Meeting of the District Budget Advisory Committee March 22, Presented by: Andy Dunn Vice Chancellor Finance & Administrative Services

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1 Meeting of the District Budget Advisory Committee March 22, 2012 Presented by: Andy Dunn Vice Chancellor Finance & Administrative Services

2 Areas of Discussion Review Budget Development Strategy Budget Solution Schematic Coast Internal Operating Deficit Deficit Targets (Site and Bargaining Unit) Framework for Possible Mid-Year Cuts (Rainy Day Fund) Rainy Day Fund Construct and Targets Outline Rainy Day Fund FTES Trends Fund Balance Trends How has our Budget Development Strategy changed in recent weeks? February Surprise Budget Stabilization Changes to FTES targets Opportunity Risk Workload Reduction Critical Path Budget Schedule March 21,

3 Budget Solution Schematic Revised March 7, 2012 Balanced Budget Solution for FY Internal Operating Deficit (On-Going Solution) New Expense Obligations STRS PERS Health Benefits (4) Step/Column UIC Revenue Reduction Carry Forward Deficit Orange County Property Tax Grab Rainy Day Fund (One-Time Solution) Preparation for Failure of Tax Measure Fund Balance General Reserve Deficit Factor (February Surprise) Board Election million $6.8 million $6.4 million March 21,

4 Salaries & Benefits Percentage of Total Expenditures Unrestricted General Fund 2006/ / / / / % 84.3% 87.6% 89.5% 88.1% 90% 89% 88% 87% 86% 85% 84% 83% 82% 81% 2006/ / / / /11 March 21,

5 Coast Internal Operating Deficit Scenarios Feb-12 Revenue change ( ) COLA $0 Tier II Mid-year Cut ($2,300,000) OC Property Tax Grab ($300,000) Total Revenue change estimate ($2,600,000) Revenue change ( ) COLA $0 Growth/Restoration (3) $0 Deficit factor $0 Total Revenue change estimate $0 Emerging Internal Operating Deficit STRS $0 PERS ($473,000) Health Benefits (4) ($3,000,000) Step/Column ($725,000) UIC ($100,000) Subtotal - CCCD Internal Operating Deficit ($4,298,000) Total Projected Deficit ($6,898,000) District-Wide Savings Estimated District-wide (Admin 9) savings ($100,000) Subtotal ($100,000) Subtotal Coast estimated Internal Operating Deficit ($6,798,000) March 21,

6 How will we close the Internal Operating Deficit? Targets By site: Site Allocation Amount OCC 46% ($3,154,272) GWC 28% ($1,931,992) Coastline 16% ($1,099,237) District office 9% ($611,820) Total 100% ($6,798,000) March 21,

7 How will we close the Internal Operating Deficit? Targets By Bargaining Unit: Unit Share Total salary/benefits CFE 45.79% $47,007,244 CFCE 39.00% $40,038,059 ACE 1.01% $1,041,273 CDMA 12.47% $12,803,679 Exec 1.62% $1,667,134 Board 0.09% $93,463 Total % $102,650,852 March 21,

8 Rainy Day Fund Construct Feb-12 Mar-12 Estimated Fund Balance $18,000,000 $18,000,000 Deficit Factor (Student Fee shortfall) ($5,500,000) ($5,500,000) Estimated Net Available Fund Balance $12,500,000 $12,500,000 General Reserve ($12,500,000) ($12,500,000) Balance/(Deficit) $0 $0 Create "Rainy Day Fund" ($8,211,252) ($6,336,452) Election Cost ($500,000) ($500,000) Additional needed one-time funds ($8,711,252) ($6,836,452) Balance/(Deficit) ($8,711,252) ($6,836,452) Redirect Retiree Benefits to pay portion of current year cost $3,000,000 $3,000,000 Freeze Equipment from ending balance $500,000 $500,000 Reduce General Reserve from 6.5% to 5.5% $1,900,000 $1,900,000 Transfer-In Unrestricted F-40 balances $200,000 $200,000 Balance/(Deficit) ($3,111,252) ($1,236,452) March 21,

9 How will we fund the balance of our Rainy Day Fund? Feb-12 Mar-12 Transfer-In from entity resources OCC % ($1,621,273) ($644,315) GWC % ($949,243) ($377,242) CCC % ($540,736) ($214,895) Balance $0 $0 March 21,

10 How has our Budget Strategy Changed? Move toward Budget Stabilization Opportunity Risk One year fiscal hold harmless Three year restoration window For capture savings associated with accelerated take-down of FTES If a district does not restore within one year, FTES and Base Allocation funding at risk. Takes us closer to the edge of compliance under 50% Law. Strategy only works if we adhere closely to FTES targets Mitigation The demand for our services at this juncture is such that restoration could be as simple as adding sections and opening the doors. If the November tax measure fails the referenced workload reduction figure will likely become our new base. March 21,

11 Trend in 50% Law Compliance Instructional Salaries & Benefits 75,978,128 80,692,989 81,501,504 80,479,987 76,427,486 Total Expenses (Less Exclusions) 151,486, ,540, ,813, ,279, ,975,072 Percentage 50.16% 50.58% 50.06% 50.53% 50.62% March 21,

