MOTT COMMUNITY COLLEGEBoard of Trustees

Committee of the Whole MeetingJune 18, 2014

Budget Resolutions

For Consideration and Vote

Final Amended 2013-2014 Budget

Initial 2014-2015 Budget

Millage Authorization (Operating, Debt)

Tuition and Fee Recommendation beginning Winter 2015

FINAL FY13-14 AMENDED BUDGET:

GENERAL FUND

Final FY13-14 General Fund Budget REVENUESOverall upward amendment to revenue is $2.0 Million; 2.28% change from January 2014 amendment

Transfers In

State Aid

Up $400k$350,000 Decrease from Reserves

$1.6 Million for the UAAL Rate Stabilization

Payments

Tuition, Grants,

PropertyTaxes

Final FY13-14 General Fund BudgetEXPENDITURESAmended upward by $1.3 Million; 1.73%

Salaries & Fringe

Benefits

Savings in contracted services, materials & supplies, and utilities,

increase in bad debt expense, equipment

$1.6 Million for the UAAL Rate Stabilization Payments

Non-salary

related expenses

Final FY13-14 General Fund Budget SUMMARY 12-13 ACTUAL 13-14 AMEND

#113-14 AMEND

#2Revenues $ 73,746,195 $ 73,313,454 $ 75,078,928

Expenditures 73,671,482 73,896,751 75,265,897

Excess (Deficit) Revenues Over Expenditures

$ 74,712

$ (583,297) $ (186,969)

Fund Balance – Beginning $ 6,506,447 $ 6,581,160 $ 6,581,160

Fund Balance – Ending $ 6,581,160 $ 5,997,863

$ 6,394,191

Fund Balance Percent* 8.92% 8.18% 8.52%

* Target = 5% - 10% of expenditure budget

Final FY13-14 General Fund BudgetNET RESULTS OF AMENDMENT:

6/30/2014 projected to end with ($187,000) reduction

FUND BALANCE : $400,000 higher than the January Amended Budget

Reserves as Required by Board Policy #3930FUND 01 72 78

Fund Name General Operating Reserve

Maintenance & Replacement Fund

Building & Site Fund

Requires 5-10% of annual operating expenses

1-3% of College depreciated assets

or $3 M

1-3% of College depreciated assets

or $3 M

13-14 Amended Budget Reserve 8.5% $1.6 million $1.8 million

Amount Needed to Fully Fund $1.4 million $1.2 million

Funding Sources2014 -2015State Aid

Tuition

Property Taxes

Debt Operating

THEN and NOW

Tuition32%

Taxes26%

State Aid37%

Other6%

1999-2000

Tuition50%

Taxes24%

State Aid21%

Other6%

2013-2014

State Funding$15,344,107

State Funding$15,306,817

What if Tuition Covered State Aid Losses?

2001

-200

2

2002

-200

3

2003

-200

4

2004

-200

5

2005

-200

6

2006

-200

7

2007

-200

8

2008

-200

9

2009

-201

0

2010

-201

1

2011

-201

2

2012

-201

3

2013

-201

4

$- $20 $40 $60 $80

$100 $120 $140 $160 $180 $200

$61 $63 $69 $71 $76 $80 $82 $85 $87 $94$103

$113 $120

$61$73

$100 $100$115 $121 $129 $130 $133

$147

$167$175 $175

Actual Hypothetical

Projected Property Tax Funding FYE 2010 through FYE 2016

($19.4 Million lost since 2009-2010)

2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 $12,000,000

$14,000,000

$16,000,000

$18,000,000

$20,000,000

$22,000,000

$24,000,000

$23,266,144.

0

$20,168,704.0

$18,940,451.

0 $17,652,500.

0

$17,228,840.

0

$17,228,840.

0

$17,487,272.

0

$3.1 M $1.3 M $1.3 M$500K

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

2001

-200

2

2002

-200

3

2003

-200

4

2004

-200

5

2005

-200

6

2006

-200

7

2007

-200

8

2008

-200

9

2009

-201

0

2010

-201

1

2011

-201

2

2012

-201

3

$4,000

$4,500

$5,000

$5,500

$6,000

$6,500 Revenue per FYES

Fund

ing

Percentage of Property Tax and State Aid of Total Funding

6/20

00

6/20

01

6/20

02

6/20

03

6/20

04

6/20

05

6/20

06

6/20

07

6/20

08

6/20

09

6/20

10

6/20

11

6/20

12

6/20

13

6/20

14

30%

35%

40%

45%

50%

55%

60%

65%

70%

63%60%

62% 60%59% 58% 57% 56% 56%

54%51%

47%44% 45% 45%

A Comparison to Seven Other Michigan Peer Community CollegesBased on 2012 – 2013 ACS Data

Current Year Comparison of Millage Rates / Property Tax Declines with State Grouping

