Mott Community College Board of Trustees and Employee Open Forum June 25, 2013 Financial State of the College Update Final FY12-13 General Fund Budget Summary 11-12 Actual Revenues $ Expenditures 76,604,567 12-13 Amend #1 $ 77,564,207 $ (959,640) $ Fund Balance – Beginning $ 7,466,087 $ Fund Balance – Ending $ 6,506,447 $ 8.39% *Target = 5% - 10% of Expenditure budget $ 73,507,430 Excess (Deficit) Revenues Over Expenditures Fund Balance Percent* 73,180,846 12-13 Amend #2 (326,584) 72,823,915 73,266,137 $ (442,222) 6,506,447 $ 6,506,447 6,179,863 $ 6,064,225 8.40% 8.28% 2 PROPOSED FY 13-14 BUDGET 3 RELEVANT BOARD POLICIES: _____________________________________________________________________ 3100 Budget Adoption. “Budget revisions will be brought forward for Board action as necessary, but not less than twice per year in January and June.” 3920,3930 Financial Stability, Fiscal Reserves. “The College will designate and set aside appropriate fund reserves to support plans for long-term capital and operating commitments.” 5100 Compensation Philosophy. “The Board has determined based on long-term budget projections, and other related budget data, that total compensation/ benefits should not exceed 77% of the total operating budget.” 4 STRATEGIC PLAN _____________________________________________________________________ 7-0. Budget/Finance 7-1. Focus on controllable revenues and costs to sustain our current reputation and facilities and provide funding for strategic priorities 7-2. Establish short and long-term budget and finance priorities that provide a balanced approach to the needs of a learning organization with the flexibility to realign resources 7-3. Implement a comprehensive strategy to address the long-term deficit which enables us to continue to provide affordable high quality education 7-4. Seek and cultivate alternative resources to supplement and/or increase existing revenue streams and funding sources 5 FUNDING SOURCES (2013-2014) State Aid Property Taxes -Operating -Debt Tuition 6 Enrollment and State and Local Funding per Fiscal Year Equated Students (FYES) $6,000 Revenue per FYES $5,800 $5,600 Funding $5,400 $5,200 $5,000 $4,800 $4,600 $4,400 $4,200 $4,000 Revenue per FYES 7 THEN and NOW 2012-2013 1999-2000 Tuition 32% Other 6% Tuition 50% Taxes 26% State Aid 36% State Aid Funding $15,344,107 Other 5% State Aid 21% Taxes 24% State Aid Funding $15,021,410 8 Projected Property Tax Funding FYE 2010 through FYE 2016 ($19.3 Million lost since 2009-2010) 9 Current Year Comparison of Millage Rates/Property Tax Declines with State Grouping 2.50% 2% 2.00% 1.7% 1.50% 1.00% 0.50% 0.00% ‐0.50% ‐1.00% Mott 0% Grand Rapids 1.99 Kalamazoo Valley 0.2% 2.41 Schoolcraft Delta 1.80 2.40 1.79 0% Wayne County 2.24 0% Henry Ford 3.00 Washtenaw 3.46 -1.0% ‐1.50% ‐2.00% ‐2.50% -2.4% ‐3.00% MCC is 3rd Lowest in Millage Rate, and has the Largest Property Tax Decline Current Year Comparison of State of Michigan Peer Group Property Tax Revenue 60,000,000 2 50,000,000 40,000,000 3 30,000,000 20,000,000 10,000,000 0 7 8 6 5 4 1 Percentage of Property Tax and State Aid of Total Funding 70% 60% 63% 58% 50% 40% 44% 45% 06/30/13 47% 06/30/12 51% 06/30/11 06/30/10 06/30/05 06/30/00 30% 12 Budget Balancing per Contact Hour Property Taxes State Aid Tuition Budget Cuts Use of Fund Balance $25 $19.44 Funding per Contact Hour $20 $14.24 $15 $10.34 $9.66 $10 $5 $2.65 $0.73 $0.65 $9.37 $5.79 $9.18 $3.81 $1.82 $1.76 $0 ‐$5 ‐$10 $(4.03) $(3.51) $(4.10) $(4.19) $(6.45) $(4.59) ‐$15 ‐$20 $(15.81) $(20.97) ‐$25 ‐$30 $(25.79) Fiscal Year 13 FEDERAL STUDENT FINANCIAL AID AND MCC 14 Tuition and Financial Aid 20% $8.4 mil Federal Aid 4% $1.8 mil Other Aid Cash Paying 76% $31.2 mil Total aid comprises 80% of MCC's total tuition revenue. 