Cabrillo College Governing Board Monday, February 14, 2011 Cabrillo College Sesnon House 6500 Soquel Drive Aptos, California 95003

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1 Cabrillo College Governing Board Monday, Cabrillo College Sesnon House 6500 Soquel Drive Aptos, California OPEN SESSION PAGE TIME 1. Call to Order and Roll Call 4:00 2. Adoption of Agenda 3. Public Comments Regarding Closed Session Items (three minute time limit per speaker) Please notify clerk if you desire to speak to the Board. 4. Announcement of Closed Session 5. Adjourn to Closed Session CLOSED SESSION 1. Conference with Real Property Negotiators (Government Code ) Property: 251 Kings Village Road, Scotts Valley, California Agency Negotiator: Brian King Negotiating Party and Owner: Scotts Valley City Manager, City of Scotts Valley Under Negotiation: Terms of Payment, Conditions OPEN SESSION Call to Order and Roll Call 4:15 Report Out of Closed Session Oral Communications - Members of the audience may speak to non-agenda items (three minute time limit per speaker). A. Consent Items 1. Human Resources Management Report It is recommended that the Governing Board ratify and/or approve the human resources management report. B. Action Items through Budget Reduction Process Commitments, Criteria and Strategies It is recommended that the Governing Board approve the budget reduction process, commitments, criteria and strategies for fiscal years through Allocation of One-Time Operating Reserves to FY It is recommended that the Governing Board approve the allocation of one-time operating reserves to FY

2 C. Information Items and Budget Planning Parameters Update A and budget planning parameters update will be presented for Governing Board information. CLOSED SESSION 2 February 7, 2011 ADJOURN 6:00 For ADA related meeting accommodations, contact Dominique Hansen, Executive Assistant to the President, at (831) at least 24 hours in advance of the meeting.

3 3 AGENDA ITEM BACKGROUND TO: GOVERNING BOARD DATE FROM: PRESIDENT SUBJECT: Human Resources Management Report ENCLOSURE(S) REASON FOR BOARD CONSIDERATION ACTION ITEM NUMBER A.1 Page 1 of 2 BACKGROUND: Requesting ratification and/or approval of the following employment transaction: FISCAL IMPACT: Within budgeted FTE s. RECOMMENDATION: It is recommended that the Governing Board ratify and/or approve the transaction as described on the attached page. Administrator Initiating Item: Loree McCawley/Victoria Lewis Academic and Professional Matter Yes No Final Disposition If yes, Faculty Senate Agreement Yes No Senate President Signature

4 4 Name Department/Division Position Effective Date Action ROGERS, Joel VAPA/Instruction VAPA Division Dean 06/30/11 Resignation (DOH: 07/01/10) (Special Board Meeting) Page 2 of 2

5 5 TO: GOVERNING BOARD AGENDA ITEM BACKGROUND DATE FROM: PRESIDENT SUBJECT: through Budget Reduction Process Commitments, Criteria and Strategies REASON FOR BOARD CONSIDERATION ACTION ITEM NUMBER B.1 ENCLOSURE(S) Page 1 of 4 BACKGROUND: The College is moving forward with budget planning for the fiscal year. In October of 2010, the College Planning Council reviewed and revised the Budget Reduction Process Commitments, Criteria and Strategies that will be used for budget planning for through The attached document was reviewed by the Governing Board in November, 2010 as a part of the and Budget Planning Parameter Update. FISCAL IMPACT: None. RECOMMENDATION: It is recommended that the Governing Board approve the budget reduction process, commitments, criteria and strategies for fiscal years through Administrator Initiating Item: Victoria Lewis Academic and Professional Matter Yes No Final Disposition If yes, Faculty Senate Agreement Yes No Senate President Signature

6 6 CPC October 6, through Budget Reduction Process Commitments, Criteria and Strategies The economic crisis affecting the state budget is conservatively projected to last at least three years. At the current time, our best efforts at projecting the fiscal impact on Cabrillo indicate that our state funding may continue to decline. 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 reductions 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 1. Maintain accreditation standards of the college and academic programs 2. Maintain state and federal compliance requirements (CMP 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 (CMP Goal B) Core courses toward an AA/AS General education breadth Labor market C. Minimize negative impact on student success (CMP Goals B & C) e.g. ARCC D. Optimize enrollment to achieve maximum state revenues.

