http://www.redwoods.edu/district/board/documents/September102012packet.pdf
REDWOODS COMMUNITY COLLEGE DISTRICT
BOARD OF TRUSTEES MEETING
September 10, 2012
Agenda Item #3.2
SUBJECT:
APPROVE 2012-13 FINAL BUDGET
RECOMMENDATION
Action is required. The President/Superintendent recommends that the Board of Trustees
approve the Final Budget for all funds pursuant to BP 6200.
BACKGROUND
The 2012-13 Final Budget Report for all funds will be a handout at the meeting. Attached to this
report is the 2012-13 unrestricted general fund budget. Unrestricted general fund revenue
reflects the Chancellor’s Office estimate for state apportionment assuming that the proposed
ballot measure does not pass. Should the ballot measure pass, the District may be able to capture
increased revenue by increasing enrollments.
For expenditures, the tentative budget presented in June 2012 included budget savings
recommended by the Budget Planning Committee (BPC) that required successful negotiations to
implement. For the 2012-13 Final Budget, only those savings that have already been
implemented have been included in the budget. The chart below shows the budget gap that was
reviewed by the BPC and the BPC’s proposed adjustments to close the budget gap. Most of
these budget cuts have been implemented. However, certain items requiring negotiations have
not yet been successfully implemented.
Budget Planning Committee (BPC) February 2012 Recommendations
Revised Estimate
3,311,639
Budget Shortfall - Worst Case (Tax measures fail)
101 Corridor Sites (Lease + operating costs)
Transfer Auxiliary Support (Bookstore, Dining, Housing, Parking)
TLUs (Course Section Funding)
Reduce operating expenditures
Revenue increase
Retirement Holds, Reductions, Reorganization Estimates:
Administration, Management
Faculty (Negotiations)
Staff (Negotiations)
Payroll Concessions (Negotiations)
Accreditation Budget
TLUs growth FTES (Over the 6-30-2011 budget)
BPC Recommendations
(275,000)
(300,000)
(275,000)
(200,000)
(80,000)
(435,000)
(800,000)
(650,000)
(471,639)
100,000
75,000
(3,311,639)
(523,000)
(808,000)
(232,000)
-
Shortfall if all BPC recommendations fully implemented
Despite implementing most of the BPC recommendations above, the 2012-13 final budget
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191
remains out-of-balance. About $1.1 million of the gap is comprised of an additional cut in state
funding enacted by the Legislature over the summer and savings proposed by the BPC that
require negotiations, which have not yet materialized. The BPC recently reviewed and made
additional recommendations for closing this new budget cut target. In addition to the $1.1
million gap, $50,000 has been added for ongoing annual write downs to bad debts and $300,000
in costs related to Special Trustee Recovery and Accreditation. The budget for ongoing write
downs is needed as the District expects some level of bad debts each year, despite best efforts at
collection. Based on last year’s actual results at year-end, adjustments were also made to the
TLU expenditure budget and the other revenue budget. An estimated $500,000 in temporary
savings was removed, so that only budget savings that have been implemented are included in
this budget. These budget adjustments increase the total gap to $2 million.
The beginning fund balance includes a $790,000 write down to the allowance for doubtful
accounts/bad debts. After an annual review of student accounts receivable balances, this entry
was made to adjust the net student accounts receivable to a conservative amount that can
reasonably be expected to be collected. This write down mostly relates to prior years, but nonethe-less reduces the District’s fund balance.
To recover from this budget deficit, a comprehensive list of budget cut options for consideration
is attached. This list includes the most recent BPC recommendations as well as additional items
reviewed at a recent BPC meeting to create and present to the Board a comprehensive list of
budget savings options for discussion. Some items on the list do not include a savings estimate,
either because the savings depends on the level of the budget cut or additional research is needed
to develop a savings estimate.
BUDGET IMPLICATIONS
Although the District has taken significant actions to close the budget gap, additional savings
need to be implemented during 2012-13. If $2 million of budget savings can be realized during
this fiscal year through successful negotiations and other actions, then the fund balance would
end at about 2.28%. With continued budget savings, the District can return to a 5.00% fund
balance by 2013-14 or 2014-15.
Note: Title V requires the adoption of a final budget that provides a positive ending fund
balance.
Therefore, a transfer (loan) of funds will be made from the Employee Benefit Trust Fund in the
amount necessary to eliminate the deficit Unrestricted General Fund Ending Balance. These
funds must be transferred back to the Employee Benefit Trust Fund as soon as sufficient
Unrestricted General Fund Balance exists. To address the deficit in future years, the District
must realize an increase in revenue and a reduction in expenditures.
LL/lw
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