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Mott Community College Board of Trustees and Employee Open Forum June 25, 2013 Financial State of the College Update Slide 2 Final FY12-13 General Fund Budget 11-12 Actual12-13 Amend #112-13 Amend #2 Revenues$ 76,604,567$ 73,180,846$ 72,823,915 Expenditures 77,564,207 73,507,430 73,266,137 Excess (Deficit) Revenues Over Expenditures $ (959,640)$ (326,584)$ (442,222) Fund Balance Beginning$ 7,466,087$ 6,506,447 Fund Balance Ending$ 6,506,447$ 6,179,863$ 6,064,225 Fund Balance Percent*8.39%8.40%8.28% 2 Summary *Target = 5% - 10% of Expenditure budget Slide 3 PROPOSED FY 13-14 BUDGET 3 Slide 4 4 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 : _____________________________________________________________________ Slide 5 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 7-4. Seek and cultivate alternative resources to supplement and/or increase existing revenue streams and funding sources 5 _____________________________________________________________________ Slide 6 FUNDING SOURCES (2013-2014) State Aid Property Taxes -Operating -Debt Tuition 6 Slide 7 Enrollment and State and Local Funding per Fiscal Year Equated Students (FYES) 7 Slide 8 THEN and NOW 8 State Aid Funding $15,344,107 State Aid Funding $15,021,410 Slide 9 Projected Property Tax Funding FYE 2010 through FYE 2016 ($19.3 Million lost since 2009-2010) 9 Slide 10 MCC is 3 rd Lowest in Millage Rate, and has the Largest Property Tax Decline Grand Rapids SchoolcraftHenry Ford Wayne County Mott Delta Kalamazoo Valley Washtenaw 0% 2% -2.4% 0.2% -1.0% 0% 1.7% 1.79 1.80 1.99 2.40 2.41 2.24 3.00 3.46 Slide 11 Slide 12 Percentage of Property Tax and State Aid of Total Funding 12 Slide 13 Budget Balancing per Contact Hour 13 Slide 14 FEDERAL STUDENT FINANCIAL AID AND MCC 14 Slide 15 Tuition and Financial Aid 15 Slide 16 Increased Five-Fold in Ten Years Slide 17 Pell Award & Cost of Tuition Mott Community College In-District (Published 13/14) Saginaw Valley State University In-State Pell Awarded$5,635 Tuition & Fees (30 contact hours) $4,042$8,120 Books & Supplies$1,000 Difference$593-$3,485 Student Needs Unmet Student Receives Remaining Balance Slide 18 Pell Distribution 12/13 2013/1 2013/4 - Preliminary Awarded Educational Tuition & Fees Educational Books & Supplies Charges Non-Educational $$ Given To Students $23,621,967 $17,675,343$3,040,480$2,906,145 Approx. 7,635 Students Slide 19 THE AMERICAN OPPORTUNITY TAX CREDIT (AOTC) PELL for Most EVERYONE ELSE ? Slide 20 American Opportunity Tax Credit (AOTC) How did his come to be? Slide 21 Pell American Opportunity Tax Credit (AOTC) Pell for Most Everyone Else Maximum Award$5,635$2,500 EnrollmentSliding Scale up to full-timeAt least Half Time Income LimitsExpected Family ContributionModified AGI< $80,000 Single < $160,000 MFJ Program of StudyDegree or Certificate-Accredited Institution Can be used forTuition, fees, books, equipment, supplies, leftover can be for living expenses Tuition, fees, books, equipment, supplies Length of Award6 years4 years Other EligibilityNot convicted of a felony drug offense Available Financial Aid (Pell and American Opportunity Tax Credit) Estimated - $14.3 Billion available annually for AOTC Slide 22 Tuition and Fee Recommendation 22 Slide 23 Tuition & Fees: Local Comparison CollegeYearly Tuition & Fees Mott CC 4,042 Baker College - Flint 7,560 Eastern Michigan University7,701 Saginaw Valley University 8,120 University of Michigan - Flint 9,102 Ferris State University10,440 Central Michigan University 10,950 Oakland University 11,183 Davenport University11,544 Michigan State University12,622 University of Michigan Ann Arbor13,625 Kettering University29,536 Cost as based on rates published from the Petersons Guide at www.petersons.com as of 5/2/2013www.petersons.com MCCs annual cost is approximately 48% of that of the next most affordable college/university in our area. 23 Slide 24 What if Tuition Covered State Aid Losses? Slide 25 25 Initial FY13-014 General Fund Budget 12-13 Amend #2Initial 13-14 Revenues$ 72,823,915$ 75,223,819 Expenditures 73,266,137 75,657,116 Excess(Deficit) Revenues Over Expenditures$ (442,222)$ (433,297) Fund Balance Beginning$ 6,506,447$ 6,064,225 Fund Balance Ending$ 6,064,225$ 5,630,928 Fund Balance Percent* 8.28% 7.44 Summary *Target = 5% - 10% of Expenditure budget Slide 26 CAPITAL FUNDING Slide 27 MCCs 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 Slide 28 Asset Value NewEnd of LifePremature End of Life MCC Asset Value vs. Time (Asset Life) Planned Maintenance points Extended Life Slide 29 Capital Asset Funding Current 10 year needs are approximately $85 million Taxable Values Declining Availability of Bonds? Approx. $1.6 million in tech fees annually Slide 30 30 Slide 31 Key Assumptions Revenue Tuition and fee revenue increases at 3.9% each year Property tax revenue remain flat for 1 year with slight increases (1.5-3.0%) thereafter 0.6410 Mill Voted Operating Millage is renewed for 10 years starting with FY08-09 State appropriations increase at 2% Other revenues increase by 2% each year Total revenue increases by avg. of 2.9% 31 Slide 32 Key Assumptions - Expenses Salaries and wages increase by 3.2% each year Fringe benefits increase at a rate of 3.0% each year Other expenses increase by avg. of 2.4% each year Total expenses increase by avg. of 3.0% each year 32 Slide 33 Projected General Fund Balance would be $692 thousand at end of FY19-20, if current trends continued (Revenue growth of 2.9% vs. expenditure growth of 3.0%) Based on an average projected gap of $823 thousand 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 33 Slide 34 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 its budget each year and will take necessary steps to do so. 34 Slide 35 Mott Community College Board of Trustees Committee of the Whole Meeting June 24, 2013 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