AGENDA ITEM BACKGROUND
TO: GOVERNING BOARD
DATE
FROM: PRESIDENT
May 5, 2014
SUBJECT:
2014-2018 Budget Planning Update
REASON FOR BOARD CONSIDERATION
ENCLOSURE(S)
ITEM NUMBER
Page 1 of 10
ACTION
BACKGROUND:
The Governor’s 2014-15 Budget was released on January 9, 2014. An all campus e-mail was sent to the
college community on February 28, 2014. The e-mail provided a summary of the impact the 2014-15
state budget will have on available resources at the college. The update is posted on the Budget
Information Website: http://www.cabrillo.edu/internal/adminservices/budgetcenter/
On January 15, the College Planning Council (CPC) had a preliminary discussion about the 2014-15 state
budget. On March 5, 2014, CPC reviewed the budget calendar and budget planning documents that will
be used to develop the 2014-15 Preliminary Budget. CPC updated the Budget Process, Commitments,
Criteria and Strategies document on March 19, 2014.
2014-15 Budget Process, Commitments, Criteria and Strategies (Attachment A)
The Budget 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.
2013-14 through 2014-15 Budget Development Timeline (Attachment B)
The budget calendar includes all participatory governance and board meetings associated with the
budget planning process for 2014-15.
2014-15 Base Budget Planning Assumptions (Attachment C)
The 2014-15 budget planning assumptions reflect the assumptions for the Preliminary Budget:
.86% COLA, approximately $470,000 for Cabrillo
No restoration/growth funding is assumed for 2014-15. The Vice President of Instruction recently
determined that the college must go into budget stability in the current year due to enrollment
declines. To clarify, the college will be funded for 10,894 in 2013-14 despite the reduction in
enrollment. To the degree the college falls below 10,894 in 2014-15 there will be a permanent
loss of apportionment funding. The college will lose $4,564 for each credit FTES below 10,894.
The expenditure assumptions include the replacement of four full-time faculty positions. Two
vacant faculty positions will be eliminated from the budget.
Ongoing expenditures will increase, i.e., column and step increments, medical benefits, retiree
benefits, utility expenses, PERS and other maintenance and repairs.
Administrator Initiating Item:
Graciano Mendoza
Victoria Lewis
Academic and Professional Matter
If yes, Faculty Senate Agreement
Senate President Signature
 No
Final Disposition
The ongoing portion of the 2013-14 salary increase will be budgeted for the 2014-15 Preliminary
Budget. Bargaining unit negotiations for 2014-15 are scheduled to begin in April 2014.
The 2014-15 Preliminary 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.
2014 through 2018 Multi-Year Base Budget Planning Assumptions (Attachment D)
The long-term projection for 2014 through 2018 the only new unrestricted revenue we expect to
receive is COLA.
The college’s enrollment will be evaluated on an ongoing basis. Enrollment will be evaluated on an
ongoing basis.
One-Time Operating Reserves (Attachment E)
Preliminary estimates of operating reserves available are as follows:
The unallocated unrestricted general fund operating reserve balance as of March 1, 2014 was
$500,000. The term unallocated refers to funds in the budget that are not allocated for a specific
purpose.
One-time increase in revenue of approximately $800,000 from the 2012-13 final apportionment
calculation. The state backfilled a large percentage of the RDA shortfall for 2012-13. These funds
will be received in 2013-14.
The college is anticipating budget savings of $ 2 million for 2013-14.
Based on current projections, the anticipated deficit for 2014-15 will be $1,082,000. The college
will use operating reserves to cover the shortfall.
The last two allocations on the operating reserve spreadsheet are related to match requirements for
new funding for the Student Success Support Program, Scheduled Maintenance and State
Instructional Equipment funding. The new funding and the match funding are pending approval
of the state budget. The amounts and match requirements may change prior to the approval of the
state budget. It is also possible that the college may be able to use existing expenditures for the
SSSP additional match requirement.
The $2 million estimated savings in the base operating budget, the new funding and the match
allocations will not be included in the 2014-15 Preliminary Budget. Changes to funding and
match allocations will be included in the 2014-15 Final Budget that will be approved by the
Governing Board in September, 2014.
The planning assumptions will be updated to reflect the impact of budget stability on ongoing revenue
for the 2014-15 Final Budget. One-time operating reserves will be used to balance the 2014-15 budget
shortfall.
May 5, 2014 Board Meeting
Attachment A
2014-15 Budget Process Commitments,
Criteria, and Strategies
The college has been unable to procure restoration as planned, but will proceed with commitments to
its recent Listening/Visioning process. The results of the spring visioning process will provide further
direction for staffing and other program needs necessary to support the future of Cabrillo College.
