AGENDA ITEM BACKGROUND

Transcription

1 TO: GOVERNING BOARD AGENDA ITEM BACKGROUND DATE FROM: PRESIDENT SUBJECT: and Budget Planning Update REASON FOR BOARD CONSIDERATION INFORMATION ITEM NUMBER G.5 August 5, 2013 ENCLOSURE(S) Page 1 of 10 BACKGROUND: The Governing Board approved the Preliminary Budget on June 10. The highlights of the state budget includes the following funding plan for California Community Colleges: $38million more in categorical funding than was proposed by the Governor $50 million for Student Success and Support- including $15million for DSPS, $15 million for EOPS, and $8 million for CalWORKs. A COLA of 1.57% and funding to restore access of 1.63% $30 million for deferred maintenance (specified as one time funds, though paid with budget year money). $25 million for local planning grants related to new adult education consortia. $48 million for energy efficiency activities related to Proposition 39 to be allocated in a manner determined $16.9 million for the Online Education Initiative. Cabrillo will receive approximately $137,000 for Scheduled Maintenance funding and $137,000 for State Instructional equipment funding on a one-time basis for $150,000 in funding for the Academic Senate. The budget agreement will pay down $30million in deferrals in The budget planning materials have been updated to reflect and state and local budget changes. More changes will be made as the state releases trailer bills. The Governing Board will be asked to approve the budget planning assumptions and Final Budget at the September Board meeting. Administrator Initiating Item: Graciano Mendoza Victoria Lewis Academic and Professional Matter No Final Disposition If yes, Faculty Senate Agreement Senate President Signature

2 Budget Reduction Process, Commitments, and Strategies (pages X - X) The Budget Reduction Process Commitments, Criteria and Strategies were updated to reference the goals in the Strategic Plan and the need to design and implement the Student Success Initiative for the college through Budget Development Timeline (pages X - X) The budget calendar includes all shared governance and board meetings associated with the budget planning process for Base Budget Planning Assumptions (page X) The through budget planning assumptions reflect the impact of the passage of proposition 30 on state revenue anticipated by the college for and Estimates have been updated to reflect the 1.57% COLA included in the state budget. Although the college allocated resources to restore course offerings for , no revenue associated with these offerings is included in the budget planning assumptions. Community Colleges do not receive backfill for shortfalls in redevelopment, local property tax or student enrollment fee shortfalls. The apportionment shortfall for is currently estimated at 2% or $1.2 million for Cabrillo. The expenditure assumptions include the replacement of eight full-time faculty positions and the 1.6%; $750,000 for Cabrillo. The District has concluded the bargaining process for all employee groups for the fiscal year. The cost of the agreements has been added to the budget planning assumptions. The Final Budget will be developed using the mid-case scenario. The projected deficit for planning purposes is approximately $1.9 million. The college expects to have adequate reserves to cover the deficit through M ulti-year Base Budget Planning Assumptions (page X) The long-term projection for through projects new revenue in the form of COLA. With new revenue comes a requirement to hire new faculty in order to meet the faculty obligation requirement. The faculty obligation number has been frozen since 2008 due to lack of funding. The Board of Governors is expected to unfreeze the faculty obligation number in fall of college has allocated ongoing and one-time funding to capture restoration funding and stabilize enrollment. The college may have to allocate more funding in future years to maintain enrollment to the funding cap. One-Time Operating Reserves (page X) The Business Office will close the fiscal year in the finance system in mid-august. The ending balances for all funds will be included in the Final Budget document. The college budgeted reserves of $3.1 million to balance the Final Budget. Changes in the operating reserves are summarized as follows: The college is anticipating budget savings of $1.5 million. The college will use $666,503 of the operating reserves to restore the FTES reserve back up to $1 million in Operating reserve funds of $1.9 million will be used to balance the Final Budget. $1.3 million of operating reserves will be used to fund the one-time (off-schedule) salary increases for The college allocated $24,736 in operating reserves for one-time expenditures.

