Mott Community College

Finance/Personnel Committee Meetings

June 20, 2012

2012-2013 Budget/Finances

2

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

• A balanced approach

_____________________________________________________________________

Trends in Funding Sources & Enrollment

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

2001

-200

220

02-2

003

2003

-200

420

04-2

005

2005

-200

620

06-2

007

2007

-200

820

08-2

009

2009

-201

020

10-2

011

$3,500,000

$8,500,000

$13,500,000

$18,500,000

$23,500,000

$28,500,000

$33,500,000

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500

State Aid Property Taxes Revenue per FYES

Fund

ing

11

CURRENT YEAR BUDGET IMPACT

15

FYE 2013 Impact in Dollars

16

$5,795,000

Tuition Keeps Up with Lost Funding/Increase in Non-controllable costs for FYE 2013

17

$40.87

$148.92

$61.15

$70.55$86.52

$103.37

$61.34

$99.88

$133.30

$168.82

$60.00

$70.00

$80.00

$90.00

$100.00

$110.00

$120.00

$130.00

$140.00

$150.00

$160.00

$170.00

2001-2002 2004-2005 2009-2010 2011-2012

Actual

Hypothetical

What if Tuition Covered State Aid Losses?

Current Year Budget Balancing Steps

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Current Year Budget Considerations• Decreased Hiring (Open Position Pool) $ 350,000• Health Insurance Savings $ 600,000• State Aid Increase $ 637,000• Cut Reserve Funding $ 620,000• Capital Funding Reduction $1,060,000• Cut Contingency $ 900,000

Total budgetary expenditure cuts $4,167,000

Beginning shortfall ($5,795,000)

Shortfall remaining ($1,628,000)

BUDGET SHORTFALL 2012-2013

Shortfall Remaining $ 1,628,000

Tuition To Cover $9.18/contact hour

Tuition and Financial Aid

22

67%9.74%

23.26%

Federal Aid Other Aid Cash Paying

$9.3 mil

$26.7 mil

$3.9 mil

Total aid comprises 76.74% of MCC's total tuition rev-enue.

FEDERAL FINANCIAL ASSISTANCEPELL GRANTS

23

-

5

10

15

20

25

30

35

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Mill

ions

Academic Year

Pell Awards

Increased Five-Fold in Ten Years

Pell Distribution – 10/11

Awarded Educational Tuition & Fees

EducationalBooks & Supplies

Charges

Non-Educational

Govt. Refund

$27,919,272 $18,729,369 $4,491,705 $4,698,199

Sample of Approx. 9,540 Students

Pell Distribution – 11/12

Awarded Educational Tuition & Fees

EducationalBooks & Supplies

Charges

Non-Educational

Govt. Refund

$31,013,885 $21,128,548 $4,493,632 $5,391,705

Sample of Approx. 9,700 Students

Pell Award & Cost of TuitionMott Community College

In-District(Published 12/13)

Saginaw ValleyState University

In-State

Pell Awarded $5,550 $5,550

Tuition & Fees(30 contact hours)

$3,644 $8,134

Books & Supplies $1,000 $1,000

Difference $906 -$3,584

Student Needs Unmet

Student Receives Remaining

Balance

THE AMERICAN OPPORTUNITY

TAX CREDIT (AOTC)

“PELL for Most EVERYONE ELSE ?”

Pell American Opportunity Tax Credit (AOTC)

“Pell for Most Everyone Else”

Maximum Award $5,550 $2,500

Enrollment Sliding Scale up to full-time At least Half Time

Income Limits Expected Family Contribution

Modified AGI< $80,000 Single

< $160,000 MFJ

Program of Study Degree or Certificate-Accredited Institution

Degree or Certificate-Accredited Institution

Can be used for Tuition, fees, books, equipment, supplies,

leftover can be for living expenses

Tuition, fees, books, equipment, supplies

Length of Award 6 years 4 years

Other Eligibility Not convicted of a felony drug offense

Not convicted of a felony drug offense

Available Financial Aid (Pell and American Opportunity Tax Credit)

Estimated - $14.3 Billion available annually for AOTC

EXPANDED BENEFIT OF A REFUNDABLE CREDIT

Tax Year 2011 Students Total Tax Liability equaled $1,658

They had Paid in (withheld from wages) $2,699 Refund without any credits would be $1,041

But Wait…… They were refunded with the AOTC $3,219

Only the Hope Credit?…… The refund would have been $2,348

Or a “Federal Financial Aid Award” of $871

Total tuition/fees increase Annual

Amount

$ Increase AOTC Refundable

Credit

Year: 2011-2012

12 Contact Hours (PT) 137.66 634.79

24 Contact Hours (FT) 256.60 895.78

30 Contact Hours (FT) 316.07 964.33

Tuition Increases and Amount Refunded from the AOTC

What Have We Done Regarding Controlling/Cutting Costs?