7 7 E. Minimize impact of non-base budget programs on General Fund (CMP Goal E) Ancillary/Auxiliary operations Categorical and grant-funded programs F. Maximize efficiency of programs and services (CMP 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 (CMP Goal D and Facilities Master Plan) H. Optimize effective utilization of college facilities (CMP Goal E) I. Maximize flexibility and opportunities for employees (Process Commitment C) III. Strategies A. Design and implement Strategic Enrollment Management Plan and determine the FTES targets for through 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.

8 8 IV. Historical Data Available A. Internal Data Cost Center Actual Expenditures, number of full-time equivalent faculty, staff and administrators (FTE) and FTES Actual Expenditures, FTE and FTES Budget Expenditures, FTE Staffing levels by department and bargaining unit from accreditation self-study FACT Books Space Planning project database Suggestion box for anonymous input Budget reduction website Accreditation Self-Study Program Planning Pages B. External Data Fiscal Data Abstract Current Cost of Education WASC Accreditation Standards

9 9 TO: GOVERNING BOARD AGENDA ITEM BACKGROUND DATE FROM: PRESIDENT SUBJECT: Allocation of One-Time Operating Reserves to FY ENCLOSURE(S) REASON FOR BOARD CONSIDERATION ACTION ITEM NUMBER B.2 Page 1 of 4 BACKGROUND: The College is moving forward with budget planning for the fiscal year. The Governing Board reviewed the projected ending balance for the through fiscal years. The following reserve categories have been established for the college: A 5% mandatory reserve; $ 3,209,000 Projected Operating Reserves (Savings); $6,500,000 through A $500,000 FTES reserve. Staff recommend the reserve be increased by $500,000 in The FTES reserve will provide resources to buffer marked changes in enrollment funding. On December 3, 2007 the Governing Board approved BP Per BP 4030 Unrestricted general reserves shall be no less than the minimum prudent reserve level established by the State Chancellor s Office, i.e. 5%. The college has saved funds to develop an operating reserve to help bridge the gap between ongoing revenues and ongoing expenses (the structural deficit). Operating reserves to date total $5,038,000. The Governing Board directed staff to project unallocated funds or savings that will be available after the fiscal year is closed. The Governing Board also directed staff to include the estimated savings in the budget planning parameters. The Business Office has reviewed spending patterns for the current year and is estimating additional resources available as of June 30, 2011 will be approximately $1,000,000. Note: there is risk in projecting and allocating savings from current and future years before the fiscal years are closed. Fluctuations in revenues and expenditures occur on a regular basis. Projections of savings will increase or decrease as actual revenues and expenditures are known. FISCAL IMPACT: Allocate $4,026,000 of operating reserves to bridge the structural deficit for RECOMMENDATION: It is recommended that the Governing Board continue to set aside a 5% mandatory reserve, increase the FTES reserve by $500,000 in and approve the use of 66.67% of the $6,038,000 operating reserves of the college to bridge the deficit for fiscal year Administrator Initiating Item: Victoria Lewis Academic and Professional Matter Yes No Final Disposition If yes, Faculty Senate Agreement Yes No Senate President Signature

