Board Budget
Study Session
Sesnon House
November 2, 2015
5:00 pm
1
CCFT Question #1:
• Over the past five years, what has been the
difference between:
1) projected revenues and expenses in the final
budget? See slide 3
2) actual revenues and expenses in the actuals at
year end. (That is, how close have September
projections been to end-of-June actuals?) See slide
4
2
Unrestricted General Fund (Base, Carryover, One-time
Unallocated-Actual Compared to Projected Ending Fund
Balance (FY 2010-11 thru FY 2013-14)
18
15.5
16
14.8
14
12
10.7
11.1
10.6
10.8
11.3
10.3
10
8
6
4
2
0
FY 2010-11
FY 2011-12
FY 2012-13
Projection
Actual
FY 2013-14
3
Base-Budget
Revenue and Expense Trends
FY 2009-10 thru FY 2017-18
Millions of Dollars
Revenues
Expenses
70.00
65.00
60.00
55.00
50.00
2009-10
Actual
2010-11
Actual
2011-12
Actual
2012-13
Actual
2013-14
Actual
2014-15
Actual
2015-16
Budget
2016-17
Projected
2017-18
Projected
Revenues
60.87
61.76
55.89
57.61
58.62
59.37
61.45
59.55
59.55
Expenses
57.88
58.55
59.07
55.46
57.26
57.46
61.66
63.49
66.25
The difference between revenue and expenditures above does not include carryover funds for expenses incurred
at the end of one year and paid in the next. The funds have been saved over a number of years by departments to
fund equipment and other needs. We have on average $1.5 to $2 million in carryover funds each year.
4
Unrestricted General Fund -Actual Compared to Projected
Ending Fund Balance (FY 2010-11 thru FY 2013-14)
1.200
1.000
0.047
0.078
0.046
0.922
0.954
0.800
0.600
0.953
1.009
0.400
0.200
(0.009)
FY 2010-11
(0.200)
FY 2011-12
FY 2012-13
FY 2013-14
5
CCFT Question: #2
• What have the percentages of faculty
compensation as a part of base budget been over
the past ten years? Of full-time faculty
compensation as part of base budget?
• This data has not been compiled.
• Overall, the college spends 87% of the base budget
on salaries and benefits for employees. See slide #7
6
General Unrestricted Fund
Expense Categories as a Percent of Total Actual Expenditures
FY 2014-15 (Salaries/Benefits/Retiree Benefits = 87%)
13%
3%
21%
Salaries
Benefits
63%
Retiree Benefits
Everything Else
7
CCFT Question #3/#4:
• What are the elements of the net ending balance?
See slides 9 and10
• What is the general reserve as opposed to the
ending balance? The general reserves is one
component of the ending balance. See slide #10
8
20.0
General Unrestricted and Restricted Funds: Fund Balance for
FY 2010-11 thru Estimated FY 2014-15
18.0
16.0
Community Ed
14.0
Restricted Fund Balance
12.0
Unrestricted Gen'l Fnd:
Undesignated
Carryover/One-time
10.0
FTES Reserve
Deficit Allocation
8.0
6.0
4.0
2.0
FY 2009-10
FY 2010-11
FY 2011-12
FY 2012-13
FY 2013-14
FY 2014-15
Note: Monthly payroll cost is approx. $5 million
9
FY 2010-11
FY 2011-12
FY 2012-13
FY 2013-14
FY 2014-15
Actual
Actual
Actual
Actual
Actual
Prop 30 passes
II. Fund Balance Analysis
GENERAL FUND BALANCE BY SUBFUND
BEGINNING FUND BALANCE
Fund 11
Genl Unrestricted
Fund 12
Genl Restricted
Fund 13
District Match
Fund 14
Carry-Over
Fund 15
Community Ed
Fund 17
One-Time
