Budget Update, Credit
Rating Renewal & Bond
Sale
Larry Gawthrop, CFO
Budget Update
Steps We’ve Taken
2016 Initial/Amend with Budget Comparison
ENROLLMENT (IPEDS)
SUMMARY
7,885*
8100*
8617
-8.5%
-6%
-4%
15-16 AMEND
15-16 BUDGET
14-15 ACTUAL
$33,665,894
$34,598,876
$35,360,871
All Other Revenue
40,517,780
40,004,092
40,201,311
Expenditures
73,933,674
74,352,968
75,305,519
250,000
250,000
256,663
(250,000)
(250,000)
(250,000)
0.00
0.00
6,663
9.27%
9.22%
8.77%
Tuition
Excess (Deficit) Revenues Over Expenditures
Budgeted Increase in GF Fund Balance
Final Surplus
Fund Balance Percent**
* 15-16 estimate
** Target = 5% - 10% of expenditure budget
Financial Information on Demand
• Financial information is
available online via
www.mcc.edu
•
Faculty & Staff
•
Departments
•
Planning, Research & Quality
Initiatives
•
Institutional Research
•
Institutional Facts, Stats &
Reports
•
Strategic Planning Dashboard
• Link
http://www.mcc.edu/acad_affair
s/aa_institutional_effectiveness.s
html
Projections: Enrollment, Revenues
Projections for Fiscal Year 2017
 8% Decrease in Enrollment
 Every 1% Improvement =
$320,000
 Minimal Increase in Property Tax Revenue
 Slight Increase in State Appropriation
Credit Rating Renewal &
Bond Sale
Rating Scales
INVESTMENT GRADE
‘AAA’
Extremely strong capacity to meet
financial commitments, highest rating
‘AA’
Very strong capacity to meet financial
commitments
SPECULATIVE GRADE
‘BB+’
Considered the highest speculative grade by market
participants
‘BB’
Less vulnerable in the near-term but faces major ongoing
uncertainties to adverse business, financial & economic
conditions
‘B’
More vulnerable to adverse business, financial & economic
conditions but currently has the capacity to meet financial
commitments
‘CCC’
Currently vulnerable & dependent on favorable business &
financial and economic conditions to meet financial
commitments
‘CC’
Currently highly vulnerable
‘C’
Bankruptcy petition has been filed or similar action taken,
payment of financial commitments are continued
‘D’
Payments default on financial commitments
A+ MOTT COMMUNITY COLLEGE
‘A’
‘BBB’
‘BBB-’
Strong capacity to meet financial
commitments, somewhat susceptible
to adverse economic conditions and
changes in circumstances
Adequate capacity to meet financial
commitments, more susceptible to
adverse economic conditions
Considered lowest investment grade
by market participants
Importance of Competition & Credit Rating
½% costs almost $1.3 million in interest
A competitive bid process was conducted by PFM Group
3.55%
3.48%
$1,262,938
3.34%
3.16%
3.18%
$688,873
3.05%
$232,330
Fifth Third Securities
$1,053,591
$297,658
Bank of America Merrill Stifel, Nicholas & Co., Inc. Robert W. Baird & Co.,
Lynch
Inc.
True Interest Cost Saved
Interest Rate
Jefferies LLC
Hutchinson, Shockey,
Erley & Co.
What can be paid for with bond funds ?
YES
NO
• Bond funds are required
to be used for capital
improvements
• Operating costs are
funded through tuition,
state appropriations
and taxes collected
through voter-approved
millages
• Buildings
• Technology Systems
• This money cannot be
spent for normal
operating costs