10 10 The Governor s January Budget for includes a net decrease of $2.9 million in general apportionment revenue. It is anticipated that the state will implement the reduction by reducing the college s funded FTES via a workload reduction. The state budget also includes an increase in enrollment fees of $10 raising the fees from $26 per credit unit to $36 per credit unit; a 38% increase in fees. The college is approximately 5% over the enrollment cap for Past experience has shown that enrollment trends are cyclical. As the economy continues to improve enrollment demand may drop. The college has cut over 400 course sections over the past four years jeopardizing the stability of some of the college s core programs and student success. State revenue received from FTES is the main source of funding for the college Reserve Allocations Governing Board principles of budget planning for ) The unrestricted general fund balance should not continue to increase. The balance has increased for a variety of reasons - mostly a restricted spending environment and an unknown sense of revenues at the beginning of each year. 2) Authorize use of up to 66.67% of operating reserves (included on page 4) 3) We use the shared governance process to evaluate the use of one time and carry over reserves to ensure that the following needs address current priorities: a. CPC allocations made in prior years b. New and existing needs for maintenance, information technology, etc. and other one time program expenses c. Deferred program/department expenses 4) Develop contingencies for the mid and worst case scenarios to be enacted only if necessary to address the budget deficit for ) Direct staff to bring recommendations for personnel/compensation and program cuts to the Governing Board if there is a need to adopt a mid or worse case scenario. 6) Direct staff to bring the planning parameters to the April Board meeting for action. The college will know in early to mid-march if the tax measure will be on the ballot 7) Direct staff to use the fiscal year to plan and prioritize future expenses which lead to student success now that our environment has changed so dramatically. 8) Develop priorities for the college given the current budget environment and bring the budget and policy discussions into one conversation rather than parallel actions.

11 Board Meeting Cabrillo Unrestricted General Fund balance as of 6/30/11 11 Board Designated Reserves Mandatory 5% Reserve- Restricted 3,209,000 FTES Reserve- funds allocated to stabilize general apportionment revenues and services to students 500,000 Operating Reserves projected 5,038,000 Total Reserves 8,747,000 Other Board designated allocations to departments through 6/30/10 Carryover Funds- (Contract commitments, allocations to departments) 4,917,000 One-time Funds allocated to departments (approved by CPC) 1,286,000 Subtotal 6,203,000 Additional Board designated allocations anticipated through 6/30/ Ending balance 1,000,000 Carryover funds to departments from the budget 1,796,000 Subtotal $2,796,000 Unrestricted General Fund Projected ending balance for June 30, 2011 $17,746,000 Operating Reserves currently available 5,038,000 Additional reserves available when FY is closed 1,000,000 Reserves currently available 6,038,000

12 12 CABRILLO COLLEGE GENERAL FUND BALANCE Board Meeting OPERATING RESERVES Projected 66.67% FY FY Beginning Balance (Mid Year -Bridge Fund Reserves, Final Budget) 4,385,818 6,038,000 ADD: One-Time Available Funds (unallocated) 652,000 - Projected Increase in reserves and ,000,000 1,000,000 LESS: Allocation of reserves for (4,026,000) Other Allocations (FTES Reserve) - (500,000) Projected Ending Operating Reserves 6,038,000 2,512,000 This box lists the beginning balance for FY , of 'Operating Reserves' as well as an estimated ending balance of apprioximately $6,038,000. For FY , three different scenarios are presented estimating the ending balance for 'Operating Reserves' based on a 66.67%, operating reserves. The Board will decide on the percentage applied to the avaiable 'Operating Reserves' towards balancing the General Unrestrict ed Fund on a one-time basis for FY

13 13 TO: GOVERNING BOARD AGENDA ITEM BACKGROUND DATE FROM: PRESIDENT SUBJECT: and Budget Planning Parameters Update ENCLOSURE(S) REASON FOR BOARD CONSIDERATION INFORMATION ITEM NUMBER C.1 Page 1 of 3 BACKGROUND: The Governing Board reviewed budget planning parameters for and on March 7, The Board directed staff to prepare planning assumptions that include the use of 66.67%; $4,026,000 of operating reserves for The updated planning assumptions are attached. Administrator Initiating Item: Victoria Lewis Academic and Professional Matter Yes No Final Disposition If yes, Faculty Senate Agreement Yes No Senate President Signature

