Mott Community College Board of Trustees and Employee Open Forum June 25, 2013

1. Mott Community CollegeBoard of Trustees and Employee Open ForumJune 25, 2013 Financial State of the College Update

2. Final FY12-13 General Fund Budget Summary *Target = 5% - 10% of Expenditure budget

3. PROPOSED FY 13-14 BUDGET

4. RELEVANT BOARD POLICIES: _____________________________________________________________________ • 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.”

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

6. FUNDING SOURCES(2013-2014)State AidProperty Taxes-Operating-Debt Tuition

7. Enrollment and State and Local Funding per Fiscal Year Equated Students (FYES)

8. THEN and NOW State Aid Funding $15,344,107 State Aid Funding $15,021,410

9. Projected Property Tax Funding FYE 2010 through FYE 2016($19.3 Million lost since 2009-2010)

10. MCC is 3rd Lowest in Millage Rate, and has the Largest Property Tax Decline 2% 1.7% Mott Kalamazoo Valley 0.2% 0% 0% 0% 1.99 2.41 Grand Rapids Schoolcraft Delta Wayne County Henry Ford Washtenaw 1.80 2.40 3.46 3.00 2.24 1.79 -1.0% -2.4%

12. Percentage of Property Tax and State Aid of Total Funding

13. Budget Balancing per Contact Hour

14. FEDERAL STUDENT FINANCIAL AID AND MCC

15. Tuition and Financial Aid

16. Increased Five-Fold in Ten Years

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

18. Pell Distribution – 12/132013/1 – 2013/4 - Preliminary Approx. 7,635 Students

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

20. American Opportunity Tax Credit (AOTC) How did his come to be?

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

22. Tuition and Fee Recommendation

23. Tuition & Fees: Local Comparison Cost as based on rates published from the Peterson’s Guide at www.petersons.com as of 5/2/2013 MCC’s annual cost is approximately 48% of that of the next most affordable college/university in our area.

24. What if Tuition Covered State Aid Losses?

25. Initial FY13-014 General Fund Budget Summary *Target = 5% - 10% of Expenditure budget 25

26. CAPITAL FUNDING

27. Link to Mission and Strategic Plans • 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.”

28. MCC Asset Value vs. Time(Asset Life) Planned Maintenance points Asset Value New Premature End of Life End of Life Extended Life

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

30. 7-YEAR FORECAST

31. 7-YEAR FORECAST • 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%

32. 7-YEAR FORECAST • 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

33. 7-YEAR FORECAST • 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

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 it’s budget each year and will take necessary steps to do so.

35. Mott Community CollegeBoard of TrusteesCommittee of the Whole MeetingJune 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