KCC FINANCIAL UPDATE Budget, Financial & Tuition

1. KCC FINANCIAL UPDATEBudget, Financial & Tuition 2019

2. Agenda • Budget Update • 2019 Budget & Mid-Year Update • 2020 Budget • Financial Update • Enrollment Impact • PPT Impact • Tuition Considerations & Approved Changes • Q&A/Discussion

3. 2019 Budget & MYBU INTITIAL 2019 BUDGET - Balanced • Reserves and Contingencies • Enrollment Management Cabinet projected flat • Increases in Property Tax and Operating State Aid • PPT was estimated at $1.9 million • $600K+ in approved budget requests

4. 2019 Budget & MYBU 2019 MID-YEAR BUDGET UPDATE Revenue Changes (overall down $900,000) • Fall Enrollment down 5%, Spring Enrollment down 3% ($600,00) • Changed PPT estimate to $1.5M (down $400,000) • Eliminated reserves

5. 2019 Budget & MYBU 2019 MID-YEAR BUDGET UPDATE Expense Changes (overall down $100,000) • Eliminated vacancy savings in salaries • Rising costs in Fringe Benefits Expected Deficit for 2019 Year – ($800,000)

6. 2020 Budget Challenges Tuition revenue • Projected 19/20 Enrollment down 4.5% • Rates frozen since 2017 State aid • PPT reimbursement down $1 million from 17-18 to 18-19 • Operations funding flat Initial projection – $2.3 million deficit • With no tuition or salary increases • Continue capital freeze

7. 2020 Budget 2020 BUDGET Revenue Changes (up $1,095,000) • Increases in Tuition and Fees - $900,000 • Increases in local property tax values - $200,000 • Budgeted PPT reimbursement $100,000 lower • Includes Reserves

8. 2020 Budget 2020 BUDGET Expense Changes (up $1,195,000) • Includes reserves, vacant positions, and an estimate for raises • 10% reduction in department operating funds Projected Budget Deficit - $900,000

9. FYES & MI Unemployment Rate • FYES = Total credit hours divided 31 • ACS Databook through 2016; Beyond 2017 through KCC calculation & estimation

11. PPT Reimbursement History

12. April Board Discussion Items(Approved in italics) • Staffing – plan is for no cuts to staffing or programs • Tuition rates – $107.50 per credit hour (State average - $130) • Phase in $3.50 per credit increase over next 4 semesters (3.25% each) • Technology fee – $12 per credit hour ($17) • Increase $6 per credit hour to approximate State average • Student services fee – $3 per credit hour ($13) • Increase $6 per credit hour • Online course fee – $20 per credit hour • Increase $15 per credit hour • Department Operating Funds – $1.15 million • Across-the-board 10 percent cut • Use Unrestricted Fund Balance – $5.3 million (13% of budget) • Plan to use 2% over the three semesters - $600,000 • Adjust use as needed at MYBU to balance budget • Current vacant positions in projection – $930,000 • Leave all vacant positions in budget

13. April Board Discussion Items(Approved in italics) • Dual Enrollment/Early College discounts – $320K per year • No changes to discounts/adjustments for in-district K-12’s • No change to non-resident discount (BISD model being developed) • Credit card convenience fee – $0 currently • Do not implement convenience fees • Registration fee – $0 currently ($41) • Do not implement Registration Fee – use Student Services Fee in lieu of • TOTAL IMPACT OF RECOMMENDATIONS – $2.6 MILLION

14. Two approaches to consider • OPTION 1 – Phase-in approach • Phase in needed tuition rate increase over four semesters • Least out-of-pocket impact to students • Continued supplement of budget with Unrestricted Fund Balance • Would still be in compliance with Board policy on reserves • OPTION 2 – Rip off the bandaid approach • Implement needed increases at once • $10 per credit in tuition in Fall Semester (no phase-in) • Preserves Unrestricted Fund Balance at 13% • Policy range is 10% - 15% • RECOMMENDATION – OPTION 1 • Least impactful to students • Still in compliance with reserves policy

15. KCC Financial Update Questions/Discussion Rick Scott, ext. 2276 Brian Murphy, ext. 2255 RESOURCES http://www.kellogg.edu/about/finance/transparency/ M:\KCC Share\Administration and Finance\Financial Reports