TOTAL BEGINNING FUND BALANCE
3,209,000
1,119,666
3,599,048
451,114
6,634,217
15,013,045
3,209,000
1,136,690
3,744,031
761,895
8,593,195
17,444,811
3,000,000
847,337
2,804,130
991,446
4,764,240
12,407,153
3,000,000
2,068,901
4,458,724
1,016,046
3,703,129
14,246,800
3,000,000
726,872
3,565,937
1,114,827
4,690,990
13,098,626
2,975,164
727,965
3,703,129
3,249,405
1,441,585
4,690,990
Fund 17 Detail
One-Time -Allocated
One-Time -Unallocated
Total Fund 17 (Note 1)
-
-
-
Note 1: For FY 2010-11 thru FY 2012-13, there were no 'One-Time -Unallocated' funds. This category was initiated beginning
FY 2013-14. The general reserve was increased to 7% in 2015-16; $4,407,000
10
Fund Balance: Percent Change From Prior Year
20.00%
15.00%
10.00%
5.00%
0.00%
FY 2009-10
FY 2010-11
FY 2011-12
FY 2012-13
FY 2013-14
FY 2014-15
-5.00%
-10.00%
-15.00%
-20.00%
-25.00%
-30.00%
-35.00%
11
CCFT Questions:
#7/#8/#11
• What percentage of base budget has the Net Ending
Balance been over the past 10 years: (How close have
we come “to the edge”?)- See slide #13
• To what percentage of base budget did the Net Ending
Balance fall at worst of the Great Recession? 17.8%, See
slide #13
• What are average net-ending balances around the
state? In our area? See handout of statewide ending
balances and Slide#14 balances in our area
12
Cabrillo Net Ending Balance
as a Percentage of Expenditures
•
•
•
•
•
2009-10
2010-11
2011-12
2012-13
2013-14
22%
26.8%
17.8%
20.4%
19.8%
• State Institutional Effectiveness Goal:
20%
13
2012-13 Net
Ending Balances
Cabrillo College
$12,177,903
21.18%
Foothill-DeAnza College
$53,670,758
30.72%
Gavilan College
$2,937,919
10.56%
Hartnell College
$9,555,374
29.45%
Monterey Peninsula College
$3,895,079
12.23%
San Jose-Evergreen College
$11,200,410
14.95%
Average Statewide
16.61%
Highest
35.53%
Lowest
5.01%
14
CCFT Questions #5/#6
•
Over the past 10 years, have we had to spend any part of the 5%
General Reserve? No, See slide#10
•
What about during the worst parts of the Great Recession?
See slide#10
•
What percentage of the base budget is the General Reserve
now? 7%, See slide#10
•
Will new funds, such as the reserve PERS/STRS fund of $2 million be
included in the calculation of the Net Ending Balance?
No,
If the funds remain in the unrestricted general fund, yes. It is
likely the funds will be transferred to a restricted fund before
the 2015-16 fiscal year is closed.
15
Funding is not set aside
for long-term commitments
• Total Cost of ownership for Facilities/Technologyaverage cost of $5 million per year
• Total cost of retiree medical benefit cost- Annual
Required Contribution is $1.6 million based on a 30year amortization schedule. New requirements to
amortize over approximately 10-years. New
estimate in progress. 2013 Report included a liability
over $17 million
• Increases in PERS/STRS
16
Reserves
General Reserve
Currently 7%
PERS/STRS
$2 Million
Unallocated One-time
funds
“Operating Reserves”
17
Unallocated One-time Funds
(Operating Reserve)
One-time funds are generated from:
• Unspent, unallocated base budget funds after the
books are closed.
