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The 2013 national and state economic recession continues to affect college budgets and revenue generation. With student enrollment declining and failure to meet FTES targets, ongoing permanent reductions are necessary. Mission College faces a significant budget cut of $1.35 million, while the district experiences an overall shortfall. The Basic Aid framework provides some financial hope, but there is a pressing need for strategic budget planning and assessment of new programs to attract students. Collaboration and innovation will be key to future financial stability.
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All CollegeBudget Forum Mission College October 11, 2013
Overview • The national and state economic recession and recovery has a long-term impact • Not meeting FTES targets and efficiency targets impacts our revenue generation • Both colleges and the district have balanced budgets through a combination of one-time cuts and contributions from the Land Corporation
Overview • Decline in student enrollment results in lowered ongoing revenue • To balance the budget all entities must identify ongoing, permanent reductions • MC=$1.35 Million • District=$630,000 • WVC= $1.5 Million • Basic Aid provides glimpse of hope from future revenue growth
FY 12/13 Budget Recap • Adopted budget was balanced • Prop. 30 passed – no mid-year “trigger” cuts • Missed out on growth funding (177 FTES ) • Create EPA account (Prop 30 $ at $100/FTES) • District foregoes $50M in restoration funding • WVC and MC missed their FTES targets by 250 FTES each • On State “stability”, but entered Locally Funded Basic Aid
Basic Aid Definition • Basic aid occurs when local property tax revenue exceeds total funding that the State provides as calculated by SB 361 apportionment. • Local property taxes and enrollment fees are primary source of revenues.
The Bucket Analogy • 2012/13 funding formula, District received $5.4M in state apportionment • Local property tax/student fees exceeded $5.4 in apportionment, entered Basic Aid
Revenue Impact of Basic Aid • District’s Core Funding is notaffected by issues at the state level • State budget shortfalls • Community College system shortfall • Deferrals
Revenue Impact of Basic Aid • District continues to receive funding for: • Student Categorical Funds • EOPS, DSPS, Financial Aid, Student Success • Lottery • Mandated Costs • EPA • Other grants • Funding dependent on # of students/FTES
Greater Impact of Basic Aid • Better planning • More stability in revenue • Less impact from the ups and downs of state funding • Potential for incremental growth • Slow growth dependent on Santa Clara County tax revenues
Fiscal Stability Planning • 2013-2014 • One Time Budget Reduction ($578K MC) • Reductions recommended by GAP Spring 2013 • Basic Aid Status • Revenues from property taxes • Potential Slow Growth • One time funds • Participatory Task Force to determine use
FY 13/14 District Budget Budget development approach • Balance with one-time funds for FY 13/14 • Estimated shortfall – $4.5 million • Available revenues • $3.0 million from the Land Corporation • $1.5 million District Services/Colleges • $578,000 from Mission College
Fiscal Stability Planning • Ongoing Structural Deficit • Living year-to-year with • One time cuts • Land Corp infusions of dollars • 14/15 • Ongoing Permanent Budget Reduction • District – approximately $3.5M • MC portion – approximately $1.35M
Constraints on Reductions • 50% Law • Full Time Obligation Number (FON) • Required to be 311 based on state requirements • Fine from State is significant • Timing is awkward • Likely will be hiring for Fiscal Year 2014-15 to meet this obligation
It’s Bigger Than Us • Structural and Economic Changes • End of the wave of Baby Boomer children • Improving Silicon Valley economy • We are not alone in this, but we still have to adjust to this new environment • Our only growth will come from attracting new students with new and refreshed programs and higher retention
Structural Deficit • Reliance on Land Corporation and One Time Cuts to balance budget each year • Smaller FTES & Headcount = Loss of Revenue • 12-13 Target missed by 250 FTES • 83 FTES from Prop 30 • Restoration not restored (based on Growth) • Missing Efficiency Targets 550-555. • 10 points = $400K
FY 14/15 Budget Planning • On-going budget reductions for FY 14/15 • Estimated shortfall – $5.0 million • Available revenues for 14/15 • $3.5 million budget reduction • $1.5 million from the Land Corporation • On-going budget reductions continue beyond FY 14/15
Re Cap--How did we get here? • Past 4 budgets have been balanced with one time funding—Not Sustainable • Combination of one-time cuts and Land Corp Stability Funding • Enrollment decrease=revenue decrease • 12/13 FTES target—MC short by 250 ($1.2M) • Prop 30 District short by177 FTES-MC =83 ($400K) • Serving almost 3000 less students • Non Peak Efficiency • Target short by 20 points ($800K)
Next Steps • Colleges Develop Budget Reduction Plans for FY 2014/15 and beyond • District develops Board policy for Basic Aid Funds Allocation • Based Participatory Governance • District Council Task Force recommendations
Looking to the Future • Financial stability in short term • Reductions address structural factors • Greater stability due to Basic Aid • Never a guarantee, but should not face cuts in the immediate future • Potential for growth • Basic Aid provides opportunity for growth in revenue in future years
Basic Aid Districts • Marin • Mira Costa • San Mateo • South Orange County • San Jose-Evergreen • West Valley-Mission
