Mott Community College

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Mott Community College

• Board of Trustees Meeting
• June 21, 2004
• BUDGET WORKSHOP

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BUDGET WORKSHOP 6/21/04

• FY03-04 Final Amended Budget
• FY04-05 Proposed Budgets
• Strategic Initiatives
• 7-Year Forecast
• Capital Funding
• Future Outlook
• Questions

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FINAL FY03-04 AMENDED BUDGET
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• RELEVANT BOARD POLICIES
• 3100 Budget Adoption. 3. Budget revisions will
  be brought forward for Board action as necessary,
  but not less than twice per year in January and
  June.
• 3920 Financial Stability. 9. The College will
  designate and set aside appropriate fund reserves
  to support plans for long-term capital and
  operating commitments.
• 5100 Compensation Philosophy. 1. 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.

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PROPOSED FINAL FY03-04 AMENDED BUDGET

• Significant Changes from Jan04 Amendment
• REVENUES
• Tuition Fees 619 thousand, 3 adj.
  credit enrollment up
• Ballenger Trust -175 thousand market
  still not recovered
• Other Revenue 51 thousand bookstore
  commission up
• Overall final upward amendment to revenue is
  495 thousand
• 0.9 change from January 2004 amendment

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PROPOSED FINAL FY03-04 AMENDED BUDGET

• Significant Changes from Jan04 Amendment
• EXPENDITURES
• Amended upward by 399 thousand, 0.7 change
• Salaries Wages, and Fringe Benefits
  --positions not filled
• Contracted Services --spending holds overall,
  projects delayed
• Operations/Communications --targeted cuts
  in spending
• Transfers --addl contribution to Maint/Repl.
  Fund to help 04-05
• RESULTS OF AMENDMENT
• FUND BALANCE 96K additional
• MAINTENANCE REPLACEMENT FUND 1.8M additional

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PROPOSED FINAL FY03-04 AMENDED BUDGET
GENERAL FUND BUDGET (fund 01)
Target 5 - 15 of Expenditure budget
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PROPOSED FINAL FY03-04 AMENDED BUDGET

• Key Strategic Accomplishments
• New policies implemented supporting long-range
  fiscal stability. (2.1)
• Bargaining Efforts focused on achieving long-term
  financial objectives. (2.0)
• Ended fiscal year maintaining operating fund
  balance and contributing to maintenance/replacemen
  t fund. (6.1)
• Long-term capital financing plan developed
  funding secured. (1.4)

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PROPOSED FY04-05 BUDGET
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PROPOSED FY04-05 BUDGET
Review of Budget Principles

• Budget must support Strategic Plan
• Minimize/Offset Impact on Students
• Avoid Overall Reduction in Staffing
• Maintain Fund Balance/Reserves

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PROPOSED FY04-05 BUDGET
Key Budget Issues

• Initial Projection in Jan04 for FY04-05 -3.7 M
• Further State Aid cuts were initially proposed
• Retirement and Health Insurance rates continuing
  to cause projected benefits cost increase of 14
• Negotiations were in progress with Faculty for
  proposed contribution toward pro rata cost
  reductions

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PROPOSED FY04-05 BUDGET

• Jan04 Initial Forecast for 04-05

This forecast shows -3.7M projected initially
for FY04-05, and -23M at the end of FY09-10,
using current assumptions and before steps were
taken to balance 04-05 and future budgets. It
shows the extent of the need to offset the
long-term impact from state aid cuts and lower
rising expenditure levels.
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PROPOSED FY04-05 BUDGET

• KEY ASSUMPTIONS
• REVENUES
• Revenue Enhancement of 2 Million,
• through a combination of 2.3 tuition and fee
  increases and
• the States Tuition Restraint Incentive Funding
• will cover 53 of the projected deficit.

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PROPOSED FY04-05 BUDGET

• KEY ASSUMPTIONS
• TUITION FEES
• Credit side enrollment expected to be flat.
• 2.3 rate increases are in line with inflation.
  More would be needed if not for proposed reward
  of increased state appropriations to make up
  difference.
• Course fees are adjusted, and the 21-contact
  hour billable cap is increased to 30 contact
  hours.
• Non-credit and extension site tuition is
  budgeted at 4.8 million, which is a 1 increase
  over 03-04.

