42. Board of Trustees Committee of the Whole Meeting June 22, 2015 Questions or Comments? Larry Gawthrop, CFO (810) 762-0525 larry.gawthrop@mcc.edu Details Provided with Board Resolutions 1.39 and 1.40