Budget Development and Assumptions for 2018-19 District Budget Forums April 17 - 19, 2018

Update to Governor’s January Budget State new funding formula increase = We STILL have little knowledge of if there will be a new funding formula, and how state apportionment funding will be appropriated. It appears COS will only receive additional funds if the funding formula allocates funding “above” 2017-18 baseline. Chancellor’s Office and State CBO board say we will have the governor’s proposal at May Revise, but with such a unique year, may not know IF there will be a new funding formula until budget adoption by the legislature in late June 2018.

Update to Governor’s January Budget CBO and CEO workgroups have requested changes to the funding formula parameters originally proposed in January. Chancellor’s office staff are proposing revisions to the formula and will present to the Chancellor in mid-April. Chancellor Oakley may accept staff requests, or request something else. He will present to the Governor in late April The Governor may still prefer something else. He will clarify his proposal at May Revise (mid-May) We may not know if a new funding formula will be adopted until legislation votes in late June 2018. Best we can decipher for the current proposal: 50% based on FTES 25% to 30% based on low socio-economic status of students (# of Pell grants, first generation students, etc. – not sure if it will include BOG/College Promise grants awarded) 20% to 25% based on number of degrees or certificates awarded, and completions (possibly up to 16 components in this calculation) All other CC’s are building their 2018-19 budgets “same as prior year”

Update to Governor’s January Budget California Budget Proposal for 2018-19 - Items of Note: 2.51% COLA (??) = approximately $1.5M for COS ongoing if awarded Growth/Access funds for 17-18 = appx $1.575M for COS ongoing 10,100 FTES actual less 9788 FTES adopted = 312 growth FTES growth IN 17-18 (3.85%) is funded for 18-19 Mid-size College funding (level achieved here in 17-18) = approximately $1.2M for COS ongoing

Update to Governor’s January Budget Restricted Funds: College Promise = $368,000 for COS “to spend on an array of activities in support of student access and completion goals” (not necessarily free first year of college?) COS will implement the COS College Promise Reimbursement program One-time funding for Guided Pathways (Carryover from 2017-18 allowed in 2018-19) approx. $1.37M one-time funds for COS = $342K in 17-18 (can be carried forward) $411K in 18-19 $342K in 19-20 $137K each in 20-21 and 21-22 Plant & Instructional Equip one-time = appx $2,200,000 for COS $1.1M each for deferred maintenance and instructional equipment ? SSSP, SEP, and BSI will most likely be combined into one categorical for 2018-19 – funding stays the same

Update to Governor’s January Budget The Governor proposes only funding six more projects from Prop 51 state facility bonds at this time That makes 25 funded, out of 29 top priority projects COS is still not included COS may have a chance to be added at May Revise for 2018-19, or may receive funds for Basic Skills Building in 2019-20 or beyond PERS/STRS increased costs for 2018-19 = $793,252 and for 2019-20 $821,016 (already budgeted in advance!) If the District chooses to fund 2020-21 increased costs in advance, would = $668,300

