63
AGENDA ITEM BACKGROUND
TO: GOVERNING BOARD
DATE
FROM: PRESIDENT
September 9, 2013
SUBJECT:
2012-13 and 2013-14 Budget Planning Update
REASON FOR BOARD CONSIDERATION
ACTION
ENCLOSURE(S)
ITEM NUMBER
Page 1 of 10
F.6
BACKGROUND:
The budget planning materials have been updated to reflect 2012-13 and 2013-14 state and local budget
changes. More changes will be made as the state releases trailer bills.
The 2013-14 Final Budget Parameters are submitted for board action.
2013-14 Budget Reduction Process, Commitments, and Strategies (pages 65-67)
The 2013-14 Budget Reduction Process Commitments, Criteria and Strategies were updated to
reference the goals in the Strategic Plan and the need to design and implement the Student
Success Initiative for the college.
2012-13 through 2013-14 Budget Development Timeline (pages 68-69)
The budget calendar includes all shared governance and board meetings associated with the
budget planning process for 2013-14.
The 2013-14 Final Budget will be developed using the mid-case scenario. The projected deficit
for planning purposes is approximately $1.1 million. The college expects to have adequate
reserves to cover the deficit.
FISCAL IMPACT:
The 2013-14 Final Budget has been prepared based on the mid-case scenario; $1.1 million deficit that
will be balanced using one-time operating reserves.
RECOMMENDATION:
It is recommended that the Governing Board approve the budget planning parameters as presented.
Administrator Initiating Item:
Graciano Mendoza
Victoria Lewis
Academic and Professional Matter
If yes, Faculty Senate Agreement
Senate President Signature
 No
Final Disposition
64
2013-14 through 2016-17 (Multi-Year) Base Budget Planning Parameters (page 70)
The long-term projection for 2013-14 through 2016-17 projects new revenue in the form of
COLA.
The faculty obligation number has been frozen since 2008 due to lack of funding. The Board of
Governors is expected to unfreeze the faculty obligation number in fall of 2014. The most recent
draft information from the Chancellor’s Office indicates that the college’s full-time faculty
obligation number will drop from 189 in fall 2013 to 163 in fall 2014. The impact of this change
will be incorporated into the budget planning assumptions for the 2014-15 fiscal year.
2012-13 and 2013-14 Base Budget Planning Assumptions (page 71)
The 2012-13 through 2013-14 budget planning assumptions reflect the impact of the passage of
proposition 30 on state revenue anticipated by the college for 2012-13 and 2013-14.
Estimates have been updated to reflect the 1.57% COLA included in the 2013-14 state budget.
Although the college allocated resources to restore course offerings for 2013-14, no revenue
associated with these offerings is included in the budget planning assumptions.
Community Colleges do not receive backfill for shortfalls in redevelopment, local property tax or
student enrollment fee shortfalls. The apportionment shortfall for 2013-14 is currently estimated
at 2% or $1.2 million for Cabrillo.
The shortfall for redevelopment revenue shortfall for 2012-13 is unknown. The college closed the
books with a shortfall of 1.75%. The latest update on the shortfall was received on August 21. At
that time the shortfall was estimated at 2%. There is a discrepancy between the RDA revenue
estimates prepared by the State Chancellor’s Office and Department of Finance estimates. If the
discrepancy cannot be resolved, the deficit will remain at 2%. This is despite the fact that
community colleges were supposed to receive 100% backfill for RDA revenue shortfalls.
The expenditure assumptions include the net replacement of seven full-time faculty positions and
the allocation of funding to maintain the college’s enrollment and capture restoration funding of
1.6%; $750,000 for Cabrillo.
The District has concluded the bargaining process for all employee groups for the 2013-14 fiscal
year. The cost of the agreements has been added to the budget planning assumptions for the base
budget and the one-time fund.
The college’s enrollment is declining. The college has allocated ongoing and one-time funding to
capture restoration funding and stabilize enrollment. The college will continue to analyze
enrollment patterns and update revenue estimates as necessary.
One-Time Operating Reserves (page 72)
The Business Office closed the fiscal year in the finance system in mid-August. The ending
balances for all funds will be included in the 2013-14 Final Budget document. The Unrestricted
General Fund balance as of 7/1/13 was $11.1 million. Allocation of the fund balance to date is
included on pages 20-22 of the 2013-14 Final Budget Book.
65
September 9, 2013
Board Meeting
2013-14 Budget Process Commitments,
Criteria and Strategies
The economic crisis affecting the state budget is conservatively projected to end soon. At the current time, our
best efforts at projecting the fiscal impact on Cabrillo indicate that our state funding may begin to increase over
the next few years.