15 Millions Pell Awards 35 30 Increased Five-Fold in Ten Years 25 20 15 10 5 ‐ 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Academic Year Pell Award & Cost of Tuition Mott Community College In‐District (Published 13/14) Saginaw Valley State University In‐State Pell Awarded $5,635 $5,635 Tuition & Fees $4,042 $8,120 $1,000 $1,000 $593 ‐$3,485 (30 contact hours) Books & Supplies Difference Student Receives Remaining Balance Student Needs Unmet Pell Distribution – 12/13 2013/1 – 2013/4 ‐ Preliminary Approx. 7,635 Students Awarded Educational Tuition & Fees $23,621,967 $17,675,343 Educational Non‐Educational Books & Supplies $$ Given To Charges Students $3,040,480 $2,906,145 THE AMERICAN OPPORTUNITY TAX CREDIT (AOTC) “PELL for Most EVERYONE ELSE ?” American Opportunity Tax Credit (AOTC) How did his come to be? Available Financial Aid (Pell and American Opportunity Tax Credit) Pell American Opportunity Tax Credit (AOTC) “Pell for Most Everyone Else” Maximum Award $5,635 $2,500 Enrollment Sliding Scale up to full-time At least Half Time Income Limits Expected Family Contribution Modified AGI< $80,000 Single < $160,000 MFJ Program of Study Degree or Certificate-Accredited Institution Degree or Certificate-Accredited Institution Can be used for Tuition, fees, books, equipment, supplies, leftover can be for living expenses Tuition, fees, books, equipment, supplies Length of Award 6 years 4 years Other Eligibility Not convicted of a felony drug offense Not convicted of a felony drug offense Estimated - $14.3 Billion available annually for AOTC Tuition and Fee Recommendation 2012 2013 Calendar Calendar Year Rate Year Rate Increase Per Contact Hour: In‐District Rate Out of District Rate Out of State Rate Institutional Technology Fee Student Services Fee Student Administrative Fee $ 117.23 $ 170.93 $ 243.00 $ 6.72 $ 117.23 $ ‐ $ 122.50 $ 177.96 $ 253.54 $ 7.02 $ 122.50 $ 8.50 $ 5.27 $ 7.03 $ 10.54 $ 0.30 $ 5.27 $ 8.50 22 Tuition & Fees: Local Comparison College Mott CC Baker College ‐ Flint Eastern Michigan University Saginaw Valley University University of Michigan ‐ Flint Ferris State University Central Michigan University Oakland University Davenport University Michigan State University University of Michigan – Ann Arbor Kettering University Yearly Tuition & Fees 4,042 7,560 7,701 8,120 9,102 10,440 10,950 11,183 11,544 12,622 13,625 29,536 Cost as based on rates published from the Peterson’s Guide at www.petersons.com as of 5/2/2013 MCC’s annual cost is approximately 48% of that of the next 23 most affordable college/university in our area. What if Tuition Covered State Aid Losses? $175.48 $175.00 $166.72 $155.00 $128.65 $135.00 140.32 $115.46 $115.00 $99.61 $112.64 $103.37 $95.00 $75.00 $61.34 $55.00 $61.15 $69.00 $75.80 Actual $82.05 $86.52 Hypothetical Initial FY13-014 General Fund Budget Summary 12-13 Amend #2 Revenues $ Expenditures Initial 13-14 72,823,915 $ 75,223,819 