The Mission Statement will continue to guide the college budget strategies given that the college:
did not earn restoration funding in 2013-14 and
enrollment fell below the 2012-13 cap of 10,894
The college will continue to re-evaluate operations, with the goal of prioritizing and funding programs
as indicated below.
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.
The college will make every attempt to leverage funding from a variety of appropriate sources. The
following criteria and prioritization commitments will apply to programs and services regardless of the
funding source.
I.
Process Commitments
A.
Link budget planning to institutional strategic plan effectiveness measures, including
program planning requests and accreditation recommendations. Redesign efficiencies
to support long range planning, including the evaluation of the impact on student
success.
B.
Utilize the appropriate forums to create efficiencies of process, facilities, centralized
services, technology solutions, and other areas that provide resource savings.
C.
The college may shift resources and make program reductions to adapt to changing
needs and to ensure fiscal stability. The college will attempt to generate more revenue
by increasing enrollment through program review and development, integrating best
practice methods of enrollment management and efficiencies, and pursuing other
revenue generating opportunities.
D.
In the event that program reductions are necessary, the college will work to preserve
faculty, staff, and management personnel when possible and, if not possible, will assist
with employment-related transitional issues.
E.
The process will be characterized by openness, respect, sensitivity, and inclusiveness,
and will be facilitated through the CPC as part of its role and responsibility as the
highest shared governance committee making recommendations to the president.
O:\Administrative Services\Board Items VP Admin folder\2014 Board Items\050514 Board meeting\Budget Update\BudUpdateStrategiesCPC3-1914finalA.docx
Page 1 of 3
May 5, 2014 Board Meeting
Attachment A
The Strategic and Educational Master Plans provide the general framework for the following criteria:
II.
Criteria
A.
Compliance Requirements
1.
Maintain accreditation standards of the college and academic programs
2.
Maintain state and federal compliance requirements (Strategic Plan), e.g.:
50% law
Full-time faculty obligation number (FON)
Accessibility
Affordable Care Act
B.
Preserve transfer, basic skills, and Career Technical Education so students are able to
complete their academic goals (Strategic Plan).
Core courses toward an AA/AS
General education breadth
Labor market and employment trends
C.
The college will include the Student Success Scorecard, accreditation
recommendations, planning agendas, and Board goals as part of the resource allocation
directive. Continue to maximize positive impact on student success (Strategic Plan).
D.
Optimize enrollment to achieve maximum state revenues. Maximize efficiency of
programs and services (Strategic Plan and Technology Plan).
WSCH/FTEF
Non-redundant
E.
Minimize fiscal impact of non-base budget programs on General Fund (Strategic Plan).
Ancillary/Auxiliary operations
Categorical and grant-funded programs
F.
Ensure comprehensive planning and maximize efficiencies to meet operational needs of
new and existing facilities (Strategic Plan and Facilities Master Plan).
Optimize effective utilization of college facilities (Strategic Plan)
G.
Maximize professional development opportunities for employees.
H.
Develop a plan for funding the total cost of ownership for facilities and technology
needs on campus.
O:\Administrative Services\Board Items VP Admin folder\2014 Board Items\050514 Board meeting\Budget Update\BudUpdateStrategiesCPC3-1914finalA.docx
Page 2 of 3
May 5, 2014 Board Meeting
III.
IV.
Attachment A
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. Ensure program budgets are linked to program and institutional plans.
Leverage funding where appropriate to identify reductions.
C.
Implement a classified prioritization process for positions.
Pilot for new classified positions in 2014-15
D.
Evaluate facility use for efficiency and effectiveness.
Water and Energy Use Reduction
Maximize facility use for increased enrollment and services to students.
E.
Discuss compensation and, benefit programs with all employee groups annually through
planning information sessions and agreed upon bargaining meetings.
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://www.cabrillo.edu/services/pro/programPlanning/Cabrillo%20College_ProgPl
anData.pdf
Strategic Plan: http://pro.cabrillo.edu/cmp/
Technology Plan: http://www.cabrillo.edu/services/pro/accred/pdf/ITTP.pdf
B.
