2008-2009/2009-2010 Budget Update Town Hall Meeting June 10, 2009 Jeanine Hawk - Vice-President, Business & Administration Prepared In Collaboration with Fiscal Services Staff

Town Hall Meeting June 10, 2009 May Revise Implications for 2008-09 Unrestricted General Fund 2008-09 Property tax shortfall: -$803,250 2008-09 General apportionment shortfall: -$790,000 Good News (is there any??) Reduction is $1,593,250 Deficit Factor Budgeted is $1,420,257 COLA 0% RESTORATION 100.00% GROWTH 1.25% DEFICIT FACTOR 1.30% Total Reduction=1,593,250

Town Hall Meeting June 10, 2009 May Revise Implications for 2008-09 Restricted General Fund – Categoricals (-14.7%) Basic Skills: -$94,088 Cooperative Agencies Resources for Education (CARE): -$14,707 Counseling, Placement and Assessment (Matriculation-Credit -$211,033 Counseling, Placement and Assessment (Matriculation-Noncredit): -$6,955 Disabled Students Programs and Services: -$231,136 Extended Opportunities Programs and Services: -$206,316 Instructional Equipment: -$35,416 Part-time Faculty Compensation: -$146,992 Scheduled Maintenance: -$35,420 Reduction is $982,062 Amount Budgeted = 0

Town Hall Meeting June 10, 2009 May Revise Implications for 2009-10 Unrestricted General Fund 2009-10 General apportionment shortfall 2009-10 Physical education cut 2009-10 Property tax shortfall NO GROWTH Total Reduction is $5, 213,854 Deficit Factor Budgeted at Tentative is $1,433,108

Town Hall Meeting June 10, 2009 May Revise Implications for 2009-10 Restricted General Fund – Categorical Reduction-53% (was -58.8%) Basic Skills: -$333,102 Cooperative Agencies Resources for Education (CARE): -$52,066 Counseling, Placement and Assessment (Matriculation-Credit): -$747,126 Counseling, Placement and Assessment (Matriculation-Noncredit): -$24,624 Disabled Students Programs and Services: -$818,296 Extended Opportunities Programs and Services: -$730,425 Instructional Equipment: -$125,386 Part-time Faculty Compensation: -$520,399 Scheduled Maintenance: -$125,397 Total Reduction is $3,476,821

Town Hall Meeting June 10, 2009 Possible Savings Towards a Balanced Budget: Reduce Schedule to Funded FTES $ 2,025,839 Virtual Hiring Freeze-24 Positions 826-1.7 mil Reduce Contracts/Services Additional 5% 474,105 Maximize Categorical 08-09 Carry-Over 160,000 Unallocated Basic Skills 450-900,000 Reduce Categorical Budgets by 30% 1,500,000 Backfill IE and Scheduled Maintenance 350-700,000 Total Potential Savings $5.8 – 8.3 mil.

Town Hall Meeting June 10, 2009 So What’s the Big Picture?? AND Ongoing: Structural Deficit $ 3,048,787 State Reductions Physical Education 2,100,000 Categoricals (53.3%) 3,476,821 Total Ongoing Reductions Needed $ 8,625,608 AND One-Time: Deficit Factor & Tax Shortfall $ 1,853,739 Categoricals (14.7%) 982,063 Total One-Time Reductions Needed $ 2,835,802 One-Time Adjustments Property Tax Backfill – 1,432,267 One-Time Off Schedule/retro Pay – (493,912)