-9.0%

-8.0%

-7.0%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-2.5%

-4.6%

-0.3%

-1.7%

-0.9%

-7.7%

-0.7%

-4.5%

Prop

erty

Tax

es

Mill

age

Rate

s

MCC is 3rd Highest Millage Rate, and has the Largest Property Tax Decline

Current Year Comparison of State of Michigan Peer Group Property Tax Revenue

Hen

ry F

ord

Kala

maz

oo V

alle

y

Scho

olcr

aft

Del

ta

Mott

Gra

nd R

apid

s

Was

hten

aw

Way

ne C

ount

y

$-

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

12345678

Comparison of State of Michigan Peer Group Revenue Percentages

Delta Grand Rapids Henry Ford Kalamazoo Mott Schoolcraft Washtenaw Wayne County

0%10%20%30%40%50%60%70%80%90%

100%

21% 17% 24% 22% 19% 17% 13% 15%

32%26% 11%

34%31% 29%

49% 45%

45%53% 63%

41% 47% 51%34% 38%

State Aid Property TaxTuition & Fees All Other

Based on 2012 - 2013 ACS Data

What Have We Done Regarding Controlling/Reducing Costs?

Expenditure Reductions

More Expenditure Reductions

Even More Expenditure Reductions

Federal Student Financial Aid & MCC

Tuition & Financial Aid

2710000072%

23000006%

830000022%

Federal AidOther AidCash Paying

Total aid comprises 78% of MCC’s total tuition revenue

Pell Awards

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

Academic Year

Pell Award & Cost of TuitionMOTT COMMUNITY

COLLEGE IN-DISTRICT

(PUBLISHED 13-14)SAGINAW VALLEY STATE

UNIVERSITY IN-STATEPell Awarded $5,730 $5,730

Tuitions & Fees (30 contact hours)

$4,271 $7,985

Books & Supplies $1,000 $1,000

Difference $459 - $3,255

Student receives remaining balance

Student needs unmet

Pell Distribution – 2013/2014

AWARDED

EDUCATIONAL TUITION &

FEES

EDUCATIONAL BOOKS & SUPPLY

CHARGES

NON-EDUCATIONAL $$

GIVEN TO STUDENTS

$ 22,570,894 $ 17,655,767 $ 2,659,748 $ 2,255,3792014/1 to 2014/4 - Preliminary

Approximately 7,282 Students

Available Financial Aid (Pell & American Opportunity Tax Credit)

PellAmerican Opportunity Tax Credit (AOTC) “Pell for Most Everyone Else”

Maximum Award $5,730 $2,500

Enrollment Sliding Scale up to full-time At least Half Time

Income Limits Expected Family Contribution Modified AGI < $80,000 Single < $160,000 MFJ

Program of Study Degree or Certificate-Accredited Institution

Degree or Certificate-Accredited Institution

Can be used for Tuition, fees, books, equipment, supplies, leftover can be for living expenses

Tuition, fees, books, equipment, supplies

Length of Award 6 years 4 years

Other Eligibility Not convicted of a felony drug offense Not convicted of a felony drug offense

Tuition & Fee Recommendation2013 CY RATE

2014 CY RATE

INCREASE

Per Contact Hour

In-District Rate $ 122.50 $ 126.30 $ 3.80

Out of District Rate $ 177.96 $ 183.48 $ 5.52

Out of State Rate $ 253.54 $ 261.40 $ 7.86

Institutional Technology Fee $ 7.02 $ 7.24 $ 0.22

Student Services Fee $ 122.50 $ 126.30 $ 3.80

Student Administrative Fee $ 8.50 $ 8.76 $ 0.26

Tuition & Fees: Local ComparisonCollege

Yearly Tuition & Fees

Mott Community College $ 4,271Saginaw Valley University $ 7,985Eastern Michigan University $ 7,989Baker College – Flint $ 8,280University of Michigan – Flint $ 9,426Oakland University $ 10,613Ferris State University $ 10,950Central Michigan University $ 11,220Davenport University Not ReportedMichigan State University $ 12,862University of Michigan – Ann Arbor $ 13,783Kettering University $ 29,536

MCC’s annual cost is approximately 48% of that of the next most affordable college/university in our area

Cost is based on rates published from the Peterson’s Guide at www.petersons.com as of 6/11/2014.

Proposed Fiscal Year 2014-2015 Budget

Relevant Board Policies3100 BUDGET ADOPTION

• Budget revisions will be brought forward for Board action as necessary, but not less than twice per year.

