1. Mott Community College Board of Trustees Committee of the Whole Meeting June 25, 2012 BUDGET RESOLUTIONS

2. For Consideration and Vote Final Amended 2011-2012 Budget Initial 2012-2013 Budget Millage Authorization (Operating, Debt) Tuition Recommendation beginning Winter 2013 2

3. FINAL FY11-12 AMENDED BUDGET: General Fund 3

4. Final FY11-12 General Fund Budget 4 REVENUES: Tuition & Fees -$588 thousand, -1.5% adj. credit-side enrollment and projections down for Winter and Spring 2012 Property Taxes -$185 thousand due to projected increased delinquencies State Aid no change Other Revenue $354 thousand (auxiliary revenue increased) =Overall downward amendment to revenue is -$356 thousand -.47% change from January 2012 amendment

5. Final FY11-12 General Fund Budget 5 EXPENDITURES: Amended downward by $770 thousand, a 1% change: Salaries & Wages and Fringe Benefits --continued holds on open positions. Non-salary related expenses -- savings in contracted services and material and supplies, with increases in utilities. Transfers -- increase of designated scholarships and transfers amongst sites to reflect actual anticipated activity.

6. Final FY11-12 General Fund Budget 10-11 Actual11-12 Amend #111-12 Amend #2 Revenues$ 76,710,276$ 76,390,963$ 76,035,286 Expenditures 76,518,073 77,609,947 76,839,675 Excess (Deficit) Revenues Over Expenditures $ 192,203$ (1,218,984)$ (804,389) Fund Balance – Beginning$ 7,273,879$ 7,466,082 Fund Balance – Ending$ 7,466,082$ 6,247,098$ 6,661,693 Fund Balance Percent*9.76%8.05%8.67% 6 Summary *Target = 5% - 10% of Expenditure budget

7. Final FY11-12 General Fund Budget 7 NET RESULTS OF AMENDMENT: FUND BALANCE : $315 thousand higher than the January Amended Budget 6/30/12 projected to end with $(804,389) deficit, for a total of $6.66 million

8. Reserves as Required by Board Policy #3930 General Operating (01) Reserve Requires 5-10% of annual operating expenses. 11-12 Amended Budget reserve of 8.67% Maintenance & Replacement Fund (72) Requires 1-3% of College depreciated assets or $3.1 M 11-12 Amended Budget reserve of $2.1 M Amount needed to fully fund is $1 M Building/Site Fund (78) Requires 1-3% of College depreciated assets or $3.1 M 11-12 Amended Budget reserve of just slightly over $3 M 8 _____________________________________________________________________

9. FUNDING SOURCES (2012-2013) State Aid Property Taxes -Operating -Debt Tuition 9

10. Trends in Funding Sources & Enrollment

11. Trends in Funding Sources & Enrollment, Fiscal Year Equated Students (FYES) 11

12. THEN and NOW 12 State Aid Funding $15,344,107 State Aid Funding $15,021,410

13. Projected Property Tax Funding FYE 2010 through FYE 2016 13

14. Percentage of Property Tax and State Aid of Total Funding 14

15. Increased Five-Fold in Ten Years

16. Pell Award & Cost of Tuition Mott Community College In-District (Published 12/13) Saginaw Valley State University In-State Pell Awarded$5,550 Tuition & Fees (30 contact hours) $3,644$8,134 Books & Supplies$1,000 Difference$906-$3,584 Student Needs Unmet Student Receives Remaining Balance

17. Pell Distribution – 10/11 Awarded Educational Tuition & Fees Educational Books & Supplies Charges Non- Educational Govt. Refund $27,919,272$18,729,369$4,491,705$4,698,199 Sample of Approx. 9,540 Students

18. Pell Distribution – 11/12 Awarded Educational Tuition & Fees Educational Books & Supplies Charges Non- Educational Govt. Refund $31,013,885 $21,128,548$4,493,632$5,391,705 Sample of Approx. 9,700 Students

19. Compensation as a Percentage of the General Fund Budget Compensation expense would be $1.25 M higher if it was at 2001 levels as a percentage of budget. Ten year average salary increases are 1.35%.

20. PROPOSED FY 12-13 BUDGET 20

21. 21 3100 Budget Adoption. “Budget revisions will be brought forward for Board action as necessary, but not less than twice per year in January and June.” 3920,3930 Financial Stability, Fiscal Reserves. “The College will designate and set aside appropriate fund reserves to support plans for long-term capital and operating commitments.” 5100 Compensation Philosophy. “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.” RELEVANT BOARD POLICIES : _____________________________________________________________________

22. 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 priorities 7-2. 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 resources 7-3. Implement a comprehensive strategy to address the long-term deficit which enables us to continue to provide affordable high quality education 22 _____________________________________________________________________

23. STRATEGIC INITIATIVES FOR 12-13 23 Allocation for 12-13 is $50,000 for AQIP $55,000 allocated for Department/Division level strategic planning Current AQIP Action Projects : Developmental Education/Mandatory Placement Campus Cultural/Behavioral Readiness Wait List/Retention Alert

