62
AGENDA ITEM BACKGROUND
TO: GOVERNING BOARD
DATE
FROM: PRESIDENT
March 4, 2013
SUBJECT:
2012-13 and 2013-14 Budget Planning Update
REASON FOR BOARD CONSIDERATION
INFORMATION
ENCLOSURE(S)
ITEM NUMBER
Page 1 of 10
E.1
BACKGROUND:
The Governor’s 2013-14 Budget was released on January 10, 2013. We are thankful to California voters
for their approval of Proposition 30. The budget includes a mixture of good news and unknowns related
to major policy proposals.
On January 23, the College Planning Council (CPC) had a preliminary discussion about planning
assumptions that will be used to develop the base budget for 2013-14. CPC met on February 27 to
review the budget planning documents attached.
2013-14 Budget Reduction Process, Commitments, and Strategies (pages 64 - 66)
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 67 - 68)
The budget calendar includes all shared governance and board meetings associated with the
budget planning process for 2013-14.
2013-14 Base Budget Planning Assumptions (page 69)
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.
The expenditure assumptions include the replacement of eight full-time faculty positions and the
allocation of funding to maintain the college’s enrollment and capture restoration funding of
1.6%; $700,000 for Cabrillo.
Funding has been allocated to Counseling to increase the number of CG 51 courses offered to
students in fall 2013.
The 2013-14 Preliminary Budget will be developed using the mid-case scenario. The projected
deficit for planning purposes is approximately $2.5 million. The college expects to have adequate
reserves to cover the deficit.
Administrator Initiating Item:
Graciano Mendoza
Victoria Lewis
Academic and Professional Matter
If yes, Faculty Senate Agreement
Senate President Signature
 No
Final Disposition
63
2013-14 through 2016-17 Multi-Year Base Budget Planning Assumptions (page 70)
The long-term projection for 2014-15 through 2016-17 projects new revenue in the form of
COLA.
With new revenue comes a requirement to hire fifteen to twenty new faculty in order to meet the
faculty obligation requirement. 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 college’s enrollment is declining. The spring 2013 enrollment is approximately 4% below
spring 2012. The college may have to allocate more funding in future years to maintain
enrollment to the funding cap.
One-Time Operating Reserves (page 71)
The college budgeted reserves of $3.1 million to balance the 2012-13 Final Budget. Changes in
the operating reserves are summarized as follows:
The revenue adjustment for the 2011-12 fiscal year was received on February 22. Actual revenue
received for 2011-12 was $448,000 higher than the college’s closing estimate.
Revenue associated with the State Mandate Program was unknown at the time the 2012-13 Final
Budget was developed. The estimated revenue is included as an increase in operating reserves
Restoration funding of 1.6%; 700,000 was not included in the 2012-13 because of the uncertainty
associated with the passage of proposition 30. The 2012-13 funds are included as an increase in
the operating reserve.
The college is anticipating budget savings of $1.5 million for 2012-13
There is still a major risk factor associated with RDA. The first principal apportionment report
from the state for the 2012-13 fiscal year included an estimated shortfall of 6.57% or $3.6 million
for Cabrillo. Although the Governor’s Budget guaranteed community colleges backfill funding
for RDA shortfalls for 2012-13 the state is advising Districts that a deficit may occur. The
college is setting aside reserves to cover the shortfall should it materialize. The college is also
planning for an ongoing shortfall of 2% (See Base Budget Planning Assumptions, page 69- 201314 Revenue Adjustments section; C.)
The budget planning documents will be agendized for Governing Board approval at the April
meeting.
64
March 4, 2013 Board Meeting
2013-14 Budget Reduction 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 is organized and staffed to operate on a $60 million budget to an organization and staffing
level that can deliver sustainable services to the community with a smaller budget.
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
Maintain accreditation standards of the college and academic programs
1.
2.
Maintain state and federal compliance requirements (Strategic Plan Goal B) e.g.:
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
Revised 2/27/13
65
Categorical and grant-funded programs
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.
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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
CABRILLO COLLEGE
FY 2012-13 through 2013-14 Budget Development Timeline
March 4, 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
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
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CABRILLO COLLEGE
FY 2012-13 through 2013-14 Budget Development Timeline
March 4, 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
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
Action Items:
- 2013-14 through 2015-16 Budget Planning Parameters
ADMINISTRATIVE COUNCIL
MANAGERS MEETING
CPC MEETINGS
BOARD MEETING
Action Items:
- 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.