• One-time funding received, not budgeted
• 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
18
Unallocated One-time
Reserves- Final Budget
ONE-TIME UNALLOCATED OPERATING RESERVES
Projected
Unrestricted General Fund Ending Fund Balance (base budget, carryover,
one-time)
$12,161,425
Add:
One-time State Mandate Reimbursement payment
$6,000,000
Less:
General Reserve
Base Budget/Carryover fund allocations/One-time fund
Retire Debt Service Obligation- Certificates of Participation
Transfer to Retiree Benefit Fund
Establish STRS/PERS Reserve
2015-16 One-time Compensation Agreements- all employee groups
Reserves needed to balance 2015-16 budget
Technology Infrastructure Allocation
($4,425,000)
($4,216,000)
($950,000)
($1,500,000)
($2,000,000)
($1,461,472)
($228,789)
($1,000,000)
2015-16 One-time Program Planning Allocations (in addition to
carryover/one-time reallocations)
(250,000)
Projected one-time unallocated operating reserves
$2,130,164
19
Unallocated One-time ReservesChanges since 2015-16 Final Budget
ONE-TIME UNALLOCATED OPERATING RESERVES
Estimated balance after 2015-16 Allocations in Final Budget
Projected
$2,000,000
Add:
State Mandate Reimbursement Block grant for 2015-16
2015-16 Estimated Ending Balance
$304,836
$1,500,000
Less:
Retirement Incentives
?
Title V One-time allocation
?
Projected one-time unallocated operating reserves
$3,804,836
20
2015-16 Changes
since 2015-16 Final Budget
Revenue Changes:
(Ongoing)
• Increase in Base Apportionment
allocation increased $ 400k over
Cabrillo 2015-16 Final Budget
• Unrestricted Base Apportionment
allocation for Full-time Faculty
over $500k
Expenditure Changes:
Overall Change in Base
Budget projection
•
•
•
•
Increase cost of retiree benefits
Increase PERS/decrease STRS
Adjust other operating expense
budgets
Update Budget Reduction total
•
+ $1.3 million balance
21
Cabrillo
2015-18 Budget Planning
2016-17:
Loss of FTES impacts
other programs:
Proposition 30 begins to phase out,
enrollment cap drops to 10,400
•
•
Expenditure
Changes:
Compliance
Requirements:
•
•
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).
Unprecedented increases in
PERS/STRS rates continue
More increases in medical benefit/
retiree benefit contributions
Concerns about meeting 50% law
compliance
22
2015 through 2020
Base Budget Planning Parameters
(Pre 2016-17 Governor's Budget)
Enrollment Cap (FTES)
Difference between ongoing Revenues & Expenses (Structural Deficit)
2015-16
Revised
2016-17
Projected
2017-18
Projected
2018-19
Projected
2019-20
Projected
Budget Stability
10,400
Budget Stability
10,400
Budget Stability?
(530,000)
1,370,924
(3,175,076)
(3,448,076)
(3,210,576)
Change in State Revenue Anticipated
A. Permanent Loss of Apportionment Revenue (FTES Assumptions- MidCase = 10,400 in 2016-17)
B. COLA @ 1.02%, 1.6%, 2.48%, 2.87%, 2.50%* (funding uncertain)
C. Unrestricted General Fund Apportionment Increase-Base Allocation and FT-Faculty Hiring
D. Growth/Access
E. Watsonville Center Revenue adjustments
F. Other Misc. Revenue increases
G. Enhanced Non-Credit (20, 40, 60, 80 FTES)
0
(2,600,000)
?
?
?
575,000
900,000
1,400,000
1,600,000
1,400,000
3,200,000
?
?
?
?
0
?
?
?
?
?
?
?
?
?
200,000
?
?
?
?
0
93,500
187,000
280,500
374,000
0
?
?
?
?
3,975,000
(1,606,500)
1,587,000
1,880,500
1,774,000
H. Fiscal impact of Proposition 30 expiration unknown (sales tax increase
ends 12/31/16; Education Protection Account Funding Associated with Prop.
30 = 15% of State Apportionment Revenue). Status update needed.