3 April 8August 5, 2013 Board Meeting Budget Reduction Process Commitments, Criteria and Strategies The economic crisis affecting the state budget is conservatively projected to end soon. At the current time, our best efforts at projecting the fiscal impact on Cabrillo indicate that our state funding may begin to increase over the next few years. The intent of the following process commitments, criteria and strategies is to enable Cabrillo to move from being a college that ishas been organized and staffed to operate on a $60 million budget to an organization and staffing level that can deliver sustainable services to the community within a smaller budgetthe ongoing resource allocation from the state. I. Process Commitments A. Link Budget planning, including program and service changes 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 (Strategic Plan 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 (Strategic Plan Goal A) Core courses toward an AA/AS General education breadth Labor market C. Minimize negative impact on student success (Strategic Plan Goal A) e.g. ARCC D. Optimize enrollment to achieve maximum state revenues. E. Minimize impact of non-base budget programs on General Fund (Strategic Plan Goal A) Ancillary/Auxiliary operations Revised 2/27/137/29/13

4 Categorical and grant-funded programs F. Maximize efficiency of programs and services (Strategic Plan 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 (Strategic Plan Goal B and Facilities Master Plan) H. Optimize effective utilization of college facilities (Strategic Plan Goal B) I. Maximize flexibility and opportunities for employees (Process Commitment C) III. Strategies A. Design and implement the Student Success Initiative for the college. 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.

5 IV. Historical Data Available A. Internal Data Accreditation Self-Study Budget & Benefits Information Center: Educational Master Plan: FACT Books Program Planning Pages Strategic Plan: Technology Plan: B. External Data Fiscal Data Abstract Current Cost of Education WASC Accreditation Standards

6 CABRILLO COLLEGE FY through Budget Development Timeline August 5, 2013 Board M eeting Nov./Dec January 14, 2013 January 10, 2013 January 8/15/29,2013 January 18, 2013 January 23, 2013 February 11, 2013 February 19, 2013 February 27, 2013 March 4, 2013 March, 2013 March 5/26, 2013 March 6, 2013 March 6/20, 2013 April, 2013 April 8, 2013 April 9/23, 2013 April 3, 2013 April 3/17, 2013 April - June 2013 May 6, 2013 May 7/28, 2013 May 1, 2013 May 1/15, 2013 May 25, 2013 CPC/BOARD MEETI NG Action Items; - Academic Staffing Recommendation- Replace six full-time faculty positions for Fall 2013 BOARD MEETI NG Information Items: Budget Update GOVERNOR'S STATE BUDGET ADMI NI STRATI VE COUNCI L STATE BUDGET WORKSHOP MANAGER'S MEETI NG/CPC MEETI NG Review Governor's Budget and impact of Proposition 30 - Discussed major components of budget planning parameters for Increase the replacement of full-time teaching faculty from six to eight for Fall Permanently fund 280 teach units to stabilize enrollment and capture restoration funding for Updated revenue assumptions to include restoration funding BOARD MEETI NG Information Items: - Budget Update ADMINISTRATIVE COUNCIL CPC MEETING Information Items: - Update Budget Parameters FY through Update Budget Development Timeline- FY Review Strategies, Commitments and Criteria BOARD MEETING Information Items: - Update Budget Parameters FY through Update Budget Development Timeline- FY Review Strategies, Commitments and Criteria First Principal Apportionment / Recal ADMINISTRATIVE COUNCIL MANAGERS MEETING CPC MEETINGS Continue to evaluate/revise Planning Parameters BOARD MEETING Action Items: - Update Budget Parameters FY through Update Budget Development Timeline- FY Review Strategies, Commitments and Criteria ADMI NI STRATI VE COUNCI L MANAGERS MEETI NG CPC MEETINGS Negotiations- All groups BOARD MEETING ADMINISTRATIVE COUNCIL MANAGERS MEETING CPC MEETINGS Governor's May Revise for released