68
March 4, 2013 Board Meeting
69
2013-14 Base Budget Planning (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@ 2%
B. COLA@1.65% (0, .825%, 1.65%)
C. Deficit factor for apportionment shortfalls (3%,2%, 1%)
D. Other
TOTAL Revenue Adjustment
2013-14 Expenditure Adjustments
Full-time Faculty Obligation - Replace 7, 8, or 9 vacancies
2012-13 Funded positions 196.25
2013-14 Funded positions 193.75 with 8 replacements
Fall 2013 frozen FON- 189.6 /Unfrozen 211.6
Add Teaching Units to maintain enrollment cap from 2012-13 (300, 268, 260)
Add Counseling Units for CG 51 Courses- 12 Units for Fall 2013
Add Teaching Units to capture 2% restoration/growth in 2013-14
Step, Column, Longevity, etc
Medical Benefit increase- 8% (50%-50% cost share = 1/2)
Retiree Medical Benefit Increase
PERS rate increase
Increase in Worker's Comp., Gen. Liability,
TRAN Interest Expense
Utilities
Operating Cost Increases
Total Expenditure Adjustments
Projected 2013-14 Structural Balance (Deficit) *
One-time Reserves used to bridge deficit
Net Deficit for 2013-14
* 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.
Worst
Case
(2,800,000)
Range
MidRange
(2,800,000)
Best
Case
(2,800,000)
600,000
1,681,326
700,000
1,681,326
800,000
1,681,326
0
0
(1,650,000)
?
631,326
0
450,000
(1,100,000)
?
1,731,326
?
900,000
(550,000)
?
2,831,326
57,000
95,000
133,000
1.5
(531,000)
(21,240)
?
(330,000)
(287,500)
(85,000)
(165,000)
(80,000)
(20,000)
(150,000)
(150,000)
(1,762,740)
(3,931,414)
2.5
(474,360)
(21,240)
?
(330,000)
(230,000)
(85,000)
(165,000)
(70,000)
(15,000)
(100,000)
(125,000)
(1,520,600)
(2,589,274)
2,589,274
0
3.5
(460,200)
(21,240)
?
(330,000)
(172,500)
(85,000)
(165,000)
(60,000)
(10,000)
0
(100,000)
(1,270,940)
(1,239,614)
(3,931,414)
(1,239,614)
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March 4, 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. 1/2 COLA @1.65%, 2.3%, 2.5%, 2.7%*
C. Other
Net change in revenue
Net Increases in Ongoing Expenses
Full-time Faculty Position changes (2.5) (net of adjunct backfill) , 18, 8, 6
Add Teaching Units to maintain enrollment cap from 2012-13 (300,268,260)
Add Counseling Teaching Units for CG 51 Courses- 12 Units for Fall 2013
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
PERS Rate Increase
STRS Rate Increase
Worker's Comp, Unemployment Insurance
TRAN Interest Expense
Utilities
Net Operating Increases
Reduction in Indirect Reimbursements from grants
Labor agreements
Total Expenditure Increases
2014-15
Projected
2015-16
Projected
2016-17
Projected
(1,518,674)
(2,589,274)
(3,183,274)
(3,317,274)
?
?
?
?
?
?
?
450,000
(1,068,674)
1,375,000
1,485,000
(1,324,274)
(1,808,274)
(1,832,274)
(684,000)
(304,000)
(228,000)
(474,360)
?
?
?
(21,240)
?
?
?
?
(330,000)
(230,000)
(85,000)
(165,000)
?
(70,000)
(15,000)
(100,000)
(125,000)
?
?
?
(330,000)
(230,000)
(145,000)
(150,000)
?
(50,000)
(20,000)
(100,000)
(150,000)
?
?
?
(330,000)
(230,000)
(145,000)
(175,000)
?
(50,000)
(25,000)
(100,000)
(150,000)
?
?
?
(330,000)
(230,000)
(145,000)
(175,000)
?
(50,000)
(30,000)
(100,000)
(150,000)
?
?
(1,520,600)
(1,859,000)
(1,509,000)
(1,438,000)
Budget Reductions
?
?
?
?
Ongoing Shortfall*
(2,589,274)
(3,183,274)
(3,317,274)
(3,270,274)
Operating Reserves available to bridge deficit
*Deficit net of One-time funds
95,000
?
1,265,000
2,589,274
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
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March 4, 2013 Board Meeting
ONE-TIME OPERATING RESERVES
Projected
Reserves budgeted for 2012-13 Deficit
$3,142,914
ADD:
2011-12 One-time increase from recal
State Mandate Reimbursement not budgeted in 2012-13
Restoration received for 2012-13, not budgeted in 2012-13
Anticipated Budget Savings from 2012-13
State Mandate Reimbursement for 2013-14
$448,000
$300,000
$700,000
$1,500,000
$250,000
LESS:
Deficit Factor for 2012-13- 6.57%
Projected Operating Reserves available for 2013-14
* Does not include FTES reserve of $1,000,000 or the 5% General Reserve
($3,608,000)
$2,732,914