External Data
WASC Accreditation Standards http://www.accjc.org/wpcontent/uploads/2012/11/Accreditation-Standards_Edited-Nov-2012.pdf
O:\Administrative Services\Board Items VP Admin folder\2014 Board Items\050514 Board meeting\Budget Update\BudUpdateStrategiesCPC3-1914finalA.docx
Page 3 of 3
CABRILLO COLLEGE
FY 2014-15 Budget Development Timeline
May 5, 2014 Board Meeting
September 4, 2013
September 10, 2013
September 18, 2013
October 2, 2013
October 4, 2013
October 8/22, 2013
November 6, 2013
November 20, 2013
September- November,
2013
December 4, 2013
December 4, 2013
December 9, 2013
CPC MEETING
-Review Draft Budget Timeline for 2014-15
ADMINISTRATIVE COUNCIL
CPC MEETING
-2013-14 Budget review with CPC- all funds
-Begin updating Budget Process Commitments, Criteria and Strategies for 2014-15
MANAGER'S MEETING
CPC RETREAT
ADMINISTRATIVE COUNCIL
CPC MEETING
-Reviewed Technology Refresh Project for One-time, budgeted State Instructional
Equipment, Lottery and Carryover Funds
CPC MEETING
-2014-15 Preliminary Budget Planning Parameters/budget review
FACULTY SENATE- Faculty Prioritization Process/Determine FON requirements for fall
2014
MANAGER'S MEETING
CPC MEETINGS
-Foundation Budget Review
BOARD MEETING
Action Items:
-2013-14 One-Time Budget Allocation, Program Planning
January 8, 2014
MANAGER'S MEETING
January 10, 2014
January 13, 2014
2013-14 GOVERNOR'S STATE BUDGET
BOARD MEETING
Information Items:
-2014-15 Budget Update
CPC MEETINGS
- Review of Governor's January Budget for 2014-15
January 15/22, 2014
January 28, 2014
February 25, 2014
ADMINISTRATIVE COUNCIL
-Review Total Cost of Ownership Model
BOARD MEETING
Information Items:
-Total Cost of Ownership Facilities Presentation/Integrated Planning
-2014-15 Budget Update
CPC MEETING
-FPAC Report Out- Total Cost of Ownership Presentation/Integrated Planning
ADMINISTRATIVE COUNCIL
March 5, 2014
MANAGERS MEETING
March 5/19, 2014
CPC MEETINGS
February 3, 2014
February 5/19, 2014
Attachment B
-Budget Process Commitments, Criteria and Strategies for 2014-15
-Budget Timeline for 2014-15
-Budget Planning Parameters, Preliminary Budget for 2014-15
March 25, 2014
ADMINISTRATIVE COUNCIL
March, 2014
First Principal Apportionment 2013-14/ 2012-13 Recalculation
March-June, 2014
2014-15 Negotiations- All groups
O:\Administrative Services\Board Items VP Admin folder\2014 Board Items\050514 Board meeting\Budget Update\031914_2014-15BudgetTimelineVLB
CABRILLO COLLEGE
FY 2014-15 Budget Development Timeline
May 5, 2014 Board Meeting
Attachment B
April 7, 2014
BOARD MEETING
Information Items:
-Budget Process Commitments, Criteria and Strategies for 2014-15
-Budget Timeline for 2014-15
-Budget Planning Parameters, Preliminary Budget for 2014-15
April 16, 2014
CPC MEETING
April 22, 2014
ADMINISTRATIVE COUNCIL
May 5, 2014
BOARD MEETING
Action Items:
-Budget Process Commitments, Criteria and Strategies for 2014-15
-Budget Timeline for 2014-15
-Budget Planning Parameters, Preliminary Budget for 2014-15
May 7, 2014
MANAGERS MEETING
May 7/21, 2014
CPC MEETINGS
May 20-23, 2014
Governor's May Revise for 2014-15 released
May 27, 2014
ADMINISTRATIVE COUNCIL
June, 2014
Second Principal Apportionment 2013-14 received
June 4, 2014
MANAGERS MEETING
June 4/18, 2014
June 9, 2014
CPC MEETINGS
BOARD MEETING
Action Items:
- 2014-15 Preliminary Budget
Information Items:
- 2014-15 Updated Budget Planning Parameters Final Budget
ADMINISTRATIVE COUNCIL
BOARD MEETING
Action Items:
- 2014-15 through 2017-18 Budget Planning Parameters
- Preliminary Review of Allocation of Reserves and One-Time Funding for 2014-15
June 24, 2014
August 4, 2014
August 26, 2014
August 6, 2014
ADMINISTRATIVE COUNCIL
MANAGERS MEETING
August 6/20, 2014
CPC MEETINGS
September 3, 2014
MANAGERS MEETING
September 8, 2014
BOARD MEETING
Action Items:
- 2014-15 Final Budget
O:\Administrative Services\Board Items VP Admin folder\2014 Board Items\050514 Board meeting\Budget Update\031914_2014-15BudgetTimelineVLB
May 5, 2014 Board Meeting
Attachment C
2014-15 Base Budget Planning Assumptions (Best, Mid, Worst Case)
2013-14 Structural Deficit
2013-14 Revenue Adjustments
A. Restoration/Growth @ 1.63%
2014-15 Revenue Adjustment
2014-15 Revenue adjustments
A. Restoration/Growth
B. COLA- .86%
C. Other
TOTAL Revenue Adjustment
Worst
Case
(750,000)
Range
MidRange
(750,000)
Best
Case
(750,000)
0
0
0
0
?