24. PROPOSED FY12-13 BUDGET 24 No Change in Budget Principles. Uncertainty still remains. Budget must support Strategic Plans Minimize/offset impact on Students Avoid overall reduction in Staffing Maintain Fund Balance/Reserves Maintain flexibility in Budget Balanced Approach

25. PROPOSED FY12-13 BUDGET Key Assumptions Revenues Property Taxes$ 1,287,950 State Aid $ 637,810 Tuition$ 1,612,930

26. PROPOSED FY12-13 BUDGET Key Assumptions Expenditures Transfers $ 569,640 Salaries, Wages and Fringe Benefits $ 489,000 Contracted Services$ 286,720 Utilities and Insurance $ 220,200

27. 27 Initial FY12-013 General Fund Budget 11-12 Amend #2Initial 12-13 Revenues$ 76,035,286$ 76,845,892 Expenditures 76,839,675 76,840,772 Excess(Deficit) Revenues Over Expenditures$ (804,389)$ 5,120 Fund Balance – Beginning$ 7,466,082$ 6,661,693 Fund Balance – Ending$ 6,661,693$ 6,666,813 Fund Balance Percent* 8.67% 8.68% Summary *Target = 5% - 10% of Expenditure budget

28. PROPOSED “OTHER FUNDS” FY12-13 BUDGETS 28 Main Point is Impact on Operating Budget: Designated Fund $2.61Million Revenue Budget (Scholarships, Student Enrichment, Copy Machines, Paid Parking, Designated Technology Fee) Auxiliary Enterprise Fund--$1 Million Budget $728,940 Net “profit” supplements General Fund (Catering, Vending, Bookstore, Computer Lab Printing, Lapeer Campus Auxiliary)

29. PROPOSED “OTHER FUNDS” FY12-13 BUDGETS 29 Main Point is Impact on Operating Budget: Debt Retirement Fund Millage Rate remains at 0.87 mill to meet debt obligations Capital Funds—repair, upgrade of buildings, equipment, technology, vehicles ($104 million in net value) Instructional Technology Fee = $1.66 Million per year $1.24 million per year planned transfer from General Fund (minimum required annual expenses).

30. CAPITAL FUNDING

31. 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.” Link to Mission and Strategic Plans

32. Asset Value NewEnd of LifePremature End of Life MCC Asset Value vs. Time (Asset Life) Planned Maintenance points Extended Life

33. Deferred Maintenance Planned maintenance not performed when scheduled Usually lack of funding – can be a liability Leads to earlier asset replacement due to premature end of life

34. Deferred Replacement Planned asset replacement not performed when scheduled – Usually lack of funding – Can be a liability for the College “Run-to-failure” mode of operation – Uses capital that should be scheduled for other purposes

35. Capital Asset Funding Current 10 year needs are approximately $85 million Taxable Values Declining Availability of Bonds? Approx. $1.7 million in tech fees annually

36. TUITION PROPOSAL (CALENDAR YEAR 2013) 36

37. What if Tuition Covered State Aid Losses? Add in Property tax loss = $325.48

38. Tuition & Fees: Local Comparison CollegeYearly Tuition & Fees Mott CC 3,644 Saginaw Valley University 8,134 Eastern Michigan University8,637 University of Michigan - Flint 9,182 Oakland University 9,938 Baker College - Flint10,080 Ferris State University 10,440 Central Michigan University 10,950 University of Michigan – Ann Arbor12,634 Michigan State University12,821 Davenport University 15,150 ITT Technical of Flint31,272 Kettering University 33,946 Cost as based on in district/state rates from the College’s web sites MCC’s annual cost is approximately 45% of that of the next most affordable college/university in our area. 38

39. Tuition Recommendation 39

40. 40

41. Key Assumptions – Revenue Tuition and fee revenue increases at 3.9% each year Property tax revenue decreases for 1 year with flat and slight increases (1.5-2.5%) thereafter 0.6410 Mill Voted Operating Millage is renewed for 10 years starting with FY08-09 State appropriations increase at 3% for two years and 2% increases thereafter Other revenues increase by 2% each year Total revenue increases by avg. of 2.8% 41

42. Key Assumptions - Expenses Salaries and wages increase by 3.1% for one year and then 3.8% thereafter Fringe benefits increases at a historical average rate of 4.5% each year Other expenses increase by avg. of 3% each year Total expenses increase by avg. of 3.7% each year 42

43. Projected General Fund Deficit would be $12.9 Million at end of FY18-19, if current trends continued (Revenue growth of 2.8% vs. expenditure growth of 3.7%) Based on an average projected gap of $3.2 million per year to be filled with budget-balancing solutions Short-term savings and flexibility continues to be key Long-term strategy of managing total compensation costs 43

44. 7 Year Forecast at June 2012 Forecasts:>>>>>>>>>>>>>>>>>>> Note: the forecast illustrates proforma data if current trends were to continue. The College is obligated to balance it’s budget each year and will take necessary steps to do so. 44

45. Mott Community College Board of Trustees Committee of the Whole Meeting June 25, 2012 Questions or Comments? For More Info.: Contact Larry Gawthrop, CFO (810) 762-0525 or larry.gawthrop@mcc.edu Details Provided with Board Resolutions 1.39 and 1.40