Net change in revenue
23
Enrollment Cap (FTES)
Net Increases in Ongoing Expenses
2015 through 2020
Base Budget Planning Parameters
(Pre 2016-17 Governor's Budget)
2015-16
Revised
Budget Stability
Full-time Faculty Position changes net of retirements & adjunct backfill (savings from
faculty retirements (net of positions replaced in 2015-16 included in the budget
reduction total below*)
Public Safety FTES- 300@ 60% of the credit funding rate- needed to maintain 10,400
enrollment cap (This will be offset by a cut of 232 Tus in Instruction as part of their
budget reduction plan- approximately $389,000)
Enhanced Non-Credit Expenses (Compensation for non-credit not yet negotiated)
Step, Column, Longevity Increases, etc.
Medical Plan Rate Increase-- 1.95%, 6%... (50%-50% cost share in place)
Retiree Benefit Increase
*PERS Rate Increase .08%, 1.2%, 3.55%, 1.6%, 1.7%
*STRS Rate Increase .63%, 1.85%, 1.85%, 1.85%, 1.85%
Utilities (Budget Cut will be submitted in November for 2016-17)
Net Operating Increases--includes increases in mandatory benefits
Estimated cost of new Sick Leave Law- Effective July 1, 2015
Affordable Care Act Implementation- Penalty Reserve
Labor agreements
Total Expenditure Increases
0
(420,000)
(173,000)
(150,000)
(90,000)
(160,000)
(4,000)
(475,000)
(100,000)
(50,000)
(1,400,000)
(3,022,000)
Estimated Budget Reductions *
(947,924)
Surplus/(Ongoing Shortfall)*
1,370,924
Operating Reserves available to bridge deficit
Deficit net of One-time funds
1,370,924
2016-17
Projected
10,400
2017-18
Projected
Budget Stability
2018-19
Projected
10,400
2019-20
Projected
Budget Stability?
?
?
?
?
(841,500)
?
(420,000)
(273,000)
(100,000)
(135,000)
(470,000)
0
(250,000)
?
(450,000)
?
(2,939,500)
?
(420,000)
(273,000)
(100,000)
(397,000)
(470,000)
(50,000)
(150,000)
?
?
?
(1,860,000)
?
(420,000)
(273,000)
(100,000)
(180,000)
(470,000)
(50,000)
(150,000)
?
?
?
(1,643,000)
?
(420,000)
(273,000)
(100,000)
(190,000)
(470,000)
(50,000)
(150,000)
?
?
?
(1,653,000)
(3,175,076)
(3,448,076)
(3,210,576)
(3,089,576)
?
?
?
?
(3,175,076)
(3,448,076)
(3,210,576)
(3,089,576)
* Budget reductions include Student Services counseling positions shift to restricted programs, Enrollment Services Management Reorganization changes, a reduction of the
Fund 13 match for ASC (formerly DSPS), Retirements from all employee groups included in the 2015-16 Preliminary and Final Budgets. These amounts count toward the $2
million reduction target for 2016-17. COLA, PERS, STRS rate increases were obtained from the School Services Dartboard 7/24/15 Attachment A.
24
New Accreditation
Standards-Fiscal
•
Reflect a realistic assessment of financial resource
availability
• Develop long-range plans that reflect the total cost of
ownership of facilities and equipment.
• Plan for updates and replacement of technology,
infrastructure, etc. to support mission, operations,
programs, and services
• Maintain sufficient cash flow and reserves to maintain
short and long-term stability & financial solvency
• Allocate resources for payment of liabilities and future
obligations (post-employment benefits)
25
Risk Factors
To determine Reserves needed
Cabrillo’s Base Budget
Cabrillo’s base, unrestricted General Fund
budget is approximately $59 million. Monthly
payroll is approx. $5 million
Cabrillo’s General Reserve
7% = $4 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.
Enrollment cap down from 10,887 to 10,400
($2.6 million reduction in funding in 2016-17)
Unfunded Deferred Facilities
Maintenance/ Technology
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. GASB
74/75 requires amortization over 10 years
instead of 30 years
26
Questions?
…to be continued in
December
27