BOARD OF TRUSTEES MEETING August 22, 2016

Transcription

1 BOARD OF TRUSTEES MEETING August 22, 2016

2 Board Budget Development Guidelines Guiding Principles: The following guiding principles are provided to the District Resources Allocation Council (DRAC) and the college budget committees for use when recommendations are made about the budget. 1. Reserve for Economic Uncertainties The general fund reserve for economic uncertainties shall be no less than 7.5% of the projected unrestricted revenue. A monthly update will be provided to the Board of Trustees that reviews current revenue, expenditure, and ending balance projections. Any action proposed by a staff member, a Board member, or the Board of Trustees as a governing body, which could potentially reduce the reserve, will be reported to the Board in the monthly update. A reported reduction in the reserve below 7.5% shall be accompanied by a plan that indicates how the reserve shall be restored. 2. Future Long-Term Debt Issues No additional COP, or other long-term debt, will be issued until: a. An ongoing revenue stream has been identified that covers the full payment for the existing issues. b. A dedicated revenue stream has been identified for the payments for the new issue. The Board has identified this principle as having a very high priority. 3. Retirement Incentives No retirement incentives will be provided unless one-time funds have been identified that will cover the full cost or the plan savings are sufficient to pay the cost of the incentive, including implementation and recruitment costs. 1

3 Board Budget Development Guidelines Guiding Principles: The following guiding principles are provided to the District Resources Allocation Council (DRAC) and the college budget committees for use when recommendations are made about the budget. 4. Area/College Allocations The expenditure budgets for each area/college shall not exceed the projected resource allocations. Any college or district balances existing at the end of each fiscal year, either positive or negative, will result in an equivalent adjustment in the allocation in the subsequent year. In addition, the Vice Chancellor of Business Services and College Business Officers shall monitor the college budgets to ensure there are no negative balances. 5. Deficit Financing Deficit financing is defined as a budget in which projected expenditures exceed projected revenue for the year. Deficit financing should not occur for ongoing expenses such as salary increases. The amount of deficit financing should always be clearly presented in the budget document. Deficit financing shall not result in a reserve balance that is less than 7.5%. 6. Retiree Medical, Dental, Vision, and Medicare Coordination of Benefits (COB) Plans To be compliant with GASB 43 and 45, an irrevocable trust was formed in FY to fund medical, dental, vision, and Medicare plans for SOCCCD retirees. An actuarial study is conducted at a minimum of every two years to update the District s OPEB (other post-employment benefits) liability. It is the Board s intent to fully fund the liability once it is identified. 2

4 Board Budget Development Guidelines Guiding Principles: The following guiding principles are provided to the District Resources Allocation Council (DRAC) and the college budget committees for use when recommendations are made about the budget. 7. Basic Aid While the District is a basic aid district: a. The expenditure budgets for ongoing purposes shall be the resources that would have been available from state apportionment. b. Excess revenue above apportionment shall be allocated at the college or district level for one-time purposes, such as to cover some of the unfunded obligation for the retiree benefit plans. c. Excess revenue above apportionment shall not be used for regular ongoing expenditures, such as salaries. d. Excess revenue above apportionment shall not be used for any other purposes that will jeopardize the District s future financial stability. e. BP and AR 3110 will be followed when allocating basic aid funds. 8. One-time Cost Savings One-time cost savings shall be allocated to purposes such as the unfunded obligation for the retiree benefit plans, or to one-time expenditures. 3

5 Board Budget Development Guidelines Guiding Principles: The following guiding principles are provided to the District Resources Allocation Council (DRAC) and the college budget committees for use when recommendations are made about the budget. 9. Full Time Equivalent Student Targets When developing the target FTES, consideration will be given to the following: a. The needs of students and the community. b. The percentage of growth allocation in the state apportionment formula. c. The FTES generated in the most recent academic year. d. The number of FTES the college administration realistically believes can be generated. 10. Funding for Growth The District resource allocation model shall limit funding for growth FTES to a maximum of the SOCCCD individual adjusted growth rate published by California Community College System Office, adjusted by subsequent System Office revisions. District growth funding shall also be constrained by FTES growth achieved by the District up to the maximum amount funded through the SB 361 allocation formula. 11. Budget Planning College budget planning will take into consideration the 50% Law and Faculty Obligation Number (FON). 4