14 Board Meeting I Base Budget Planning Assumptions Final Budget Structural Deficit Range 14 Worst Mid- Best Case Range Case (1,886,000) (1,886,000) (1,886,000) Revenue Adjustments- January State Budget A. Reverse 66.4% of the FTES Reduction (formerly classed as 2.21%growth) B. Remove Negative COLA C. Deficit Factor State Property Tax $15 million D. Adjust General Apportionment Shortfall E. Part-time Faculty Compensation Revenue Assumptions 1,300,000 1,300,000 1,300, , , ,000 (300,000) (150,000) 0 465, , , , ,000 Other A. General Apportionment Red.- $8.99 mil, $6.184 mil, $3.99 mil B. Increase in Student Fees $110 mil.-to offset apportionment reduction C. Deficit Factor Student Fee Revenue Shortfall (8,997,000) (6,184,000) (3,990,000) 1,097,000 1,097,000 1,097,000?????? TOTAL Revenue Adjustment (8,105,000) (5,042,000) (2,698,000) Full-time Faculty Obligation -Fall 2011 (205.6) (6 budgeted/unfilled funded) 0 (270,000) (360,000) (Faculty step 5/5, with benefits $90,000)-reduce funded 0, 3, 4 0 (3) (4) Adjunct Replacement Units- 30 units per FT $1750 per unit 0 157, ,000 Classified positions Management positions Benefits Increase in Transfer to Retiree Benefit Fund 66,000 66,000 66,000 Labor Agreements Increase in Transfer for future retiree liability (new employees,etc.)??? Medical benefit increase 935, , ,000 PERS employer rate increase for (rates continue to 17% 15% 13% 400, , ,000 increase in subsequent years %). 3.24% 3.24% 3.24% STRS rate increase Increase in Worker's Comp., Gen. Liability, Step and Column Increases (includes longevity, shift diff.) New Facilities Supplies & Operating Staff 85,000 80,000 75, , , ,000??? District Contribution- Bus Pass Program (100,000) (100,000) (100,000) Operating Costs: Supply budget increases for COLA 53 and 54 object classifications Operating Costs: Other net operating increases % 0.00% 0.00% 200, , ,000 Total Expense Adjustments 1,981,000 1,703,500 1,501,000 Projected Structural Balance (Deficit) (10,086,000) (6,745,500) (4,199,000) 66.67% of Operating Reserves applied to Defict 4,026,000 4,026,000 4,026,000 Net Reduction Target for (6,060,000) (2,719,500) (173,000)

15 Budget Planning Board Meeting through Base Budget Planning Parameters Preliminary Budget Budget Update Mid-Range Scenario Projected Projected Difference between ongoing Revenues & Expenses (Structural Deficit) (1,886,000) 45,000 (6,745,500) (8,790,500) Increase in State Revenue Anticipated Property Tax Shortfall (150,000) 1/2 of 2.21% Growth in Governor's Budget 1,300,000 Negative.39% COLA Restored 216,000 General Apportionment adjustmnet 465,000 Part-time faculty compensation 100,000 Gen. Apportionment reduction- $8.99 mil, $6.184 mil, 3.99 mil (6,184,000) Increase in Student Fees $110 mil to offset apportionment reduction 1,097,000 Net change in revenue 1,931,000 (5,087,000) 0 0 Net Increases in Ongoing Expenses Full-time Faculty Position changes (-3, +4, +3) (net of adjunct backfill) 112,500 (150,000) (112,500) Step, Column, Longevity Increases, etc. (395,000) (425,000) (450,000) Classified Positions 0 Medical Plan Rate Increase--15% (825,000) (725,000) (750,000) Management Positions 0?? Retiree Benefit Increase (66,000) (50,000) (100,000) PERS Rate Increase (400,000) (395,000) (175,000) STRS Rate Increas 0?? Worker's Comp, Unemployment Insurance (80,000)?? New Facilities Supplies & Operating, Staff 0?? Utilities 0 (100,000) (100,000) Net Operating Increases (150,000) (200,000) (225,000) District Contribution- Bus Pass Program 100,000 Retiree Benefits- New Employees??? Labor agreements??? Total Expenditure Increases (1,703,500) (2,045,000) (1,912,500) Budget Reductions??? Ongoing Shortfall* 45,000 (6,745,500) (8,790,500) (10,703,000) Allocation of 66 2/3% of operating reserves 4,026,000 Deficit net of One-time funds (2,719,500) *Estimates will change as more information becomes available