1. THE MMCC BUDGET
January 15, 2015

2. Where does our money come from? And Where does it go?

3. REVENUE SOURCES Michigan Community Colleges – primary revenue streams
Tuition & Fees – 43%
State Appropriations – 25%
Local Property Taxes – 31%
MMCC – same sources, but…
Revenue stream looks much different
Low local support from property tax levy
Heavy dependency on tuition & fees

4. MMCC REVENUE COMPARED TO OTHER MICHIGAN COMMUNITY COLLEGES
2014
Per the 2013 ACS Report, the average of operating fund revenue sources for Community Colleges in our group* was:
43% Tuition and Fees
31% Property Taxes
25% State Appropriations
1% All Other
*Our ACS group includes Alpena, Bay De Noc, Glen Oaks, Gogebic, Kirtland, Montcalm, North Central, Southwestern, West Shore.

5. MMCC REVENUE BREAKDOWN

6. ENROLLMENT FACTS
Only 31% of Mid’s students are In-District (State average = 68%)
>80% of Mid’s tuition revenue is generated by Out-of-District students
Recent focus on International Student enrollment has pushed revenue derived from international students to 6% of Mid’s total tuition and fees
Financial effects of recent enrollment declines have been partially offset by annual tuition rate increases

7. MMCC HISTORICAL DATA

8. STATE APPROPRIATIONS 20% of Mid’s general fund revenue (average = 25%)
Very little change in recent years
State appropriations peaked in 2002 at $4.7 million
2014 appropriations were $4.5 million
State appropriations per student declined due to enrollment growth
Little, if any, ability to impact

9. MMCC Historical Data
Fiscal Year Equated Students

10. LOCAL PROPERTY TAXES 9% of Mid’s general fund revenue (average = 31%)
Remained relatively constant when many schools were experiencing double digit declines
Headlee amendment has eroded the college’s original operating millage of 1.5 mills to mills
Second lowest operating millage among Michigan Community Colleges

11. The Annual Budgeting Process

12. MMCC Board of Trustees’ Guiding Principles
MMCC WILL USE AN INCLUSIVE PROCESS INTERNALLY TO DEVELOP A BUDGET AND WILL PROPOSE AN ANNUAL BUDGET BASED ON THEIR PORJECTIONS OF REVENUES AND EXPENSES FOR THE NEXT YEAR. The budget will be developed using the following formula:
Program Development funds – equal to 2% of projected general fund revenues
Planned Savings – equal to 5% of projected general funds revenues
Tuition & Fees – set to provide GF reserve (contingency) equal to 2.5% of budget

13. BUDGET BUILDING BASICS
Current year data is the baseline for future year’s budget
Project and evaluate current year data to June 30th

14. ENROLLMENT & TUITION RATES
BUDGET PROJECTIONS
ENROLLMENT & TUITION RATES
The enrollment projection team meets to forecast the enrollment for the upcoming academic year
Current tuition rates are applied to the enrollment projections to evaluate the projected revenue stream without adjusting the tuition rates
Tuition rate adjustment proposal goes to the Board of Trustees
Board of Trustees acts on tuition rate proposal, revenue is set

15. MID’S EXPENDITURES
General Fund Expenditures were $21.2, $20.7, and $21.0 million for 2012, 2013, and 2014, respectively.

16. EXPENDITURE COMPARISON
MMCC 2014
Per the 2013 ACS Report, the average of operating fund expenditures for Community Colleges in your group* was:
45% Instruction
1% Public Services
11% Instructional Support
14% Student Services
18% Institutional Administration
11% Plant Operations
*Your ACS group includes Alpena, Bay De Noc, Glen Oaks, Gogebic, Kirtland, Montcalm, North Central, Southwestern, West Shore.

17. MAJOR EXPENDITURES
Salaries and fringes account for over 82% of total college expenditures
Employee health Insurance cost is almost $2 million
Employee retirement costs - exceeds 25% of every payroll dollar. Total cost for 2014 was $2.9 million
Energy costs for all Mid operations exceeded $1.1 million in 2014

18. SALARIES & FRINGES

19. PROJECTING MAJOR EXPENSES
BUDGET PROJECTIONS
PROJECTING MAJOR EXPENSES
Salaries and salary increases are driven by labor contracts
Employee health Insurance increases are limited by state imposed caps
Health insurance hard caps are indexed to medical inflation rates, averaging 3.2%
MPSERS – contribution rates are set by the state of Michigan
Current rate exceeds 25%
Increased from 16.94% in 2010 to 25.78% in 2014 (60% increase)
Recent year increases of 1-2% are necessary to offset the UAAL
Energy – increases are estimated based upon market info and projected building utilization

20. BUDGET ALLOCATION DEPARTMENTAL INPUT
Department Managers solicit input from their departments
Additional staffing needs
Operating expense changes
New training or operational initiatives
Deferred maintenance issues
THIS IS YOUR OPPORTUNITY FOR INPUT!

21. BUDGET ALLOCATION
Budget Managers present requests for additional/modified funding
Compare projected revenue to projected expenses
Surplus – good, maintain contingency funding
Deficit - determine what areas to consider reducing to balance the budget
Contingency funds – set aside to fund unanticipated expenditures, new initiatives and salary adjustment that arise after the budget is completed
Budget committee (Strategic Council) evaluates budget requests in relation to funds available
Consider past year requirements/demands and compare to projected levels of activity
Determine extent of budget cuts required and the strategic approach to balance the budget

22. Eliminating the deficit
BALANCING THE BUDGET
Eliminating the deficit
Budget committee (Strategic Council) evaluates budget requests in relation to funds available
Determine extent of budget cuts required and the strategic approach to balance the budget
Contingency fund consideration
Historical trends vs. future projections

23. BUDGET APPROVAL Preliminary budget to the Board of Trustees in April
Intent to levy millage is published in early June along with notice of a “Truth in Taxation” notice
Board authorizes tax levy at the second June board meeting
Balanced budget presented to Board of Trustees at the second June board meeting

24. QUESTIONS?