BUDGET DEVELOPMENTBUDGET DEVELOPMENTPROCESS & TENTATIVEPROCESS & TENTATIVE

BUDGET BUDGET

BOARD OF TRUSTEES MEETINGBOARD OF TRUSTEES MEETING

JUNE 25, 2007JUNE 25, 2007

June 25, 2007June 25, 2007 22

Resource AllocationResource Allocation

DRAC – District Resource Allocation CouncilDRAC – District Resource Allocation Council

Current process established by Board of Current process established by Board of Trustees’ action May 1997Trustees’ action May 1997

Charged with the development and oversight of Charged with the development and oversight of the allocation processthe allocation process

Makes recommendations to the ChancellorMakes recommendations to the Chancellor

June 25, 2007June 25, 2007 33

Council CompositionCouncil Composition

Nine voting members:Nine voting members:

– 2 Academic Senate Presidents or designee2 Academic Senate Presidents or designee

– 2 Academic Senate faculty appointments2 Academic Senate faculty appointments

– 2 Directors of College Fiscal Services2 Directors of College Fiscal Services

– 2 Vice Presidents of Instruction2 Vice Presidents of Instruction

– 1 District representative appointed by Chancellor1 District representative appointed by Chancellor

Chaired by Deputy Chancellor (non-voting)Chaired by Deputy Chancellor (non-voting)

June 25, 2007June 25, 2007 44

DRAC Revenue Allocation ModelDRAC Revenue Allocation Model

Location prior year ending balances carried Location prior year ending balances carried forwardforward

Revenue calculations based on SB 361Revenue calculations based on SB 361 FTES is updated according to attendance FTES is updated according to attendance

reports (CCFS-320) submitted to the Statereports (CCFS-320) submitted to the State State Budget ActState Budget Act

– COLACOLA– GrowthGrowth– OtherOther

Local College-based RevenueLocal College-based Revenue– Non-resident tuition, facilities use fees, student Non-resident tuition, facilities use fees, student

materials feesmaterials fees

June 25, 2007June 25, 2007 55

AllocationsAllocations

DRAC Model Distribution 2007-08:DRAC Model Distribution 2007-08:

– Colleges = 81.2% (split according to FTES)Colleges = 81.2% (split according to FTES)

– District = 9.8% fixedDistrict = 9.8% fixed

– General Expenses = 2.5% (legal fees, audit fees, IT General Expenses = 2.5% (legal fees, audit fees, IT priority projects, retiree benefits, property & liability priority projects, retiree benefits, property & liability insurance, election costs, etc.)insurance, election costs, etc.)

– Contingency = 6.5% fixed according to Board of Contingency = 6.5% fixed according to Board of Trustees’ budget development guidelinesTrustees’ budget development guidelines

June 25, 2007June 25, 2007 66

Expenditure Budget ProcessExpenditure Budget Process

District Fiscal Services updates all salaries & District Fiscal Services updates all salaries & benefits:benefits:

– Step and Column movementStep and Column movement

– Apply annual contractual increases Apply annual contractual increases

– Update Health Benefit BudgetUpdate Health Benefit Budget

– Update OPEB (Retiree Liability Costs) Update OPEB (Retiree Liability Costs)

– Revise Payroll Expense RatesRevise Payroll Expense Rates

• STRS, PERS, Unemployment Insurance, Worker’s Comp, etc.STRS, PERS, Unemployment Insurance, Worker’s Comp, etc.

Revise General Expense Budget ItemsRevise General Expense Budget Items

June 25, 2007June 25, 2007 77

District Services & ATEP Expense BudgetDistrict Services & ATEP Expense Budget

Budget Worksheets are Distributed to Budget Worksheets are Distributed to Departments via the Vice Chancellor and Departments via the Vice Chancellor and Provost officesProvost offices

Departments:Departments:

– Review Budgets for Personnel Position AccuracyReview Budgets for Personnel Position Accuracy

– Allocate Supply and Operating Funds to AccountsAllocate Supply and Operating Funds to Accounts

– Consult with Director of Fiscal Services and Deputy Consult with Director of Fiscal Services and Deputy Chancellor as appropriateChancellor as appropriate

June 25, 2007June 25, 2007 88

District Services & ATEP Expense Budget, cont’d.District Services & ATEP Expense Budget, cont’d.

