Board Budget
Study Session
Horticulture Center
March 2, 2015
4:00 pm
Agenda
• Governor’s January 2015-16
State Budget Overview
• 2015-18 Budget Planning
• Enrollment Trends
• Compliance Mandates
(handouts)
• Funding Formula
• General Reserve
• Outcome Based Funding
Model
• Unallocated One-Time
(Operating Reserve)
•
Student Success Funding
(SSSP) / Student Equity
• Cabrillo Budget Overview
• Budget Policy Goals to
consider
• Unrestricted General Fund
Trend Analysis
• Questions? Next Steps?
2015-16 Governor’s January Budget
Best state budget in years
Revenue Changes:
(Ongoing)
• 1.58% COLA
• Increase in unrestricted general
fund revenue
• Access (growth) funds- subject to a
growth formula still under review
• Increase in SSSP (formerly
Matriculation) /Student Equity
Funding
Revenue Changes:
(One Time)
•
State Mandate Block Grant
Expenditure Changes:
•
Unprecedented increases in
PERS/STRS rates
Continuous increases in medical
benefit/retiree benefit contributions
•
Enrollment Trends
Apportionment FTES History
and VPI Projection
16,000
14,000
 Historical
12,000
Projected
FTES
10,000
8,000
6,000
Base (New 10,500 CAP)
4,000
Actual
2,000
0
20072008
20082009
20092010
20102011
20112012
20122013
20132014
20142015
20152016
20162017
Funding Formula
Overview
Funding for credit/noncredit FTES
$49 million
Funding for maintaining
10,000 FTES
$ 5 million
Funding for maintaining
a state approved center
(minimum of 1,000 FTES)
Watsonville
$ 1 million
$55 million
Total
Shift to
Outcome Based Funding
Model
Student Success Support Program
(formerly Matriculation)
•
•
•
•
Student Equity program
requirements:
“ . . . to close achievement gaps in
access and success in
underrepresented student groups,
as identified in local student
equity plans.”
Student Equity Success Indicators
are to measure:
•
•
•
•
Student Orientation
Student Assessment
Student Education
Planning
Access
ESL and Basic Skills Completion
Degree & Certificate Completion
Transfer
Student Services (SSSP/Student Equity)
Funding Increases
Actual Revenue
FY 2011-12
Unrestricted General Fund
Restricted Student Services Funds
4%
Projected Revenue
FY 2015-16
Unrestricted General Fund
Restricted Student Services Funds
8%
96%
92%
Cabrillo
Budget Challenges
2014-15:
2016-17:
•
Cabrillo projecting 10,887 FTES target
•
Deficit factor reduced from $1 million to
$0.5 million
•
Cabrillo enrollment down at all locations
•
Cabrillo will be funded at 2014-15 level in 2015-16
•
Permanent $2 million loss of funding will occur in
2016-17
•
New cap may be 10,500
•
We must maintain 10,000 FTES total and 1,000
FTES at the Watsonville Center –current
enrollment is 1,100 FTES
Unrestricted General Fund
Revenue and Expense Trends
FY 2009-10 thru FY 2017-18
$68
$66
Millions of Dollars
$64
$62
$60
$58
$56
$54
Revenues
$52
Expenses
$50
2009-10
Actual
2010-11
Actual
2011-12
Actual
2012-13
Actual
2013-14
Actual
2014-15
Budget
2015-16
Projected
2016-17
Projected
2017-18
Projected
General Unrestricted Fund Expense Categories
as a Percent of
Total Actual Expenditures
FY 2013-14
2%
14%
Salaries
21%
63%
Benefits
Retiree
Benefits
Everything
Else
Cabrillo
2015-18 Budget Planning
2016-17:
Proposition 30 begins to phase out
Loss of FTES impacts
other programs:
• Lottery, SIE, Deferred Maintenance,
State Mandate Block Grant and
Student Services Programs that
receive funding based on FTES.
• Reduces the Full-time Faculty
Obligation Number (FON).
Expenditure
Changes:
• Unprecedented increases in
PERS/STRS rates continue
• More increases in medical
benefit/retiree benefit contributions
Compliance
Requirements:
Concerns about meeting 50% law
compliance
Compliance/Mandates
Faculty Obligation Number
(FON) fall 2014
Cabrillo calculated FON: 176.6
Cabrillo actual FON:
184.4
50% Law
FY 2013-14 = 50.82%
STRS/PERS
rate increases began in
2014-15
Restricted Program Matches
SSSP:
• Assessment
• Orientation
• Student Educational
Planning
• Student Equity
Affordable Care Act
Effective 10/1/15
(benefits plan year)
New Sick Leave Law
Effective 7/1/15
Reserves
General Reserve
Currently 5%
Unallocated One-time
funds
“Operating Reserves”
General Reserve
• The General Reserve should not be
allocated under any circumstances.
• Using the General Reserve is a sign of fiscal
insolvency.
• Adverse impact on the District’s
accreditation if the General Reserve drops
below 5%
Unallocated One-time Funds
(Operating Reserve)
One-time funds are generated from:
o Unspent, unallocated base budget funds after the
books are closed.
o One-time funding received, not budgeted
o Adjustments from the recalculation of state
apportionment revenue for previous years are made
up to three years after a fiscal year is closed at the
local level
General Unrestricted Fund Balance
Required Reserve & Unallocated One-time
5
5
4
Available for
Allocation (OneTime), $1.7 million
4
In Millions
3
3
2
2
Required Reserve
(Unavailable), $3 million
1
1
-
FY 2014-15
as of February 11, 2015
Risk Factors
To determine reserves needed
Cabrillo’s Base Budget
Cabrillo’s base, unrestricted General
Fund budget is approximately $58
million.
Cabrillo’s General Reserve
5% = $3 million
Revenue Trends
Forecasted deficit spending requires a
higher reserve to bridge the deficit.
Enrollment
Declining FTES requires an extra reserve
to manage permanent fluctuations in
FTES.
Unfunded Deferred Facilities
Maintenance
Cabrillo’s estimate is $5 million per year
(unfunded)
Changes in Legislation /
Compliance Mandates
Cause increases in expenditures /
decreases in revenue.
Retiree Benefits
Cabrillo’s future liability is
approximately $17 million with $3
million funded.
Budget Guidelines
Options to consider
•
Develop a maximum percentage of salaries/benefits, not to exceed a certain
percentage of base budget
•
Increase General Reserve percentage (from 5% to X%)
•
Continue to utilize Unallocated One-time Operating Reserves to fund
college priorities
•
Allocate a fixed percentage of ongoing and one-time funds to the
following:
•
Deferred Facilities
Maintenance
•
Technology
•
Program Planning
•
Retiree Benefits
•
Equipment Replacement
College Planning Council
Feedback
Some CPC Members recommended using
One Time Funds for:
 Salary increases
 Bonus payments to employees
 Funding the Deficit
 Increasing Reserves
 Facilities Deferred Maintenance
 Fund Program Plan
What actions are needed
and when?
• Develop and implement a restructuring plan for the
college
• $2 million in reductions equivalent to the revenue loss of
387 FTES; 3.5%
• Reduce non-general fund programs as necessary
• Balanced budget
• Develop budget guidelines/procedures
• Develop timeline: Phase in restructuring and reductions
starting now- implement all reductions by July 1, 2016
Questions?
Next Steps?