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Expenditure Reductions1) Energy Conservation Project

- Utility costs averaged 8.2% in 2003, Now they are 3.1%

2) Hold on vacant positions• Average savings of $750K per year

3) Change in timing of custodial shift• Savings of approximately $170K per year

4) Eliminating and restructuring food service• Was losing approximately $100K per year• Now generating $48K per year in revenues

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Expenditure Reductions5) Utility Reduction Analyst Project

• Resulted in $720K savings between 2004-2010 on Telecommunications/IT, Water, and Waste

6) Employee Contract Bargaining• Employees agreed to pay freezes with incremental

increases over 9 years at 1.35%• Industry average is 2.8%

– Savings of $460K per year

7) Course Section Efficiency• Maximizing section seat count before adding new

sections

8) Discretionary budget cuts• Average savings of $400K per year

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Expenditure Reductions9) Reduction of ORP (optional retirement plan) costs

• Average annual savings of $400K10) Combining Deans position

• Fine Arts and Social Science combined saving $168K per year12) Outsourcing custodial and grounds work at sites

• Savings of approx. $350K per year13) Health Insurance changes to coverage and plans

• Savings $550K14) New print shop lease

• Savings of $200,000 per year15) New Auditors

• Savings of $60,580 over five years

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Compensation as a Percentage of the General Fund Budget

74.00%

74.50%

75.00%

75.50%

76.00%

76.50%

77.00%

2001 2013

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%.

A Comparisonto

7 Other MichiganPeer Community Colleges

Based on 2010 –2011 ACS Data

MCC is 3rd Lowest in Millage Rate, and has the Largest Property Tax Decline

1.79 1.80 1.99 2.04 2.41 2.483.00 3.41

-3.76

-8.64

-10.98

-1.64

-3.14 -8.64 -8.64

-5.33

-12.00

-10.00

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

6.00G

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Prior Year Comparison of Millage Rates/Property Tax Declines with

State Grouping

MCC is 3rd Lowest in Millage Rate, and has the Largest Property Tax Decline

1.79 1.80 1.99 2.042.41 2.48

3.003.41

-2.39

-6.39 -6.76

-1.42

-0.65-6.39 -6.39

-2.85

-8.00

-6.00

-4.00

-2.00

0.00

2.00

4.00

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Current Year Comparison of Millage Rates/Property Tax Declines with

State Grouping

54

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

Current Year Comparison of State Aid

010,000,00020,000,00030,000,00040,000,00050,000,00060,000,00070,000,000

Current Year Comparison of State of Michigan Peer Group Property Tax

Revenue

MCC is 4th lowest in Total Revenue

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

Current Year Comparison of State Peer Group Total Revenue

Tuition & Fees: Local ComparisonCollege Yearly Tuition & Fees

Mott CC 3,644 Saginaw Valley University 8,134 Eastern Michigan University 8,637University of Michigan - Flint 9,182 Oakland University 9,938 Baker College - Flint 10,080 Ferris State University 10,440 Central Michigan University 10,950 University of Michigan – Ann Arbor 12,634Michigan State University 12,821Davenport University 15,150 ITT Technical of Flint 31,272Kettering 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.57

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Key Assumptions – RevenueTuition and fee revenue increases at 3.9% each yearProperty tax revenue decreases for 1 year with flat and slight increases (1.5-2.5%) thereafter0.6410 Mill Voted Operating Millage is renewed for 10 years starting with FY08-09State appropriations increase at 3% for two years and 2% increases thereafterOther revenues increase by 2% each yearTotal revenue increases by avg. of 2.8%

61

Key Assumptions - ExpensesSalaries and wages increase by an average of 3.35% Fringe benefits increases at a historical average rate of 4.5% each yearOther expenses increase by avg. of 3% each yearTotal expenses increase by avg. of 3.7% each year

62

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 solutionsShort-term savings and flexibility continues to be keyLong-term strategy of managing total compensation costs

63

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.64

Revenues

Amended

Budget

2011-2012

Initial

Budget

2012-2013 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19

Tuition and Fees 39.0 40.6 42.2 43.9 45.6 47.4 49.2 51.1

Property Taxes 18.9 17.7 17.1 17.1 17.4 17.6 17.9 18.4

State Appropriations 14.4 15.0 15.5 15.9 16.3 16.6 16.9 17.2

All Others 3.7 3.5 3.6 3.7 3.7 3.8 3.9 4.0

Total Revenue 76.0 76.8 78.4 80.6 83.0 85.4 87.9 90.7

Revenue I ncrease (Decrease): 1.0% 2.1% 2.8% 2.9% 2.9% 3.0% 3.2%

Expenditures

Salaries 39.5 40.6 41.8 43.4 45.1 46.8 48.6 50.4

Fringe Benefi ts 17.6 17.0 17.8 18.6 19.4 20.3 21.2 22.2

All Others 19.7 19.2 20.4 20.9 21.4 21.9 22.4 23.0

Total Expenditures 76.8 76.8 80.0 82.9 85.9 89.0 92.2 95.6

Expenditure I ncrease (Decrease): -0.1% 4.1% 3.6% 3.6% 3.6% 3.6% 3.6%

Surplus/(Deficit): -0.80 0.01 (1.6) (2.3) (2.9) (3.6) (4.3) (4.9)

Fund Balance 6.7 6.7 5.1 2.8 (0.1) (3.7) (8.0) (12.9)

COMMENTS/QUESTIONS?

65