The intent of the following process commitments, criteria and strategies is to enable Cabrillo to move from
being a college that has been organized and staffed to operate on a $60 million budget to an organization and
staffing level that can deliver sustainable services to the community within the ongoing resource allocation from
the state.
I.
Process Commitments
A.
Link Budget planning, including program and service changes and redesign efficiencies, to long
range planning, including the evaluation of the impact on student success.
B.
Utilize the appropriate forums to dialogue about the restructuring, consolidation, reductions,
and/or elimination of programs and services resulting from a reduction in resources.
C.
In the event that program and workforce reductions are necessary, the college will work to
preserve faculty, staff and management positions when possible and, if not possible, will assist
with employment-related transitional issues.
D.
The process will be characterized by openness, respect, sensitivity, and inclusiveness.
The College Master Plan provided the general framework for the following criteria:
II.
Criteria
A.
Compliance Requirements
1.
Maintain accreditation standards of the college and academic programs
Maintain state and federal compliance requirements (Strategic Plan Goal B) e.g.:
2.
50% law
Full-Time faculty obligation number (FON)
Accessibility
B.
Preserve transfer, basic skills, and Career Technical Education so students are able to complete
their academic goals (Strategic Plan Goal A)
Core courses toward an AA/AS
General education breadth
Labor market
C.
Minimize negative impact on student success (Strategic Plan Goal A) e.g.
ARCC
D.
Optimize enrollment to achieve maximum state revenues.
E.
Minimize impact of non-base budget programs on General Fund (Strategic Plan Goal A)
Ancillary/Auxiliary operations
Categorical and grant-funded programs
Revised 7/29/13
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66
III.
F.
Maximize efficiency of programs and services (Strategic Plan Goal A and Technology Plan)
Are college programs and services efficient?
WSCH/FTEF
Non-redundant
G.
Minimize the negative impact on the operational needs of new and existing facilities (Strategic
Plan Goal B and Facilities Master Plan)
H.
Optimize effective utilization of college facilities (Strategic Plan Goal B)
I.
Maximize flexibility and opportunities for employees (Process Commitment C)
Strategies
A.
Design and implement the Student Success Initiative for the college.
B.
Review all auxiliary and categorical program budgets with the appropriate budget administrator
to identify reductions.
C.
Evaluate college-wide services and systems; explore alternative models across components;
reduce costs, reduce duplication of function, and increase efficiencies throughout the college.
D.
Management of personnel budget.
Process Overview
Utilize salary savings for vacant positions to reduce the overall budget reduction target.
Salary savings may be used to fund replacements for vacant positions based on demonstrated
need and the approval of the Vice President/President.
Salary savings may not be used to cover other operating expenses or equipment purchases.
Cabinet may approve the recruitment of vacant positions based on demonstrated need.
Human Resources will provide a list of vacant positions and the status of recruitments on a
weekly basis.
Administrative Services will provide a report of cumulative salary savings on a monthly
basis.
E.
Evaluate facility use for efficiency and effectiveness.
Watsonville
Scotts Valley
Energy Use Reduction
F.
Discuss compensation and benefit programs with all employee groups.
A-4
67
IV.
Historical Data Available
A.
Internal Data
Accreditation Self-Study http://www.cabrillo.edu/services/pro/accred/index.html
Budget & Benefits Information Center:
http://www.cabrillo.edu/internal/adminservices/budgetcenter/
Educational Master Plan: http://www.cabrillo.edu/services/pro/masterPlan/
FACT Books http://www.cabrillo.edu/services/pro/factbook/
Program Planning Pages http://pro.cabrillo.edu/pro/factbook/programPlanningTables.html
Strategic Plan: http://pro.cabrillo.edu/cmp/
Technology Plan: http://www.cabrillo.edu/services/pro/accred/pdf/ITTP.pdf
B.