?
0
0
470,000
?
470,000
0
470,000
?
470,000
78,000
117,000
(2.0)
(324,000)
(21,000)
(364,000)
(50,000)
(100,000)
(33,000)
(125,000)
?
?
(939,000)
(1,219,000)
1,219,000
0
(3.0)
(300,000)
(21,000)
(328,000)
(50,000)
(50,000)
(23,000)
(100,000)
?
?
(755,000)
(1,035,000)
2013-14 Expenditure Adjustments
Full-time Faculty Obligation 39,000
2014-15 Funded- FON positions 192.25 (Fall 2014 FON TBD- will be unfrozen)
Fall 2013 frozen FON- 177.6 (Fall Actual 187.25 excluding Children's Center teachers)
(1.0)
Step, Column, Longevity, etc
(348,000)
Add 12 units for Counseling CG courses
(21,000)
Medical Benefit Increase- 8% (50%-50% cost share = 1/2)
(400,000)
Retiree Medical Benefit Increase
(50,000)
Utilities
(150,000)
PERS
(43,000)
Net Operating Increases
(150,000)
Other?
?
Labor/Negotiations agreeements
?
Total Expenditure Adjustments
(1,123,000)
Projected 2014-15 Structural Balance (Deficit)*
(1,873,000)
One-time Reserves used to bridge deficit
Net Deficit for 2014-15
(1,873,000)
(1,035,000)
* The ongoing deficit includes the ongoing portion of the salary increase for 2013-14 only. Does not include categorical program impacts on the general fund.
The salary/benefit budget includes a credit to the expense lines of $300k for salary/benefit savings.
May 5, 2014 Board Meeting
Attachment D
2014-15 through 2017-18
Base Budget
Planning Parameters
2014-15
Projected
Difference between ongoing Revenues & Expenses (Structural Deficit)
Increase in State Revenue Anticipated
A. Restoration/Growth
B. COLA @.86%, 1.0%, 1.0%,1.0%
C. Other
Net change in revenue
2015-16
Projected
(750,000)
0
2016-17
Projected
(1,219,000)
?
2017-18
Projected
(1,691,000)
?
?
470,000
550,000
(280,000)
(669,000)
(1,136,000)
(1,908,000)
?
?
?
(21,000)
(324,000)
(364,000)
(50,000)
(33,000)
0
(100,000)
(125,000)
?
?
(324,000)
(248,000)
(50,000)
(150,000)
?
(100,000)
(150,000)
?
?
(324,000)
(248,000)
(50,000)
(460,000)
?
(100,000)
(150,000)
?
?
(324,000)
(248,000)
(50,000)
(666,000)
?
(100,000)
(150,000)
?
(939,000)
(1,022,000)
(1,332,000)
(1,538,000)
Budget Reductions
?
?
?
?
Ongoing Shortfall*
(1,219,000)
(1,691,000)
(2,468,000)
(3,446,000)
Net Increases in Ongoing Expenses
Full-time Faculty Position changes net of retirements & adjunct backfill
Add Counseling Teaching Units for CG 51 Courses
Step, Column, Longevity Increases, etc.
Medical Plan Rate Increase-- 8% (50%-50% cost share in place)
Retiree Benefit Increase
PERS Rate Increase
STRS Rate Increase
Utilities
Net Operating Increases
Labor agreements
Total Expenditure Increases
Operating Reserves available to bridge deficit
Deficit net of One-time funds
* Cost of 1% for all employees = $427,000. The salary estimates do not include
the one-time salary increase for 2013-14.
RDA and EPA revenue shortfalls continue to be a major threat.
The RDA shortfall was backfilled for 2012-13 and 2013-14 but there is no guarantee this will continue.
78,000
1,219,000
0
555,000
(2,468,000)
560,000
Attachment E
May 5, 2014 Board Meting
ONE-TIME OPERATING RESERVES
Operating Reserves unallocated as of 3/1/14
ADD:
2012-13 one-time increase from recalculation
*Anticipated Budget Savings from 2013-14
LESS:
Reserves needed to balance 2014-15 budget
*Increase in SSSP Match
*Increase in Scheduled Maintenance Match/SIE Match
Program Planning Funding for 2014-15
Projected Operating Reserves available in 2014-15
* These items will be included in the 2014-15 Final Budget when funding levels
are known and the 2013-14 fiscal year is closed.
Does not include FTES reserve of $1,000,000 or the 5% General Reserve
Projected
$500,000
$800,000
$2,000,000
($1,219,000)
($1,100,000)
($908,000)
?
$73,000