Financial Forecast Update November, Clackamas Community College Fiscal Year 08/09

History Recap Budget Challenges Faced Last Year 5% Enrollment Decline in 6/7 (while rest of state CC’s were flat) – loss of 380 fte / $1.6m Changes to community college distribution formula: Equalization Acceleration of enrollment gain / drop Prior over-budgeting of tuition and other revenue

6/7 Enrollment Recap ( note: CCC had largest enrollment drop in state / overall state enrollment was flat) Instructions: These are embedded graphs. To edit a graph simply double-click anywhere on the graph. When you’re done editing the graph, click outside of the graph to return to PowerPoint. Labels above each column are added in PowerPoint.

Recap of Funding Formula / Revenue Major Components of Ongoing General Fund Revenue: Funding Formula 76% * Tuition 19% All Other 5% * (state support and property taxes – based on reimbursable fte)

Projected Revenue Growth vs. Expenditure Growth – last year Combination of flat revenue growth and increasing expenditures causes deficits / large reserve draws Year+/-TotalReserve 7/8surplus+848k$4.1m 8/9deficit-1.4m$2.7m 9/10deficit-2.0m$0.7m 10/11deficit-3.6m$-2.9m Note: Reserve balance net of deferred payment.

Actions Taken to Help the Budget Cause 1. Increase Revenue (approx. 800k) Enrollment Increased in 7/8 Up 3.0% / Rest of State also Growing – 3.5%. Fall 08 enrollment growth is promising. Other Revenue in 8/9 – 770k $5 Tuition rate increase -from $57 to $62 per credit $1 equals approx. 138k - so $5 generates around $690k Misc. Other Revenue – 80k High School Contracts / Nursing Contracts / Rent 2. Shift Costs Away From General Fund – 600k Deferral of ELC Capital Contribution in 8/9 / $500k savings ($1m over two years) Shifts to Wired Grant / Fee funds / Tech. Mech. Fund - 100k per year

7/8 Enrollment Recap ( note: CCC enrollment up, but still lags state average – 3.0% growth / vs. 3.5% state average) Instructions: These are embedded graphs. To edit a graph simply double-click anywhere on the graph. When you’re done editing the graph, click outside of the graph to return to PowerPoint. Labels above each column are added in PowerPoint.

Actions Taken to Help the Cause 3. Reduce Expenses – approx. 700k Elimination of one exempt position (purchasing manager) Elimination of 1.5 classified positions (1 phone technician /.5 archivist) / leave vacant 2 custodial positions in addition Food service subsidy elimination – 24k a year Open new harmony building with existing non-instructional staff Leaving five FTF positions open (English / Social Sciences / Business / Engineering / Human Services) – three additional openings (English / Math / Health-PE) held subsequent/ Part time backfill Consolidation of some sections / Reduction of PTF costs / Various other efficiencies

Actions Taken to Help the Cause Adjustments Since Budget Prepared Higher Costs (Bad News): Absorbed 150k of unbudgeted WIA Grant costs Likely shift of 125k of high school alternative fund costs Higher COLA – 0.7 more than previous estimate of 3.0% (all employee groups received base increase of 4.5% (cap) plus steps) Higher energy costs – NWNG 14% rate increase request Possible higher than expected classified reclass adjustments Higher Revenue / Lower Costs (Good News): Higher than expected enrollment growth Higher tuition revenue New Sustainability Grant Lower than budgeted medical costs – due to entrance into OEBB. Higher carryover going into 8/9 - $4.1m vs. budget of $3.3m (net of payment deferral)

Projected Revenue Growth vs. Expenditure Growth- current Combination of flat revenue growth and increasing expenditures causes deficits / large reserve draws Year+/-TotalReserve 7/8surplus+878k$4.1m 8/9deficit-.28k$3.8m 9/10deficit-.33m$3.5m 10/11deficit-2.5m$1.0m Note: Reserve balance net of deferred payment

Forecast Assumptions Good News: Actions taken with this budget have made a difference. We’re looking much better financially. Bad News: We faced a large hole / deficit and still face major challenges even if state funding grows at 10% next biennium. The economy appears headed towards recession and there’s a very real possibility that state funding will be flat / less than 10% forecasted. We had planned on an increase of $3.5m.

Progression of State of Oregon General Fund Revenue Forecast Instructions: These are embedded graphs. To edit a graph simply double-click anywhere on the graph. When you’re done editing the graph, click outside of the graph to return to PowerPoint. Labels above each column are added in PowerPoint.

Economy Risks U.S. economy deteriorates further – prolonging and intensifying recession. Stock market woes persist, undermining capital gains realizations in 2008 and 09. Corporate profits fall significantly, depressing taxable incomes. Unemployment increases depressing state personal income tax collections Policy actions, both federal and state – i.e. budget cuts.

If State Funding is Flat…. Revenue growth over two years – around $1.4m (around 1.5% a year) – almost exclusively from tuition increases Expenditure growth over same period: Personal services –$6.2m (85% of total) All Other1.1m Total$7.3m - about 5.5% a year Difference$5.9m

If State Funding is Flat…. Available Reserves$3.8m Board Minimum – 6%$2.8m Difference$1.0m

If State Funding is Flat…. Total Estimated Shortfall$5.9m Available from Reserves$1.0m Remainder*$4.9m – over two years / 5.2% of total spending *from revenue, cost shifts and expense reductions.

Key Dates External: November - Election / state initiatives decided – State updates revenue forecast / Governor proposes budget March and May – State updates revenue forecast January to June – Legislative deliberations / ultimately approve state community college budget

Budget Development Process / Timeline October – April (Development of Proposed Budget) January – Board Workshop Budget Work sessions (March 12 / April 9) Budget Committee Meeting (May 14 th ) Budget Adoption (June 18)

Recap College faces budget challenges even if state funding grows 10%. Current economic news is unsettling and has the possibility to impact college budget significantly. We will know more by the end of the month when the Governor proposes his budget. I’m not trying to alarm anyone - but I also want all to be aware of the challenges we may face. Let’s discuss how we can work on this together should significant challenges arise.