2012-2013 Budget/Finances

1. 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

3. Trends in Funding Sources & Enrollment

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

5. CURRENT YEAR BUDGET IMPACT

6. FYE 2013 Impact in Dollars $5,795,000

7. Tuition Keeps Up with Lost Funding/Increase in Non-controllable costs for FYE 2013 $40.87 $148.92

8. What if Tuition Covered State Aid Losses?

9. Current Year Budget Balancing Steps

10. 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)

11. BUDGET SHORTFALL 2012-2013 • Shortfall Remaining $ 1,628,000 • Tuition To Cover $9.18/contact hour

12. Tuition and Financial Aid

13. FEDERAL FINANCIAL ASSISTANCEPELL GRANTS

14. Increased Five-Fold in Ten Years

15. Pell Distribution – 10/11 Sample of Approx. 9,540 Students

16. Pell Distribution – 11/12 Sample of Approx. 9,700 Students

17. Pell Award & Cost of Tuition Student Receives Remaining Balance Student Needs Unmet

18. the american OpportunityTax credit (AOTC) “PELL for Most EVERYONE ELSE ?”

19. Available Financial Aid (Pell and American Opportunity Tax Credit) Estimated - $14.3 Billion available annually for AOTC

20. 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

21. Tuition Increases and Amount Refunded from the AOTC

22. What Have We Done Regarding Controlling/Cutting Costs?

23. Expenditure Reductions • Energy Conservation Project - Utility costs averaged 8.2% in 2003, Now they are 3.1% • Hold on vacant positions • Average savings of $750K per year • Change in timing of custodial shift • Savings of approximately $170K per year • Eliminating and restructuring food service • Was losing approximately $100K per year • Now generating $48K per year in revenues

24. Expenditure Reductions • Utility Reduction Analyst Project • Resulted in $720K savings between 2004-2010 on Telecommunications/IT, Water, and Waste • 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 • Course Section Efficiency • Maximizing section seat count before adding new sections • Discretionary budget cuts • Average savings of $400K per year

25. Expenditure Reductions • Reduction of ORP (optional retirement plan) costs • Average annual savings of $400K • Combining Deans position • Fine Arts and Social Science combined saving $168K per year • Outsourcing custodial and grounds work at sites • Savings of approx. $350K per year • Health Insurance changes to coverage and plans • Savings $550K • New print shop lease • Savings of $200,000 per year • New Auditors • Savings of $60,580 over five years

26. Compensation as a Percentage of the General Fund Budget 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%.

27. A Comparisonto 7 Other MichiganPeer Community CollegesBased on 2010 –2011 ACS Data

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

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

32. MCC is 4th lowest in Total Revenue

33. Tuition & Fees: Local Comparison 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.

34. 7-YEAR FORECAST

35. 7-YEAR FORECAST • Key Assumptions – Revenue • Tuition and fee revenue increases at 3.9% each year • Property tax revenue decreases for 1 year with flat and slight increases (1.5-2.5%) thereafter • 0.6410 Mill Voted Operating Millage is renewed for 10 years starting with FY08-09 • State appropriations increase at 3% for two years and 2% increases thereafter • Other revenues increase by 2% each year • Total revenue increases by avg. of 2.8%

36. 7-YEAR FORECAST • Key Assumptions - Expenses • Salaries and wages increase by an average of 3.35% • Fringe benefits increases at a historical average rate of 4.5% each year • Other expenses increase by avg. of 3% each year • Total expenses increase by avg. of 3.7% each year

37. 7-YEAR FORECAST • 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 solutions • Short-term savings and flexibility continues to be key • Long-term strategy of managing total compensation costs

38. 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.

39. COMMENTS/QUESTIONS?