73,266,137 75,657,116 Excess(Deficit) Revenues Over Expenditures $ (442,222) $ (433,297) Fund Balance – Beginning $ 6,506,447 $ 6,064,225 Fund Balance – Ending $ 6,064,225 $ 5,630,928 Fund Balance Percent* 8.28% 7.44 *Target = 5% - 10% of Expenditure budget 25 CAPITAL FUNDING Link to Mission and Strategic Plans • MCC’s mission statement directs the college to… “maintain its campuses, state‐of‐the‐art equipment, and other physical resources that support quality higher education. The college will provide the appropriate services, programs, and facilities to help students reach their maximum potential.” MCC Asset Value vs. Time (Asset Life) Asset Value Planned Maintenance points New Premature End of Life End of Life Extended Life Capital Asset Funding •Current 10 year needs are approximately $85 million •Taxable Values Declining • Availability of Bonds? •Approx. $1.6 million in tech fees annually 30 Key Assumptions – Revenue Tuition and fee revenue increases at 3.9% each year Property tax revenue remain flat for 1 year with slight increases (1.5-3.0%) thereafter 0.6410 Mill Voted Operating Millage is renewed for 10 years starting with FY08-09 State appropriations increase at 2% Other revenues increase by 2% each year Total revenue increases by avg. of 2.9% 31 Key Assumptions - Expenses Salaries and wages increase by 3.2% each year Fringe benefits increase at a rate of 3.0% each year Other expenses increase by avg. of 2.4% each year Total expenses increase by avg. of 3.0% each year 32 Projected General Fund Balance would be $692 thousand at end of FY19-20, if current trends continued (Revenue growth of 2.9% vs. expenditure growth of 3.0%) Based on an average projected gap of $823 thousand per year to be filled with budget-balancing solutions Short-term savings and flexibility continues to be key Long-term strategy of managing total compensation costs 33 7 Year Forecast at June 2012 Forecasts:>>>>>>>>>>>>>>>>>>> Final Revenues Amended Initial Forecast Budget Budget at 2012-2013 2013-2014 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 6/30/12 Tuition and Fees 35.7 38.9 40.5 42.1 43.7 45.4 47.2 49.1 51.1 Property Taxes 17.7 17.2 17.2 17.5 17.7 18.0 18.5 19.0 18.4 State Appropriations 15.0 15.3 15.6 15.9 16.2 16.6 16.9 17.2 17.2 4.4 3.7 3.8 3.8 3.9 4.0 4.1 4.2 4.0 72.8 75.2 77.1 79.4 81.7 84.0 86.7 89.5 90.7 3.2% 2.6% 2.9% 2.9% 2.9% 3.1% 3.2% 3.2% All Others Total Revenue Revenue Increase (Decrease): Expenditures Salaries 39.8 40.1 41.4 42.7 44.1 45.5 46.9 48.4 50.4 Fringe Benefits 16.6 17.1 17.6 18.1 18.6 19.2 19.8 20.4 22.2 All Others 16.9 18.5 18.9 19.4 19.9 20.3 20.8 21.3 23.0 73.3 75.6 77.9 80.2 82.6 85.0 87.5 90.1 95.6 3.2% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.6% (0.43) (0.8) (0.9) (0.9) (1.0) (0.8) (0.6) (4.9) 5.6 4.8 3.9 3.0 2.1 1.2 0.5 (12.9) Total Expenditures Expenditure Increase (Decrease): Surplus/(Deficit): Fund Balance (0.44) 6.1 Note: the forecast illustrates proforma data if current trends were to continue. The College is obligated to balance it’s budget each year and will take necessary steps to do so. 34 Mott Community College Board of Trustees Committee of the Whole Meeting June 24, 2013 Questions or Comments? For More Info.: Contact Larry Gawthrop, CFO (810) 762-0525 or larry.gawthrop@mcc.edu Details Provided with Board Resolutions 1.39 and 1.40