PERS & STRS Increased Employer Costs Fiscal Year New total salaries STRS creditable earnings STRS Employer % Rate STRS increase STRS increased cost STRS Accumulated increased cost from FY15 PERS creditable earnings PERS Employer Rate PERS increase PERS increased cost PERS Accumulated increased cost from FY15 Total Annual Increase 2014/2015 34,450,471 19,166,938 8.88 0.0063 120,752 11,288,373 0.11771 0.00329 37,139 157,890 2015/2016 37,263,295 20,513,374 10.73 0.0185 379,497 500,249 12,061,443 0.11850 0.00079 9,529 46,667 389,026 2016/2017 41,960,918 22,755,902 12.58 420,984 921,233 14,150,730 0.13888 0.02038 288,392 335,059 709,376 2017/2018 41,992,399 14.43 1,342,217 0.15531 0.01643 232,497 567,556 653,481 2018/2019 42,391,653 22,967,507 16.28 424,899 1,767,116 14,338,380 0.18100 0.02569 368,353 935,909 793,252 2019/2020 42,790,907 23,179,111 18.13 428,814 2,195,930 14,526,029 0.20800 0.02700 392,203 1,328,111 821,016 2020/2021 43,190,161 23,390,716 19.10 0.0097 226,890 2,422,820 14,713,679 0.23800 0.03000 441,410 1,769,522 668,300 2021/2022 43,589,415 23,602,320 14,901,328 0.25200 0.01400 208,619 1,978,140 2022/2023 43,988,669 23,813,925 15,088,977 0.26100 0.00900 135,801 2,113,941 2023/2024 44,387,923 24,025,530 15,276,627 0.26800 0.00700 106,936 2,220,878 2024/2025 44,787,177 24,237,134 15,464,276 0.27300 0.00500 77,321 2,298,199 4,721,019

FTES Update Historical Perspective Year Actual FTES Funded FTES 2000-01 8,149.45 8,204.79 2001-02 8,419.17 2002-03 8,506.82 2003-04 8,510.76 2004-05 8,620.16 2005-06 7,582.27 2006-07 8,929.55 2007-08 8,209.56 2008-09 10,160.04 9,042.35 2009-10 10,614.57 8,696.69 2010-11 10,561.93 8,945.00 2011-12 9,033.30 8,261.13 2012-13 8,646.55 8,466.31 2013-14 9,448.98 8,713.55 2014-15 8,868.90 2015-16 9,430.00 9400.00 2016-17 9,700.00 9700 (up to 9,740) 2017-18 10,100.00 10,089?

Fiscal Solvency Projections Step and Column Costs (Cost of 1% = information only; not in budget projections) Description COSTA CSEA COSAFA Mgt/Conf Total Cost – Step and Column (Unrestricted) 214,500 218,800 58,000 491,300 Cost of 1% (Unrestricted Only) 217,800 95,300 44,700 61,600 419,400 Cost of 1% (Combined) 240,900 135,750 48,000 76,200 500,850

Fiscal Solvency Projections Scenario 1 (NO COLA) 2018-19 assume same as 17-18, + mid-size college Assume 312 growth in 17-18 (10,100-9,788), = $1.575M new revenues in 17-18 ($5,050 per FTES) – these funds will be budgeted (ongoing) as we end the 17-18 year Assume 0% growth for 18-19 Assume NO increase for new funding formula (funding formula is yet to be clarified!) Assume NO COLA = 0 for 18-19 Assume College Promise funding estimate $368,000 (restricted) Assume reaching the 10,000 FTES mid-size college mark! = $1,200,000 = 2.77M new revenues 18-19 2019-20 Assume 0% growth for 19-20 Assume 1% COLA for 18-19 = $600,000 ongoing = 600K new revenues 19-20

Projected Budget - Fiscal Solvency Plan Unrestricted Only Scenario 1: 0 COLA, 0 Growth, Mid-size college base 18-19; 1% COLA and 0 Growth estimated for 19-20 Description 2017-18 2018-19 2019-20 State Allocation 57,244,798 60,106,000 60,706,000 Federal and Local Funds 3,300,712 2,934,100 Total Revenue 60,545,510 63,040,100 63,640,100 Expenditures (GF 1000 to 7000) 60,448,951 60,448,950 62,022,250 Step/Column 491,300 492,000 Utilities/WC/P&L/LRC & other augmentations 200,000 Savings from GFU retirees (est = 9 then 3) (1,161,000) (405,000)? Cost of 15 new Faculty (then 5?) 1,715,000 571,800? Cost of PERS/STRS Incr (budget 2 yrs advance) 668,000 208,600 Savings: 17-18 1X budgets – budget augmtns (340,000) Total Expenditures 63,089,650 Structural Surplus/(Deficit) 96,559 1,017,850 550,450