3920 FINANCIAL STABILITY & 3930 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

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

Proposed FY14-15 General Fund Budget

REVENUES – KEY ASSUMPTIONS

Grants & Other

Property Taxes

Tuition & State

Aid

unchanged$1.5 million in tuition & fees; $430,000 in State Aid

($100,000) decrease in transfers in

Proposed FY14-15 General Fund BudgetEXPENDITURES – KEY ASSUMPTIONS

Salaries & Fringe

Benefits

Additional bad debt expenseNo across the board increases, minimal increase in health insurance (hard cap), and

blended MPSERS rate

Other Expenses

Initial FY14-15 General Fund Budget

13-14 AMEND #2 INITIAL 14-15

Revenues 75,078,928 75,430,356

Expenditures 75,265,897 75,424,741

Excess (Deficit) Revenues Over Expenditures (186,969) 5,615

Fund Balance – Beginning 6,581,160 6,394,191

Fund Balance – Ending 6,394,191 6,399,806

Fund Balance Percent* 8.52% 8.45%

* Target = 5% - 10% of expenditure budget

Proposed “Other Funds” FY14-15 Budgets

Main Point is Impact on Operating Budget

Designated Fund $2.7Million Revenue Budget Scholarships, Student Enrichment, Copy Machines,

Paid Parking, Designated Technology Fee

Auxiliary Enterprise Fund $994,000 Budget $751,750 Net “Profit” Supplements General Fund Catering, Vending, Bookstore, Computer Lab Printing,

Lapeer Campus Auxiliary

Proposed “Other Funds” FY14-15 Budgets

Main Point is Impact on Operating Budget

Debt Retirement Fund Millage rate remains at 0.87 mill to meet debt obligations

Capital Funds repair, upgrade of buildings, equipment, technology & vehicles ($101 million in net value) Instructional Technology Fee = $1.55 Million per year $765,000 per year planned transfer from General Fund

(minimum required annual expenses)

Capital FundingRegional Technology Center

Link to Mission and Strategic PlansMCC’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.”

Capital Asset Funding

Current 10 year needs are approximately $85 million Taxable Values Declining Bond Millage passed in

November 2013 ($50 M) Approx. $1.6 million in tech

fees annually

7 Year Forecast

7 – Year Forecast

Key Assumptions – Revenue Tuition and fee revenue increases at 1.0% each year Property tax revenue remain flat for 1 year with slight

increases (0.5-1.0%) thereafter 0.6410 Mill Voted Operating Millage is renewed for 10

years starting with FY08-09 State appropriations increase at 1% Other revenues increase by 2% each year Total revenue increases by an average of 1.4%

7 – Year Forecast

Key Assumptions - Expenses Salaries and wages increase by 2.5% each year Fringe benefits increase at a rate of 2.0% each year Total expenses increase by avg. of 2.4% each year

7 – Year Forecast

Projected General Fund Balance would be ($12.7) million at end of FY20-21, if current trends continued (Revenue growth of 1.4% vs. expenditure growth of 2.4%)

Based on an average projected gap of $823,000 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

7 Year Forecast at June 2014REVENUES

AMENDED BUDGET 13-14

INITIAL BUDGET

14-15 15-16 16-17 17-18 18-19 19-20 20-21

Tuition & Fees 36.6 38.2 38.6 38.9 39.3 39.7 40.1 40.5

Property Taxes 17.3 17.3 17.6 18.0 18.4 18.9 19.4 19.9

State Appropriations 16.9 15.7 15.9 16.1 16.2 16.4 16.5 16.7

All Others 4.2 4.2 4.3 4.3 4.4 4.5 4.6 4.7

TOTAL REVENUE 75.1 75.4 76.4 77.3 78.4 79.5 80.7 81.8

Revenue Increase (Decrease) 0.5% 1.2% 1.3% 1.4% 1.4% 1.4% 1.4%

EXPENDITURES

Salaries 40.0 40.3 41.3 42.4 43.4 44.5 45.6 46.7

Fringe Benefits 18.6 17.6 18.0 18.3 18.7 19.1 19.4 19.8

All Others 16.7 17.5 18.0 18.5 19.1 19.6 20.1 20.7

TOTAL EXPENDITURES 75.3 75.4 77.3 79.2 81.2 83.1 85.2 87.3

Expenditure Increase (Decrease) 0.1% 2.6% 2.4% 2.4% 2.4% 2.4% 2.5%

Surplus/(Deficit) (0.19) 0.06 (1.0) (1.9) (2.7) (3.6) (4.5) (5.5)

Fund Balance 6.3 6.4 5.4 3.4 0.7 (2.9) (7.4) (12.9)

Note: the forecast illustrates proforma data if current trends were to continue. The College is obligated to balance its budget each year and will take necessary steps to do so.

MOTT COMMUNITY COLLEGEBoard of Trustees

Committee of the Whole MeetingJune 18, 2014

Questions or Comments?

Larry Gawthrop, CFO (810) 762-0525

larry.gawthrop@mcc.edu

Details Provided with Board Resolutions 1.39 and 1.40