External Data
Fiscal Data Abstract 06-07
Current Cost of Education 06-07
WASC Accreditation Standards
http://www.cabrillo.edu/services/pro/accred/pdf/ACCJC%20NEW%20STANDARDS.pdf
A-5
CABRILLO COLLEGE
FY 2012-13 through 2013-14 Budget Development Timeline
September 9, 2013 Board Meeting
Nov./Dec. 2012
January 14, 2013
January 10, 2013
January 8/15/29,2013
January 18, 2013
January 23, 2013
February 11, 2013
February 19, 2013
February 27, 2013
March 4, 2013
March, 2013
March 5/26, 2013
March 6, 2013
March 6/20, 2013
April, 2013
April 8, 2013
April 9/23, 2013
April 3, 2013
April 3/17, 2013
April - June 2013
May 6, 2013
May 7/28, 2013
May 1, 2013
May 1/15, 2013
May 25, 2013
68
CPC/BOARD MEETING
Action Items;
- Academic Staffing Recommendation- Replace six full-time faculty positions for Fall 2013
BOARD MEETING
Information Items:
- 2012-2014 Budget Update
2013-14 GOVERNOR'S STATE BUDGET
ADMINISTRATIVE COUNCIL
STATE BUDGET WORKSHOP
MANAGER'S MEETING/CPC MEETING
Review Governor's Budget and impact of Proposition 30
- Discussed major components of budget planning parameters for 2013-14
-Increase the replacement of full-time teaching faculty from six to eight for Fall 2013
-Permanently fund 280 teach units to stabilize enrollment and capture restoration funding for 2012-13
- Updated revenue assumptions to include 2012-13 restoration funding
BOARD MEETING
Information Items:
- Budget Update
ADMINISTRATIVE COUNCIL
CPC MEETING
Information Items:
- Update Budget Parameters FY 2012-13 through 2016-17
- Update Budget Development Timeline- FY 2013-14
- Review Strategies, Commitments and Criteria
BOARD MEETING
Information Items:
- Update Budget Parameters FY 2012-13 through 2016-17
- Update Budget Development Timeline- FY 2013-14
- Review Strategies, Commitments and Criteria
First Principal Apportionment 2012-13/ 2012-13 Recal
ADMINISTRATIVE COUNCIL
MANAGERS MEETING
CPC MEETINGS
Continue to evaluate/revise Planning Parameters
BOARD MEETING
Action Items:
- Update Budget Parameters FY 2012-13 through 2016-17
- Update Budget Development Timeline- FY 2013-14
- Review Strategies, Commitments and Criteria
ADMINISTRATIVE COUNCIL
MANAGERS MEETING
CPC MEETINGS
2012-13 Negotiations- All groups
BOARD MEETING
ADMINISTRATIVE COUNCIL
MANAGERS MEETING
CPC MEETINGS
Governor's May Revise for 2013-14 released
A-6
CABRILLO COLLEGE
FY 2012-13 through 2013-14 Budget Development Timeline
September 9, 2013 Board Meeting
June 2013
June 5, 2013
June 5/19, 2013
June 10, 2013
June 11, 2013
August 5, 2013
August 6/27, 2013
August 7, 2013
August 7/21, 2013
September 9, 2013
September 10/24, 2013
September 4, 2013
September 4/18, 2013
69
Second Principal Apportionment 2011-12 Received
MANAGERS MEETING
CPC MEETINGS
Action Items:
- 2013-14 Preliminary Budget
Information Items:
- 2013-14 Updated Budget Planning Parameters Final Budget
BOARD MEETING
Action Items:
- 2013-14 Preliminary Budget
Information Items:
- 2013-14 Updated Budget Planning Parameters Final Budget
ADMINISTRATIVE COUNCIL
BOARD MEETING
Information Items:
- 2013-14 through 2015-16 Budget Planning Parameters
ADMINISTRATIVE COUNCIL
MANAGERS MEETING
CPC MEETINGS
BOARD MEETING
Action Items:
- 2013-14 through 2015-16 Budget Planning Parameters
- 2013-14 Final Budget
ADMINISTRATIVE COUNCIL
MANAGERS MEETING
CPC MEETINGS
Cabrillo's budget planning process for 2013-14 began late due to the uncertainty surrounding the passage of Proposition 30.
The 2014-15 budget plannning cycle will begin in September, 2013.
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70
September 9, 2013 Board Meeting
2013-14 through 2016-17
Base Budget
Planning Parameters
2013-14
Projected
Difference between ongoing Revenues & Expenses (Structural Deficit)
Increase in State Revenue Anticipated
A. Restoration/Growth
B. COLA @1.57%, 1.8%, 2.3%, 2.5%*
C. Deficit Factor (Prop. Tax, RDA, Student Enrollment Fees)
D. Other
Net change in revenue
2014-15
Projected
231,326
?
850,000
(1,200,000)
50,000
(68,674)
Net Increases in Ongoing Expenses
Full-time Faculty Position changes (3.5) (net of adjunct backfill)
Add Teaching Units to maintain enrollment cap from 2012-13 (300,268,260)
Add Teaching Units to capture restoration/growth for 2013-14
Step, Column, Longevity Increases, etc.
Medical Plan Rate Increase-- 8% (50%-50% cost share in place)
Retiree Benefit Increase
Mandatory Benefit Rate Increases/Decreases (Unemployment Ins. Rate down)
STRS Rate Increase
Worker's Comp, Unemployment Insurance
TRAN Interest Expense
Utilities
Net Operating Increases
Labor agreements- all groups
Total Expenditure Increases
(487,000)
(1,061,360)
Ongoing Shortfall*
Operating Reserves needed to bridge deficit
(1,130,034)
1,130,034
133,000
(474,360)
?