Fiscal Solvency Projections Scenario 2 (2.51% COLA) 2018-19 assume same as 17-18, + mid-size college, + 2.51% COLA Assume 2.51% COLA = $1.5M for 18-19 All other assumptions same as Scenario 1 Structural Surplus could be: $2.52M in 2018-19 $2.05M in 2019-20

College Promise AB 19 Though the state has not been clear regarding the purpose of the initial funding proposal (they are now emphasizing “multiple activities in support of student access and completion goals”), the District plans to implement a one year pilot program called: COS College Promise Reimbursement $368,000 (estimate) for COS Restricted funding An average of the tuition fees paid by first year freshman who completed and passed 15 units per semester = $34,000 per semester $70,000 per year cost estimate If the program draws more students, cost could rise to $150,000 per year To be funded by state AB 19 funds estimated at $368,000, or by General Fund Reserves if state funding is not allocated

College Promise AB 19 Other criteria of the one year pilot program called COS College Promise Reimbursement Pilot Program will be one year only/one year at a time (if state funding continues) First year college students only (includes prior dual/concurrently enrolled HS students) Students must complete FAFSA submission by the last day of September for fall semester or last day of February for spring semester (FAFSA required per AB 19) Must enroll in, and complete with a passing grade (C or above), a minimum of 15 units per semester Will apply to two consecutive semesters (Summer sessions not included) Reimbursement of 15 units or more of tuition will be made upon successful completion of 15 units in a student’s first semester, and again in their second semester Student’s account will be credited at end of semester for tuition previously paid The reimbursement would not cover books or fees (such as transit, health, student center, student activity, nonresident fees, etc.)

Enrollment Management - FTES 2017-18 FTES as of April 11, 2018: Assume zero growth for summer 2018 (same as 2017) 2017-18 FTES Actual Hours of Attendance Weekly Attendance Method Indep Weekly Attdc Meth Daily Attendance Method Indep Daily Attdc Method Total Summer 2017 Session 2 shift 88 Session 3 62 117 36 215 Fall 2017 497 3,847 344 89 116 4,894 Spring 2018 452 3,500 317 93 136 4,498 Summer 2018 Sessions 1&2 72 305 108 485 TOTAL 10,180

FTES Status Hanford & Tulare 2017-18 projection based on summer 2018 “Same As Last Year” FTES 2013-14 2014-15 2015-16 2016-17 2017-18 (to date) 2017-18 projected Hanford 1,037.00 953.58 1,039.00 Tulare 2,428.36 2,195.75 2,596.72 1,696.18 1,673.32 1,869.27 Tulare included Hanford FTES these years First year FTES separated

Notes: Closing books 2017-18 Administration anticipates additional funds to add to General Fund Reserve (fund balance) at close of 2017-18 Actual FTES (10,100) over budgeted (9788) will bring additional one-time revenue (appx $1.575M) COS Anticipates meeting mid-size college status, which could bring another $1.2M in 2017-18 retroactively Estimated at $2.77M+ unspent (one-time $’s) Resource Allocation Manual provides guidance for expenditures of one-time funds such as these COS admin and budget committee will follow those steps in fall 2018, when these funds are actually allocated by the state Portions of General Fund Unrestricted District budgets go unspent each year (comprised of over 1,000 account lines) estimated at $1M

“May Revise” Budget to come All of these assumptions and projections will change when the Governor issues the “May Revise” projected budget Will be issued approximately May 11 2018 We expect the new funding formula will be finalized, and simulations/projections will be available Fiscal Services will then revise assumptions and budget development, before rolling the budget Tentative Budget will be submitted for Board approval in June State legislation will approve final State Budget in late June State legislation could vote NOT to approve the new funding formula! (Still in flux) Final COS Budget will be submitted for Board approval in September NOTE: This is a UNIQUE year due to the proposed new funding formula! No final formula exists yet, and legislation may choose to delay implementation.

Questions? Comments?