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PROPOSED FY04-05 BUDGET

• KEY ASSUMPTIONS
• PROPERTY TAXES
• Up 792 thousand from 03-04 due to a 4 property
  tax value increase.
• Millage Rate decreased from 1.9966 to 1.9907

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PROPOSED FY04-05 BUDGET
KEY ASSUMPTIONS (continued)

• STATE AID (PENDING)
• 3 increase proposed by governor and both
  legislative houses. Not expected to be finalized
  until later this summer.
• Due to state budget constraints, funding not yet
  secured for the tuition restraint incentive
  portion, totaling 840 thousand for MCC.

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PROPOSED FY04-05 BUDGET

• KEY ASSUMPTIONS (continued)
• OTHER REVENUE
• Projected increase of 14, including Ballenger
  Trust income, unrestricted grants and donations,
  and facilities rentals.
• Overall Revenues for 04-05 are projected to
  increase by 4 from the final 03-04 budget, much
  better than the 0.3 decline we experienced this
  year.

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PROPOSED FY04-05 BUDGET
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PROPOSED FY04-05 BUDGET

• KEY ASSUMPTIONS (continued)
• EXPENDITURES
• Cost Cuts of 1.7M will cover 47 of the
  initially projected deficit

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PROPOSED FY04-05 BUDGET

• KEY ASSUMPTIONS (continued)
• EXPENDITURES
• Overall increase of 2.3 million or 4 over the
  final 03-04 budget.
• Salaries Wages 3.3 includes step and pay
  scale increases (smaller than past
  history--compare to 6.8 increase the prior year)
• Fringe Benefits 14 to account for health
  insurance rate increases and retirement
  contribution rate increases
• Non-Salary -3 due to necessary spending cuts

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PROPOSED FY04-05 BUDGET

• KEY ASSUMPTIONS (continued)
• SUMMARY--FY 04-05 BUDGET BALANCING STEPS
• Accept States Tuition Restraint Incentive
  Funding
• Increase course fees to cover cost raise
  billable hour cap
• Employee group agreements to reduce compensation
  costs
• Continue holds on filling many of 46 vacant
  positions
• 0 Inflationary adjustment for most non-salary
  lines
• Fund 04-05 planned contribution for Maintenance/
  Replacement with 03-04 savings
• Foundation for MCC commitment of 50 thousand to
  help offset institutional scholarship cost

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PROPOSED FY04-05 BUDGET

• Summary What was implemented for 04-05?
• 47 of projected deficit
• Cost cuts, 1.7M
• 53 of projected deficit
• Revenue enhancements, 2M

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PROPOSED FY04-05 BUDGET
GENERAL FUND BUDGET (fund 01)
Target 5 - 15 of Expenditure budget
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PROPOSED FY04-05 BUDGET
Planned Results

• Balanced budget, with small surplus in general
  fund
• Acceptance of Increased Funding offered by State
  affordability maintained for students
• Continued commitment from General Fund to cover
  shorter term capital needs in maintenance
  replacement fund
• No Reduction in Force Planned
• Strategic Goals and 7-year impact considered
  throughout process

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PROPOSED OTHER FUNDS FY04-05 BUDGETS

• Main Point is Impact on Operating Budget
• Designated Fund1.6 million budget
• (Scholarships, Student Enrichment, Copy Machines,
  Paid Parking, Designated Technology Fee)
• 352,000 revenue from building rentals, sales
• 900,000 revenue from student Technology Fee
• 362,000 funded with General Fund (expense)
  transfers
• 50,000 funded with contribution from Foundation
  for MCC
• Auxiliary Enterprise Fund--612,000 budget
• (Catering, Day Care, Vending, Bookstore)
• 308,000 net profit supplements General Fund
  (revenue)

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PROPOSED OTHER FUNDS FY04-05 BUDGETS

• Main Point is Impact on Operating Budget
• Debt Retirement Fundno General Fund impact
• Millage Rate decreases from 0.82 to 0.69
• New Bond Debt of 15 million included
• Capital Fundsrepair, upgrade of buildings,
  equipment, technology, vehicles (100 million in
  net value)
• Instructional Technology Fee 900K per year
• 1.8 Million per year planned transfer from
  General Fund still needed
• New 45 Million in Voted Bond Authority from June
  14, 2004 election meets remaining 7-year capital
  budget needs