Budgets are Updated for Rising CostsBudgets are Updated for Rising Costs– MembershipsMemberships

• Commission on Athletics, Community College LeagueCommission on Athletics, Community College League

– New Employee FingerprintingNew Employee Fingerprinting– Maintenance agreements for equipment & softwareMaintenance agreements for equipment & software

• Copiers, Mail Machines, Fusion System (for Capital Copiers, Mail Machines, Fusion System (for Capital Projects)Projects)

Deputy Chancellor & Director of Fiscal Services Deputy Chancellor & Director of Fiscal Services make recommendations to the Chancellor for all make recommendations to the Chancellor for all district servicesdistrict services

June 25, 2007June 25, 2007 99

Irvine Valley College Expense BudgetIrvine Valley College Expense Budget

Total Allocation established by DRAC modelTotal Allocation established by DRAC model

Budget Worksheets are Distributed to DepartmentsBudget Worksheets are Distributed to Departments

Departments:Departments:– Review Budgets for Personnel Position AccuracyReview Budgets for Personnel Position Accuracy

– Propose Budgets for Discretionary Expenditures:Propose Budgets for Discretionary Expenditures:• SuppliesSupplies• ContractsContracts

– Propose Budgets for Mandatory Expenditures:Propose Budgets for Mandatory Expenditures:• Maintenance agreements for equipment & softwareMaintenance agreements for equipment & software• Utilities Utilities

June 25, 2007June 25, 2007 1010

Irvine Valley College Expense Budget, cont’d.Irvine Valley College Expense Budget, cont’d.

Director of College Fiscal Services reviews Director of College Fiscal Services reviews departmental budgets in consultation with Vice departmental budgets in consultation with Vice Presidents, Deans, and DirectorsPresidents, Deans, and Directors

Significant new expenditure items are discussed Significant new expenditure items are discussed within various shared governance groups and within various shared governance groups and recommendations are made to the Presidentrecommendations are made to the President

– Strategic Planning ProcessStrategic Planning Process

• Comprehensive report submitted to the Board of Trustees in Comprehensive report submitted to the Board of Trustees in May 2007 May 2007

• Involves Academic Senate, ASIVC, Classified Management, Involves Academic Senate, ASIVC, Classified Management, Classified Senate, CSEA, Deans, and Faculty Association Classified Senate, CSEA, Deans, and Faculty Association

June 25, 2007June 25, 2007 1111

Irvine Valley College Expense Budget, cont’d.Irvine Valley College Expense Budget, cont’d.

– Budget Committee Budget Committee

• Makes recommendations to the President on fiscal mattersMakes recommendations to the President on fiscal matters

• Involves Academic Senate, ASIVC, Classified Management, Involves Academic Senate, ASIVC, Classified Management, Classified Senate, CSEA, Deans and Faculty AssociationClassified Senate, CSEA, Deans and Faculty Association

Vice Presidents & Director of College Fiscal Vice Presidents & Director of College Fiscal Services make final recommendations to the Services make final recommendations to the President for all departmental budgetsPresident for all departmental budgets

President makes final decisions on budgetary President makes final decisions on budgetary matters matters

June 25, 2007June 25, 2007 1212

Saddleback College Budget ProcessSaddleback College Budget Process

Revised Budget Allocation Process Two Years ago:Revised Budget Allocation Process Two Years ago:

– Previously Previously - Planning and Budget Committees Separate - Planning and Budget Committees Separate– CurrentlyCurrently - Integrated Planning and Budget Process - Integrated Planning and Budget Process– Planning and Budget Council (PBC)Planning and Budget Council (PBC)

Membership:Membership:– Academic Senate (4)Academic Senate (4) – Deans Cabinet (2)Deans Cabinet (2)

– ASG (2)ASG (2) – Director of College Fiscal Svcs (1)Director of College Fiscal Svcs (1)

– Classified Staff (2)Classified Staff (2) – Vice Presidents (2)Vice Presidents (2)

– Classified Mgmt (1)Classified Mgmt (1) – College President (non-voting)College President (non-voting)

June 25, 2007June 25, 2007 1313

Saddleback College Budget ProcessSaddleback College Budget Process

Four Strategic Planning Committees:Four Strategic Planning Committees:

Governance & Planning Groups provide input, Governance & Planning Groups provide input, plans, recommendations:plans, recommendations:

– Student SuccessStudent Success – Institutional EffectivenessInstitutional Effectiveness

– Campus EnvironmentCampus Environment – Enrollment ManagementEnrollment Management