(320,000)
(178,000)
(85,000)
350,000
?
*Deficit net of One-time funds
0
Cost of 1% for all employees = $425,000
RDA continues to be a major threat. The RDA shortfall was backfilled for 2012-13 but there is no guarantee this will continue.
Although RDA will be backfilled for 2012-13, the state is delaying payments to CCCs because of a cash shortfall, increasing
the amounts CCCs must borrow (in addition to apportionment deferrals).
* COLA estimates projected based on School Services of California Financial Dartboard- (July 26, 2013 forecast)
A-8
2015-16
Projected
2016-17
Projected
(1,130,034)
(1,310,034)
(1,245,034)
?
?
?
?
990,000
?
1,265,000
?
1,375,000
(140,034)
(45,034)
?
?
?
(325,000)
(230,000)
(145,000)
(150,000)
?
(50,000)
(20,000)
(100,000)
(150,000)
?
(1,170,000)
?
?
?
(325,000)
(230,000)
(145,000)
(175,000)
?
(50,000)
(25,000)
(100,000)
(150,000)
?
(1,200,000)
?
?
?
(325,000)
(230,000)
(145,000)
(175,000)
?
(50,000)
(30,000)
(100,000)
(150,000)
?
(1,205,000)
(1,310,034)
(1,245,034)
(1,075,034)
129,966
September 9, 2013 Board Meeting
71
2013-14 Base Budget Planning Assumptions (Best, Mid, Worst Case)
2012-13 Structural Deficit
2012-13 Revenue Adjustments
A. Restoration funds- 1.6%
B. Revenue Adjustment for Prop 30 passing
2013-14 Revenue Adjustment
2013-14 Revenue adjustments
A. Restoration/Growth @ 1.63%
B. COLA @ 1.57%
C. Deficit factor for apportionment shortfalls (3%, 2%, 1%)
D. Other
TOTAL Revenue Adjustment
Worst
Case
(2,200,000)
Range
MidRange
(2,200,000)
Best
Case
(2,200,000)
750,000
1,681,326
750,000
1,681,326
800,000
1,681,326
0
0
(1,650,000)
0
781,326
0
850,000
(1,200,000)
50,000
2,131,326
855,000
900,000
(550,000)
50,000
3,736,326
133,000
171,000
3.5
(474,360)
(320,000)
(178,000)
(85,000)
350,000
(487,000)
(1,061,360)
(1,130,034)
1,130,034
0
4.5
(460,200)
(320,000)
(178,000)
(85,000)
350,000
(487,000)
(1,009,200)
527,126
2013-14 Expenditure Adjustments
Full-time Faculty Obligation - Net replacement of vacancies 6,7,8
95,000
2012-13 Funded positions 196.25
2013-14 Funded positions 193.75 with net 7 replacements
Fall 2013 frozen FON- 189.6
2.5
Add Teaching Units to maintain enrollment cap from 2012-13 (300, 268, 260)
(531,000)
Step, Column, Longevity, etc
(320,000)
Medical Benefit Increase- 8% (50%-50% cost share = 1/2)
(178,000)
Retiree Medical Benefit Increase
(85,000)
Mandatory Benefit Rate Increases/Decreases (Unemployment Insurance rate down significantly)
350,000
Permanent Salary Schedule increases- all groups
(487,000)
Total Expenditure Adjustments
(1,156,000)
Projected 2013-14 Structural Balance (Deficit) *
(2,574,674)
One-time Reserves used to bridge deficit
Net Deficit for 2013-14
(2,574,674)
* Does not include categorical program impacts on the general fund.
Student Success expenditures moved to restricted fund: Additional 10 days for Counseling contracts, new counseling position, TUs for orientation courses.
The salary/benefit budget includes a credit to the expense lines of $300k for salary/benefit savings.
A-9
527,126
72
September 9, 2013
7/1/13 Unrestricted General Fund Ending Balance
$11,161,853
(Funds 11,14,17)
Allocation of Fund Balance:
General Reserve- 5%
FTES Reserve Restored to $1 million
Transfer to Base Budget for 2013-14 Deficit
Net One-time allocations to date
Estimated Carryover Fund allocations for 2013-14
One-time Salary increases for 2013-14
Allocations to date
$3,000,000
$1,000,000
$1,131,000
$200,000
$3,800,000
$1,200,000
$10,331,000
Unallocated Fund Balance/ Operating Reserves for 2013-14 as of 8/21/13
A-9
$830,853