Town Hall Meeting June 10, 2009 One-Time Adjustments EFFECT OF MAY REVISE TO PROPOSED ADOPTED BUDGET -2nd Revision   2008-2009 2009-2010 2010-2011 PROPOSED BUDGET with 2008-09 and 2009-10 REDUCTIONS ACCOUNTS PROJECTED FUND BALANCE w/o REDUCTIONS PROJECTED FUND BALANCE with REDUCTIONS 2009-2010 TENTATIVE BUDGET PROPOSED ADOPTED BUDGET w/o REDUCTIONS PROPOSED ADOPTED BUDGET with REDUCTIONS TOTAL REVENUE AND TRANSFERS (LESS ONE-TIME FUNDING) 133,010,302 136,518,708 TOTAL EXPENDITURES AND TRANSFERS (LESS ONE TIME EXPENDITURE) (137,313,739) (138,741,231) VACANT POSITIONS WITH PAYROLL RELATED BENEFITS* (1,652,526) (826,264) VACANT SAVINGS WITH PAYROLL RELATED BENEFITS* 1,239,395 - OPERATING SURPLUS/(DEFICIT) (4,716,568) (3,048,787) ONE-TIME FUNDING/(EXPENDITURES): PRIOR YEAR APPORTIONMENT ADJ - PROPERTY TAX BACKFILL 1,432,267 ONE-TIME OFF SCHEDULE/RETRO PAY WITH RELATED BENEFITS (483,912) OPERATING SURPLUS/(DEFICIT) WITH ONE-TIME ITEMS (3,768,213) MAY REVISE (172,993) (3,780,746) PROPOSED REDUCTIONS 3,326,208 BEGINNING BALANCE 18,797,976 12,829,763 11,099,708 11,664,766 6,884,424 ENDING FUND BALANCE PRIOR TO DESIGNATED RESERVES 14,856,770 9,780,976 4,270,175 8,161,441 3,381,099 FUND BALANCE RATIO TO TTL EXPENDITURES & TRANSFERS ** 10.75% 7.01% 3.06% 5.99% 2.48% MAY REVISE - CATEGORICALS (982,063) (3,476,821) PROPOSED REDUCTION - CATEGORICALS 565,058 2,199,804 FUND BLANCE REVISE- CATEGORICALS (574,999) ENDING FUND BALANCE PRIOR TO DESIGNATED RESERVES WITH MAY REVISE 13,299,7087 13,864,766 793,354 2,104,082 FUND BALANCE RATIO TO TTL EXPENDITURES & TRANSFERS WITH MAY REVISE** 9.58% 10.03% 0.57% 5.14% 1.57% DESIGNATED RESERVES FOR: GLOBAL EDUCATION INITIATIVE 09-10 (200,000) UNFUNDED RETIREE BENEFITS (2,000,000) UNDESIGNATED ENDING FUND BALANCE UNDESIGNATED ENDING FUND BALANCE RATIO 7.87% 8.31% One-Time Adjustments Property Tax Backfill – 1,432,267 One-Time Off Schedule/retro Pay – (493,912)

Fund Balance Actuals and Projected Town Hall Meeting June 10, 2009 Fund Balance Actuals and Projected 8.31% 7.87% 5.14% 5.00% 1.57% .57%

Town Hall Meeting June 10, 2009 Budget Objectives Adopted by the BOT – April, 2007   Protect the College’s ongoing operation by maintaining a fund balance of 5% or more going forward from 2006/07. Going forward from the 2007/08 budget establish benchmarks that will help guide budget decisions for the College.   Develop a budget plan that brings available ongoing revenues and expenditures into balance effective with the adoption budget for 2009/10. Proposed New Objective: Protect the College’s ongoing operation, including categorical programs, by maintaining a fund balance of 5% or more thru 2010/11.

Town Hall Meeting June 10, 2009 Budget Principles Adopted by the BOT – April, 2007 Maintain course offerings that are responsive to current student needs but are also fiscally sound based on established measurements such as: WSCH/FTEF.   Establish and maintain an acceptable cost effective level of learning resources and student support services based on comparative performance data as determined by the College. Maintain employment for permanent personnel and avoid layoffs. To the degree that they are the basis for revenue projections ensure that enrollment growth estimates are realistic and can be achieved within the fiscal limitations of the College. Where possible and practicable, use staff attrition and/or existing vacancies as one means of reaching budget targets. Expedite changes that may produce lower costs over time such as energy saving retrofits, alternative energy sources, reduction or consolidation of facility usage, etc. Continue to seek external sources of funding, such as grants, to support the College’s core missions, but avoid those with matching, management, or reporting requirements that demand significant college resources.

Town Hall Meeting June 10, 2009 Budget Principles Adopted by the BOT – April, 2007 – continued Establish priorities for Unrestricted General Fund support of activities or programs outside of the core mission of the College.   Develop a budget process that manages the growth of expenditures based on: analysis of program need (rather than historical allocations); realistic expectations of revenues; updated market information; and performance measurements. In light of the current financial circumstance review ongoing and future planning initiatives in terms of their long term advantages to the College in meeting public demand for services, improving student success outcomes, or to provide new revenues. Modify, defer, or abandon as appropriate those for which the costs outweigh their potential for furthering the College’s core missions and goals. Make effective use of the College’s established planning structures and processes to recommend specific actions to reach the stated objectives, following the principles listed above. The College President shall clarify how these recommendations will be evaluated and the timelines necessary to arrive at a set of final recommendations for any particular budget cycle. Programs will not be eliminated or reduced without careful review. Benchmarks will be used as a guide to inform the decision-making process.

Town Hall Meeting June 10, 2009 Next Steps: Principles and Process Department/Program Dialogue budgetideas@smc.edu Budget Committee & DPAC Recommend Ways to Reach Target BOT Workshop June 23 Begin to Implement Solutions – July 1 Continue to Advocate with Legislators Provide Quality Teaching, Learning and Program Services to over 21,000 FTES Wait for the Final Budget – BOT Adopt August/September