05-06 Budget Update

Campus ForumMay 16, 2005

Agenda

Welcome Dr. Van Der Ploeg Process Update Doug Bentz Enrollment Update Ric Machuga Financial Update Martha Wescoat-

Andes Future Dr. Van Der Ploeg Questions Doug Bentz

Where we are in the process

Board Budget CriteriaReviewed annually by:

•Executive Council (EC)•Budget Development Committee (BDC)•Board of Trustees (BOT)

Fall

Spring

Sum

mer Programs

Prioritize

EC Review & Prioritize

Implement Budget Plan

Leadership Teams

Prioritize

Input

Input

Input

BDC Review & Make a

Recommend

BOTReview

& Approve

President Review & Approve

President’s Planning

GuidelinesReviewed by EC and BDC

ShareApproved

Recommendation

Enrollment Update

2004-05 FTES Projections

17-Apr-05

2003-04 FTES Final

2004-05 FTES

Projection ChangePercent Change

2004-05 Enrollment Goal 11,968 12,410 442 3.69%

Previous Year Carry-Over 180 162 (18) -10.22%

Late Summer 358 387 29 4.50%

Fall 5,097 4,961 (136) -2.68%

Winter 414 517 103 24.83%

Spring 4,900 5,085 185 3.78%

Early Summer* 842 1,004 162 19.24%

Flex FTES 176 176 - 0.00%

Total 11,968 12,292 324 2.70%

*The Early Summer 2005 Projection Assumes No Carry-over FTES for 2005-06

Assisted Learningaka Directed Studies

Year  FTES

03-04 1,109

04-05 c. 980

04-05 withdrawals c. minus 250

Other Enrollment Planning FTES

04-05 early summer carry over c. minus 162

O4-05 “enhancements” (list p. 1,2, &11)

c. plus 250

04-05 additional growth required just to “stay even”

c. 162

05-06 Budget List

4 Planning Components1. Revenue Projections (pages 1-2)

How much new money can we count on?

2. Fixed Cost Projections (pages 3-4)How much will certain costs automatically increase?

3. Planned program reductions (pages 5-10)How much have programs identified in reductions?

4. Augmentation requests (pages 11 – 14)What new costs must we fund?

05-06 State Revenue Budget Picture

January Budget+ COLA at 3.93%+ Growth if a district grows Transfer cost of STRS No equalization No restoration of PFE prior year cut No non-credit

05-06 State Revenue Budget Picture

May Revise Increase COLA to 4.23% $40M Equalization System Wide Restoration of 04-05 PFE cut, but

contingent on individual district accountability

One-time funding in selected areas STRS cost transfer still in

05-06 Butte Revenue Projections

(Reminder: Looking only at unrestricted revenue) Largest single source

COLA Other potential sources

Growth - only if we grow beyond what we need to replace; trying to avoid decline

PFE cut - Reinstate 04-05 year, not new money – Mainly faculty positions hired years ago on PFE

Equalization - 50% 2nd installment: needed to help new ongoing expenditures for 05-06; 04-05 allocation used to balance the budget

Hope to see during the Legislative Process: More Equalization State STRS cost not transferred to District/employees

05-06 Butte Revenue Projections

Pre-May Revise Revenue Forecast includes COLA3.93% $1,705,672

Need to update for 4.23% -- approximately $130K more

May be decreased by Governor’s transfer of 2% STRS cost to Districts to negotiate <$428K>

Growth – budget year 05-06 Plan for through Enrollment Management, budget

expenditures to pursue, but do not budget revenue in the current year until received

Why? Most growth has been going for replacement FTES Growth has been slow due to local demographics Hope to avoid decline

05-06 Butte Revenue Projections

Growth (04-05) $708,644 Growth achieved 04-05 will be budgeted 05-06

Equalization TBD amount depends on individual district

distribution PFE Restoration TBD Other non-State sources

Trying to develop but not yet ready to budget Foundation Non-resident students/International enrollment Contracts/grants

05-06 Butte Revenue Projections

Pre May-Revise Estimate (List pg 2)

$2.4 MMay Revise:

$130K in COLAOur portion of Equalization TBDPFE Restoration TBD

STRS deduct to be addressed<$428K>

Fixed Cost Increases

Employee Compensation Step/Column/Longevity $ 500 K Potential 05-06 Salary Increase $1.644 M Health Benefit increase $ 461K STRS cost transfer ???? 04-05 Salary Increase <$228K>

Subtotal@$2.4 M

Retiree Health Benefit increase $449K 35% cost increase GASB 43/45 future – ongoing budget - $1M

(Current: One-time funds to liability $1.5 M) Insurance/Contracts/Student-related @$550K

Total (List page 4) $3.4M

Structural Funding GapRevenue inadequate to cover Expenses

Projected New Revenue $2.4M

Estimated Fixed Cost Increases$3.4 M

Deficit <$1.0 M>Need to cut to make budget balance from

fixed cost adjustments

Structural Gap04-05 Compensation Increase > Revenue

04-05 Compensation Model Cost Step/Column/Longevity $ 500,000 4.166% Salary Increase $1,271,449 Health Benefit Increase $ 894,632 Subtotal $2,653,745

Two main sources to pay 04-05 COLA increase $1,038,142 04-05 Growth increase $ 723,106 04-05 Deficit <$ 17,333> Subtotal $1,743,915

Deficit <$909,830>

New Message

Used to say “We need to grow to fund our fixed cost increases.”