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STRATEGIC INITIATIVES FOR 04-05 LINKED TO BUDGET
PROCESS
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STRATEGIC INITIATIVES FOR 04-05

• PROCESS
• Department level annual planning produced
  requests for 04-05 funding.
• President and Management Team reviewed and
  approved final list for funding
• Allocation for 04-05 again at reduced level from
  what it was in FY02-03
• NEXT STEPS
• September 2004 Report on 03-04 initiatives
• more details on 04-05 initiatives
• January 2005 Begin process for 05-06 initiatives

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STRATEGIC INITIATIVES FOR 04-05

• Budget Impact--Summary
• Total 360,000 set aside in 04-05 budget most
  are one-time items
• 1.1M 7-yr impact, but with no new FTE requested
• (Many more initiatives will take place, but
  without new budget impact)

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STRATEGIC INITIATIVES FOR 04-05
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7-YEAR FORECAST
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7-YEAR FORECAST

• Review of Prior 7-Year Forecast (as of Jan04)
  -23M Deficit

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7-YEAR FORECAST

• Review of Prior 7-Year Forecast What changed
  from January 2004?
• State Aid Tuition Restraint Incentive Funding
  proposal
• Adds 10 million back over 7 years, IF FUNDED
• Tuition, Fees, Other Revenues
• Added 3 million to forecast over 7 years based
  on 03-04 actual enrollment fee increases
• REVENUES 13 Million better than Jan04
  forecast

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7-YEAR FORECAST

• Review of Prior 7-Year Forecast What changed
  from January 2004?
• Salaries Fringes
• Contribution toward Pro Rata share from all 7
  groups achieved, adding 10 million in savings
• Health Insurance, Retirement costs increased,
  subtracting 7 million of savings
• Non-Salary Lines
• Increase of 2 million over 7 years
  reclassification of prior items charged to
  capital funds
• EXPENDITURES 1 million better than Jan04
  forecast

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7-YEAR FORECAST

• What changed from January 2004?
• Bottom Line
• Current Forecast is -10 Million at end of
  FY09-10
• This is 13 Million better than Jan04 Forecast
  but only 3 Million better than Jun04 forecast
• State Appropriations (pending) are not as bad as
  prior projections
• Short-term savings and flexibility continues to
  be key
• Thanks to employee groups, long-term strategy of
  reducing compensation costs is working!

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7-YEAR FORECAST

• Employee Pro Rata Contributions to date

6 Groups have met pro rata request with 3-year
contracts Faculty have met over half of request
with 2-year agreement.
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7-YEAR FORECAST

• Current 7-Year Forecast (As of Jun04) -9.6
  Million at FY09-10

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CAPITAL FUNDING
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Capital Funding

• 7-Year Needs Identified 67 Million
• Financing Plan in place, with successful voter
  support granting MCC 45 Million in Bond
  Authority
• First 15 Million in Bond Proceeds to arrive on
  June 30, 2004
• Commitment of Operating Funds and Continuous
  Planning necessary to provide quality and updated
  facilities, equipment and technology

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FUTURE OUTLOOK Next Steps and Key Issues for
Consideration
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FUTURE OUTLOOK Key Issues

• 0.65 Operating Millage will need to be
  renewed/increased before expiration at end of
  2007-08
• Reducing Compensation costs Long-term budget
  challenge remains to control rising expenditure
  levels
• States budget careful watch and continued
  flexibility will be needed on our end
• Current 2001-2006 Strategic Plan ends soon new
  cycle to begin

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Next Board Actions
PROPOSED FY04-05 BUDGET

• FY04-05 Budget Amendment
• Nov/Dec04

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Questions or Comments?For More
InformationDetails are Provided with Board
Resolutions 2.78 and 2.80

• MCC Board of Trustees Meeting
• June 21, 2004
• BUDGET WORKSHOP

Kelli Sproule, Chief Financial Officer
810-762-0525 ksproule_at_mcc.edu