12 Stabilization Model - Workload Reduction Credit Non-Credit N-C Convert Total Allocation FTES Reduction Section Reduction Est Reduction in Instructional Cost Stability Model (5.56% workload Reduction) 30,559 OCC 15, , % $1,344,467 GWC 9, , % $785,467 CCC 5, , % $448,633 30, , % 1, $2,578,567 Assumptions 1. Workload Reduction shall be proportionate to overall budget reduction 2. 3 FTES/Section 3. $4,300 cost per 3 unit section March 21,

13 Total Funded FTES 36,000 35,000 34,000 Funded FTES Projected FTES 33,000 32,000 31,000 30,000 29,000 28,000 27, Final Budget Projected Base Workload Reduction March 21,

14 FTES Summary Credit Non-Credit N-C Convert Total Allocation Base FTES Funding 34,114 OCC 17, , % GWC 10, , % CCC 5, , % 33, , % Target (2.2% Growth) 34,865 OCC 18, , % GWC 10, , % CCC 5, , % 34, , % Funded FTES (2.6% Growth) 35,001 OCC 18, , % GWC 10, , % CCC 5, , % 34, , % March 21,

15 FTES Summary Credit Non-Credit N-C Convert Total Allocation Final Budget (6.15% workload reduction) 32,848 OCC 17, , % GWC 10, , % CCC 5, , % 32, , % Mid-Year Cuts (8.15% workload reduction) 32,148 OCC 16, , % GWC 9, , % CCC 5, , % 31, , % Amended Budget (7.55% workload reduction) 32,358 OCC 16, , % GWC 9, , % CCC 5, , % 32, , % March 21,

16 CCCD FTES Comparison CCC GWC OCC Total P-1 6,074 10,097 17,121 33, Budget 5,709 10,022 17,117 32,848 Over/(Under) Cap March 21,

17 FTES Summary Credit Non-Credit N-C Convert Total Allocation Base FTES Funding 32,358 OCC 16, , % GWC 9, , % CCC 5, , % 32, , % Budget Stabilization (5.56% workload reduction) 30,559 OCC 15, , % GWC 9, , % CCC 5, , % 30, , % March 21,

18 CCCD Non-Resident FTES OCC , , , , , GWC CCC TOTAL 1, , , , , , , , March 21,

19 Comparison of Beginning Balance, Revenue & Expense Unrestricted General Fund 35,000,000 30,000,000 25,000,000 20,000,000 15,000,000 10,000,000 5,000, Actual Actual Actual Actual Actual Budget Projected Beg Bal 19,125,024 28,794,303 23,601,080 21,096,788 19,698,262 27,289,190 15,000,000 March 21,

20 Final Ending Fund Balance Beginning Fund Balance (Reserve) $13,500,000 New Revenues Apportionment $3,950,000 Mandated Costs Reimbursement 635,000 Other Income 58,000 Total New Revenues $4,643,000 Budget Savings District Site $1,405,000 District-Wide Accounts (Admin 9) 1,965,000 Total Budget Savings $3,370,000 Ending Fund Balance $21,513,000 Reserved Ending Balance RESERVE FOR CONTINGENCY (6.5%) $13,500,000 HOLDING FOR MID-YEAR CUTS $3,200,000 GWC LEARNING RESOURCE CENTER 2,000,000 RETIREE HEALTH BENEFITS 1,000,000 EQUIPMENT UPGRADES 920,000 VSP PAYOUT 397,000 CONTRACTUAL CARRY OVER 316,000 CONTRACT/GRANT DEVELOPMENT 100,000 REDISTRICTING 80,000 Total Designations $21,513,000 UNDESIGNATED ENDING FUND BALANCE $0 College Ending Balances Orange Coast College $2,502,942 Golden West College 1,833,874 Coastline Community College 1,439,136 Total College Ending Balances $5,775,952 Total District and College Balance $27,288,952 March 21,

21 Fund Balance Trend w/comparable Colleges Ending Balance as of June 30, 2010 $50,000,000 40% $45,000,000 $40,000,000 $35,000,000 $30,000,000 35% 30% 25% $25,000,000 20% $20,000,000 $15,000,000 $10,000,000 $5,000,000 15% 10% 5% $0 Peralta Riverside Coast Los Rios San Mateo Contra Costa Ventura Foothill deanza Rancho Santiago North Orange Kern 0% Ending Balance ($) Required Reserve (5%) Over (under) Ending Balance (%) March 21,

22 State-Wide Fund Balance Averages 40% 35% 30% 25% 20% 15% 10% 5% 0% Unrestricted General Fund Net Ending Balance as a Percentage of Unrestricted General Fund Expenditures 16.20% Average Statewide 5.60% Lowest Statewide 36.80% Highest Statewide 10.50% Coast March 21,

23 Critical Path Budget Development Calendar March 21,

Presentation to the District Budget Advisory Committee January 26, Presented by: Andy Dunn Vice Chancellor Finance & Administrative Services

Presentation to the District Budget Advisory Committee January 26, 2012 Presented by: Andy Dunn Vice Chancellor Finance & Administrative Services Areas of Discussion Summary 2011-12 FY Changes Review P-1