Now it looks like our message will be “State COLA and growth revenue combined are not

enough to cover the cost increase of our compensation model; therefore, we need to make program reductions to cover compensation costs as well as other fixed cost increases.”

Such as full-time faculty obligation, retiree health benefits, insurance, contracts, and utilities.

05-06 Program Reductions

Asked for 2.5% at the beginning of the year Expectation that we would use the Budget

Planning Reserve funds to lessen the program reductions for 05-06

Told programs we would use reserve funds for 05-06 if greater cuts were needed

Programs identified $1.2 M or 2.42% List pages 5–9

4th year of reductions and no layoffs proposed for 05-06

Reductions: An Ongoing Requirement

Year Amount05-06 $1.2 M

04-05 $2.4 M03-04 $5.3 M02-03 $1.4 M

New Critical Needs Augmentations

Fixed costs increases do not include critical needs of new costs

Other new critical needs to be addressed: Full-time Faculty obligation – 5 positions Enrollment Management Initiatives to replace

FTES New Classified staff in high priority areas Recruitment costs to replace retirements Continuation of one-time funding for ongoing

programs: Journalism, Staff Development, Marketing

More on the list…

New Critical Needs Augmentations

Nature of the AugmentationsHave-to-haveRevenue-relatedMany are compliance drivenNew buildings on linePrior year commitments

Strategic Use of One-Time Funds

Using reserves (one-time funds) to fund augmentations on a temporary basis

Summary of Reserves 5% Contingency – Unavailable for Allocation $3.9M Transportation – Restricted $119K Retiree Health Benefit Transfer– Restricted $1.5M Unpaid Student Fees – Restricted $710K Budget Planning – Available for budgeting$3.3M

TOTAL (as of 3rd quarter) $9.6M

Strategic Use of One-Time Funds

Using reserve (1x funds) to cover critical augmentations

2 ways being handled with reserve funds: Permanent staff - allocate 3 yrs. of 1x funds

Provides some stability Total: $2,239,008

Use $672,496 in 05-06 Use $783,256 in 06-07 Use $783,256 in 07-08

Other than permanent staff – 1x funds for 1 year

Total: $2,923,943 Half due to Retiree Health Benefit contribution

3 year TOTAL $5.163M $3,596,439 needed in 05-06

Strategic Use of One-Time Funds

Sources to Pay: $5.1 M is more than we have in Budget Planning Reserve. Therefore, using both: Reserve for Budget Planning $3.3M Anticipated carryover funds from 04-05 – Amount TBA

Amount based on availability: Final 1X Allocations will be based on the availability of funds from the Reserve for Budget Planning and the 04-05 year-end carryover.

Timing: Exact amount will become known during the summer when the revenue picture, fixed cost increases, and year-end carryover are known.

If more ongoing revenue/less fixed costs: Will move augmentations to ongoing funds if possible.

Continue some level of planning reserve: Both the BDC and the Cabinet request to maintain some level of Reserve for Budget Planning to provide a safety net into the future.

Reality of Using One-time Funds

Deficit spendingTemporary measure – one-time Cannot be sustained over time to

cover ongoing fixed costsContext - District has over $6 M in

cash outflow every month. Using the entire Budget Planning reserve at

once would only get us through ½ month.Does not meet Board’s Budget

Criteria for balanced budget

Future

Push for more revenue, lower fixed costs, and program cuts will be our expected practice into the future given our structural gap and the use of one-time funds for ongoing needs.

Budget Strategies used to date

Grow/Replace Enrollment Increase Retention Develop Alternative Revenue Sources Any new funding used to minimize need

for further cuts, not program expansion (eg. Equalization)

Reduce operating budgets Freeze vacancies Change benefits plans Save one-time funds Allocate reserve funds as possible

Future Program Reductions

Reduction likely to be more painful after 4 years of cutting

05-06 planning for 06-07Planning process to identify reductionsFreezing vacancies likely againLayoffs and program eliminations

possibleTarget % will be known in the late

summer

Future Planning

Two ways to solve any budget crisis Generate more revenue (State and non-

State)Growth Argument

Decrease costs to stay within available revenueReduction argument

We need to work on both sides of the equation.

Planning is Critical

Often hear after the fact: “Well it wasn’t as bad as you said it might be” or “You always work it out.” Implication – didn’t need to plan

Our collective objective is to maintain programs/services and positions for students and employees.

We all work very hard to plan and have options so that we can minimize the need for more drastic measures such as layoffs and program eliminations.

As a College we can’t maintain the institution without extensive planning and work by all groups and individuals.