– Equipment CommitteeEquipment Committee – Academic SenateAcademic Senate

– Technology CommitteeTechnology Committee – Classified SenateClassified Senate

– Hiring CommitteeHiring Committee – Student GovernmentStudent Government

– Program ReviewProgram Review – Deans CabinetDeans Cabinet

– Maintenance PlanMaintenance Plan – Student Services CouncilStudent Services Council

June 25, 2007June 25, 2007 1414

Saddleback College Budget ProcessSaddleback College Budget Process

Process:Process:

– PBC reviews all planning documentsPBC reviews all planning documents– PBC establishes College Strategic PlanPBC establishes College Strategic Plan– Director of College Fiscal Services provides budget data Director of College Fiscal Services provides budget data – PBC reviews budget statusPBC reviews budget status– PBC makes recommendations to College PresidentPBC makes recommendations to College President– President makes decision and informs College President makes decision and informs College

CommunityCommunity Overriding Planning and Budget Parameters:Overriding Planning and Budget Parameters:

– Increase enrollmentIncrease enrollment– Safe and well maintained facilities and groundsSafe and well maintained facilities and grounds– Increase Student retention and persistenceIncrease Student retention and persistence– Culture of institutionalCulture of institutional effectiveness based on assessment effectiveness based on assessment

outcomesoutcomes– Fiscal Stability (Strategic Plan, SB 361 impact)Fiscal Stability (Strategic Plan, SB 361 impact)

June 25, 2007June 25, 2007 1515

Saddleback College Budget ProcessSaddleback College Budget Process

College wide allocations established by Fiscal OfficeCollege wide allocations established by Fiscal Office

Associate Faculty/overload allocations established by Associate Faculty/overload allocations established by Office of InstructionOffice of Instruction

Deans/Directors provided with allocation amounts for Deans/Directors provided with allocation amounts for operationsoperations

Deans/Directors manage and distribute operational Deans/Directors manage and distribute operational funds based on Division plansfunds based on Division plans

Fiscal Office approves all budget revisions; projects Fiscal Office approves all budget revisions; projects and monitors expenditures for fiscal stabilityand monitors expenditures for fiscal stability

June 25, 2007June 25, 2007 1616

Saddleback College Budget ProcessSaddleback College Budget Process

Planning and budget revision:Planning and budget revision:

– PBC regularly makes recommendations to College PBC regularly makes recommendations to College President in accordance with Strategic PlanPresident in accordance with Strategic Plan– State allocation revisionsState allocation revisions– Local income adjustmentsLocal income adjustments– Grants and contractsGrants and contracts– All budget adjustments coordinated through Fiscal All budget adjustments coordinated through Fiscal OfficeOffice

Planning & budget is a continual year round processPlanning & budget is a continual year round process President manages College budget process and isPresident manages College budget process and is responsible for College fiscal stabilityresponsible for College fiscal stability

SOCCCDSOCCCD2007-08 Tentative Budget2007-08 Tentative Budget

June 25, 2007June 25, 2007 1818

2007-08 Tentative Budget Assumptions2007-08 Tentative Budget Assumptions

Net SB361 Revenue Increase of $12.3 MillionNet SB361 Revenue Increase of $12.3 Million

– $7.5M 2006-07 FTES Increase to Base funding$7.5M 2006-07 FTES Increase to Base funding

– $4.9M Increase Based on 4.53% SB361 COLA$4.9M Increase Based on 4.53% SB361 COLA

– $1.7M Increase Based on 1.50% Growth estimate$1.7M Increase Based on 1.50% Growth estimate

– ($1.8M) One time block grant in 2006-07($1.8M) One time block grant in 2006-07

• $5.4M GF Unrestricted Ending Balance carried $5.4M GF Unrestricted Ending Balance carried forward from 2006-07forward from 2006-07

June 25, 2007June 25, 2007 1919

Assumptions ContinuedAssumptions Continued

6.5% Reserve for Economic Uncertainties6.5% Reserve for Economic Uncertainties

10.0% Estimated Increase for Health & Welfare 10.0% Estimated Increase for Health & Welfare Benefits and Property & Liability coverageBenefits and Property & Liability coverage

Salary Increases:Salary Increases:– CSEA : 4.53% per existing contractCSEA : 4.53% per existing contract– Faculty, Classified Managers, Academic Faculty, Classified Managers, Academic