6 Overview of District Funds Adopted Budget FY General Fund (GF): Including: Unrestricted GF: Restricted GF: Other Funds*: Total All Funds: $338.7 Million $286.1 Million $ 52.6 Million $416.3 Million $755.0 Million * Other Funds Include: Community Education, Child Development, Capital Outlay (Including Basic Aid Projects), Self-Insurance, Retiree Benefit, OPEB & Pensions Stability Trust Funds 5

7 Adopted Budget FY Changes from Tentative Budget Revenue Changes: General Fund Unrestricted Ending Balance One-time funds from FY Carried Forward is $50.6M (increase of $16.7M) Unrestricted revenue increased by $6.0M due to property tax, Lottery and non-resident tuition estimates (used for SB361 increases) Restricted funds increased by $5.6M to $52.6M 6

8 Adopted Budget FY SB361 Revenue Recap COLA of 0.0% Growth of up to 0.5% ($0.7M) Districts need to grow to earn this revenue Base Allocation adjustment of 1.2% ($1.6M) SB361 revenue is distributed through the DRAC model Note: There are also one-time funds included in the budget for mandated cost reimbursement and Proposition 30 7

9 Adopted Budget FY Additional Funding Sources Part-time Faculty Office Hours and H&W Benefits partial state reimbursement of $250,000 Proposition 30 EPA funds budgeted for part-time faculty salaries and benefits of $2.7M Strong Workforce Program funds for CTE of $2.5M were recently allocated and will be added to the budget through a revision in the coming months 8

10 Adopted Budget FY Expense Recap Step and Column increases are included for all employee groups All negotiated salary increases are included STRS rate of 12.58% and PERS rate of % Employee Health and Welfare Benefits increase of 2.9% ($900K) Workers Compensation rate decrease from 1.8% to 1.6% due to improved claims experience Unemployment Insurance rate remain flat at 0.05% Increase in General Expenses for Title IX investigations, legal fees, and property/liability insurance 9

11 Available Basic Aid Funds RESOURCES - FY AMOUNT Balance at July 1, 2016* $16,229,972 Receipts FY $58,510,948 Estimated Property Taxes for Basic Aid $74,740,920 Unallocated Funds ($2,163,279) Contingency for Unrealized Property Taxes** ($11,702,190) Total Approved Projects FY $60,875,451 * Beginning Balance was higher after final tax receipts ** Contingency is 20% of current year estimated receipts 10

12 Retirement System Increases SOCCCD STRS & PERS Projected Rate and Cost Increases (All District Funds) Fiscal Year Annual Increase Actual Estimated Estimated Estimated Estimated Estimated over STRS Annual Rate % % % % % % STRS Contribution 7,181,247 8,671,975 10,245,683 11,559,232 12,872,781 13,561,507 6,380,260 Annual Increase 1,490,728 1,573,708 1,313,549 1,313, ,726 PERS Annual Rate % % % % % % PERS Contribution 5,424,269 6,549,524 8,063,347 8,840,537 9,666,302 9,909,174 4,484,905 Annual Increase 1,125,255 1,513, , , ,872 Combined Annual Increase 2,615,983 3,087,531 2,090,739 2,139, ,598 10,865,165 Notes: FY through FY include negotiated salary increases FY through FY estimates do not assume any changes in salaries 11

13 Enrollment Trends FY FY FY FY FY Actual Actual Actual Annual Target IVC 9,329 9,419 9,510 9,841 9,712 SC 18,475 15,541 18,177 15,086 18,564 TOTAL 27,804 24,960 27,687 24,927 28,276 FY FTES are based on the annual report; the decline from FY is the result of a reporting shift of summer FTES rather than a true reduction in students served FY target FTES have been increase by 0.5% from the prior year targets Both colleges anticipate achieving the targets for FY

14 Looking Ahead-Challenges The adopted budget outlook has improved since the tentative budget presentation primarily due to higher ending balances and additional one-time and restricted funding As costs increase and demands for programs and services increase, the new on-going income does not keep pace There are challenges and ongoing impacts to the Colleges and District Services We need to continue to strategically plan and link district wide and college planning initiatives to all resource decisions 13

15 Looking Ahead-Challenges Increases for this Adopted Budget FY primarily consist of one time increases, when our needs are for ongoing increases It is a challenge to predict future State budgets, therefore, we will be working together on Enrollment Management and Budget Solution ideas to remain proactive 14

16 Questions?