Mott Community College

Board of TrusteesCommittee of the Whole

MeetingJune 25, 2012

BUDGET RESOLUTIONS

For Consideration and Vote• Final Amended 2011-2012 Budget• Initial 2012-2013 Budget• Millage Authorization (Operating,

Debt)• Tuition Recommendation beginning

Winter 2013

2

FINAL FY11-12 AMENDED BUDGET:

General Fund

3

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

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.

Final FY11-12 General Fund Budget

10-11 Actual 11-12 Amend #1 11-12 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 $ 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

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

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 M11-12 Amended Budget reserve of $2.1 MAmount needed to fully fund is $1 M

Building/Site Fund (78)Requires 1-3% of College depreciated assets or $3.1 M11-12 Amended Budget reserve of just slightly over $3 M 8

_____________________________________________________________________

FUNDING SOURCES(2012-2013)

State Aid

Property Taxes-Operating

-Debt

Tuition9

Trends in Funding Sources & Enrollment

1999

-200

0

2004

-200

5

2009

-201

0

2011

-201

2

$3,500,000

$8,500,000

$13,500,000

$18,500,000

$23,500,000

$28,500,000

$33,500,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

State Aid Property Taxes Headcount

Fund

ing

Hea

dcou

nt

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

THEN and NOWTuition32%

Taxes

26%

State Aid36%

Other6%

1999-2000 Tu-ition

53%

Taxes23%

State Aid20%

Other5%

2012-2013

12

State Aid Funding

$15,344,107State Aid Funding

$15,021,410

13

Projected Property Tax Funding FYE 2010 through FYE 2016

$12

$14

$16

$18

$20

$22

$24

2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

$23.3

$20.2

$18.9

$17.6 $17.1 $17.1 $17.4

Million

s

$1.3 Million Decrease

$1.3 Million Decrease

$3.1 Million

Percentage of Property Tax and State Aid of Total Funding

14

63%58%

51%47%

44%42%

30%

40%

50%

60%

70%06

/30/

00

06/3

0/05

06/3

0/10

06/3

0/11

06/3

0/12

06/3

0/13

-

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 Award & Cost of TuitionMott Community College

In-District(Published 12/13)

Saginaw ValleyState University

In-StatePell 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

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

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%.

PROPOSED FY 12-13 BUDGET

20

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:_____________________________________________________________________

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

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_____________________________________________________________________

STRATEGIC INITIATIVES FOR 12-13

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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

PROPOSED FY12-13 BUDGET

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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

PROPOSED FY12-13 BUDGET

Key Assumptions Revenues

Property Taxes $ 1,287,950State Aid $ 637,810Tuition $ 1,612,930

PROPOSED FY12-13 BUDGET

Key Assumptions Expenditures

Transfers $ 569,640Salaries, Wages and Fringe Benefits $ 489,000Contracted Services $ 286,720Utilities and Insurance $ 220,200

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Initial FY12-013 General Fund Budget

11-12 Amend #2 Initial 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

PROPOSED “OTHER FUNDS” FY12-13 BUDGETS

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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)

PROPOSED “OTHER FUNDS” FY12-13 BUDGETS

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Main Point is Impact on Operating Budget:

Debt Retirement FundMillage 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).

CAPITAL FUNDING

• 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

Ass

et V

alu

e

New End of LifePremature End of Life

MCC Asset Value vs. Time

(Asset Life)Planned Maintenance points

Extended Life

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

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

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

TUITION PROPOSAL(CALENDAR YEAR 2013)

36

$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?Add in Property tax loss =

$325.48

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.38

Tuition Recommendation

39

2012 Calendar

Year Rate

2013 Calendar

Year Rate IncreasePer Contact In-District Rate 108.05$ 117.23$ 9.18$ Hour: Out of District Rate 161.75$ 170.93$ 9.18$

Out of State Rate 215.49$ 243.00$ 27.51$ Institutional Technology Fee 6.19$ 6.72$ 0.53$ Student Services Fee 108.05$ 117.23$ 9.18$

40

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%

41

Key Assumptions - ExpensesSalaries and wages increase by 3.1% for one year and then 3.8% thereafterFringe 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

42

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

43

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

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)

Final

Forecast

at

6/30/11

47.4

20.9

15.4

3.9

87.6

2.6%

48.9

20.5

23.1

92.5

3.3%

(4.9)

(13.7)

Mott Community College

Board of TrusteesCommittee of the Whole

MeetingJune 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