Administrators, Police Officers Association – to be Administrators, Police Officers Association – to be determined by negotiations & board actionsdetermined by negotiations & board actions

June 25, 2007June 25, 2007 2020

SOCCCD: Overview of Fund StructureSOCCCD: Overview of Fund Structure2007-08 Tentative Budget2007-08 Tentative Budget

General Fund (GF):General Fund (GF): $200.4 Million, Including:$200.4 Million, Including:– Unrestricted GF: $179.9 MillionUnrestricted GF: $179.9 Million– Restricted GF:Restricted GF: $ 20.5 Million $ 20.5 Million

Other Funds*: Other Funds*: $163.2 Million $163.2 Million

Total All Funds: $363.6 MillionTotal All Funds: $363.6 Million

* Other Funds Include: Community Education, Child Development,* Other Funds Include: Community Education, Child Development, Capital Outlay (Including Basic Aid Projects), Debt Service,Capital Outlay (Including Basic Aid Projects), Debt Service, Self-Insurance, & Retiree Benefit FundsSelf-Insurance, & Retiree Benefit Funds

June 25, 2007June 25, 2007 2121

COPS Debt RetirementCOPS Debt Retirement

1996 Issue = $18.9M1996 Issue = $18.9M

Will Be Retired June 1, 2008Will Be Retired June 1, 2008

Sufficient funds are available from prior year Sufficient funds are available from prior year Basic Aid allocations to retire the debtBasic Aid allocations to retire the debt

June 25, 2007June 25, 2007 2222

OPEB (Retiree Benefits Liability)OPEB (Retiree Benefits Liability)

Actuarial Study performed in May 2006Actuarial Study performed in May 2006

– Total obligation $80.2MTotal obligation $80.2M

– Unfunded Liability is $58.3MUnfunded Liability is $58.3M

– 2007-08 Contribution to the Obligation is $5.1M2007-08 Contribution to the Obligation is $5.1M • Current Year Service = $3.3MCurrent Year Service = $3.3M

• Past Service = $1.8MPast Service = $1.8M

• Funded with Basic AidFunded with Basic Aid

– Additional contributions $6.8MAdditional contributions $6.8M

• $5.0M formerly used to retire COPS debt$5.0M formerly used to retire COPS debt

• $1.8M income from Promenade apartments$1.8M income from Promenade apartments

June 25, 2007June 25, 2007 2323

““Basic Aid” ReceiptsBasic Aid” Receipts

• 1999-20001999-2000 $ 5,676,800 $ 5,676,800 • 2000-20012000-2001 $ 9,192,300 $ 9,192,300• 2001-20022001-2002 $13,719,277 $13,719,277 • 2002-20032002-2003 $18,419,919 $18,419,919 • 2003-20042003-2004 $27,356,952 $27,356,952 • 2004-20052004-2005 $40,162,878 $40,162,878 • 2005-20062005-2006 $46,899,203 $46,899,203

• 2006-2007*2006-2007* $50,566,203 $50,566,203 • 2007-2008* **$41,976,2932007-2008* **$41,976,293

* Estimated (Exact Amounts Will not Be Available Until the End of Each Fiscal Year).* Estimated (Exact Amounts Will not Be Available Until the End of Each Fiscal Year). Per OC Tax Assessor, Secured Property Taxes were estimated to increase 9% inPer OC Tax Assessor, Secured Property Taxes were estimated to increase 9% in 2006-07, 7% in 2007-08, and 5% thereafter. A 15% decline in Supplemental Taxes is2006-07, 7% in 2007-08, and 5% thereafter. A 15% decline in Supplemental Taxes is projected for 2007-08. projected for 2007-08. ** Decline due to recovery of FTES at colleges in 2006-07** Decline due to recovery of FTES at colleges in 2006-07

June 25, 2007June 25, 2007 2424

Basic Aid Funds Included In BudgetBasic Aid Funds Included In Budget

• $10.1M OPEB (Retiree Benefits) Contribution$10.1M OPEB (Retiree Benefits) Contribution

• $ 1.9M ATEP Operating Budget$ 1.9M ATEP Operating Budget

• $ 3.8M Phase II for Student Information System$ 3.8M Phase II for Student Information System

• $26k for Legislative Advocacy for Basic Aid $26k for Legislative Advocacy for Basic Aid issuesissues

• $51.1M Currently Undesignated$51.1M Currently Undesignated