7 CABRILLO COLLEGE FY through Budget Development Timeline August 5, 2013 Board M eeting June 2013 June 5, 2013 June 5/19, 2013 June 10, 2013 June 11, 2013 August 5, 2013 August 6/27, 2013 August 7, 2013 August 7/21, 2013 September 9, 2013 September 10/24, 2013 September 4, 2013 September 4/18, 2013 Second Principal Apportionment Received MANAGERS MEETI NG CPC MEETI NGS Action Items: Preliminary Budget Information Items: Updated Budget Planning Parameters Final Budget BOARD MEETI NG Action Items: Preliminary Budget Information Items: Updated Budget Planning Parameters Final Budget ADMI NI STRATI VE COUNCI L BOARD MEETI NG Information Items: through Budget Planning Parameters ADMI NI STRATI VE COUNCI L MANAGERS MEETI NG CPC MEETINGS BOARD MEETI NG Action Items: through Budget Planning Parameters Final Budget ADMI NI STRATI VE COUNCI L MANAGERS MEETI NG CPC MEETI NGS Cabrillo's budget planning process for began late due to the uncertainty surrounding the passage of Proposition 30. The budget plannning cycle will begin in September, 2013.

8 August 5, 2013 Board Meeting Base Budget Planning (Best, M id, Worst Case) Range Worst Mid- Best Case Range Case Structural Deficit (2,500,000) (2,500,000) (2,500,000) Revenue Adjustments A. Restoration funds- 1.6% 750, , ,000 B. Revenue Adjustment for Prop 30 passing 1,681,326 1,681,326 1,681, Revenue Adjustment Revenue adjustments A. 1.63% B. 1.57% C. Deficit factor for apportionment shortfalls (3%, 2%, 1%) , , ,000 (1,650,000) (1,200,000) (550,000) D. Other 0 50, ,000 TOTAL Revenue Adjustment 781,326 2,131,326 3,786, Expenditure Adjustments Full-time Faculty Obligation - Replace 7, 8, or 9 vacancies 57,000 95, , Funded positions Funded positions with 8 replacements Fall 2013 frozen FON /Unfrozen Add Teaching Units to maintain enrollment cap from (300, 268, 260) (531,000) (474,360) (460,200) Add Teaching Units to capture 2% restoration/growth in ??? Step, Column, Longevity, etc (322,000) (322,000) (322,000) Medical Benefit Increase- 8% (50%-50% cost share = 1/2) (178,000) (178,000) (178,000) Retiree Medical Benefit Increase (85,000) (85,000) (85,000) PERS and Other Mandatory Benefit Rate Increases (165,000) (165,000) (165,000) Permanent Salary Schedule increases- all groups (487,000) (487,000) (487,000) Total Expenditure Adjustments (1,711,000) (1,616,360) (1,564,200) Projected Structural Balance (Deficit) * (3,429,674) (1,985,034) (277,874) One-time Reserves used to bridge deficit 1,985,034 Net Deficit for (3,429,674) 0 (277,874) * Does not include categorical program impacts on the general fund. Student Success expenditures moved to restricted fund: Additional 10 days for Counseling contracts, new counseling position, TUs for orientation course The salary/benefit budget includes a credit to the expense lines of $300k for salary/benefit savings.

9 August 5, 2013 Board Meeting through Base Budget Planning Parameters Projected Projected Projected Projected Difference between ongoing Revenues & Expenses (Structural Deficit) (68,674) (1,985,034) (1,890,034) (1,715,034) I ncrease in State Revenue Anticipated??? A. Restoration/Growth???? B. 1/2 2.3%, 2.5%, 2.7%* 850,000 1,265,000 1,375,000 1,485,000 C. Deficit Factor (Prop. Tax, RDA, Student Enrollment Fees) (1,200,000) D. Other 50,000 Net change in revenue (368,674) (720,034) (515,034) (230,034) Net I ncreases in Ongoing Expenses Full-time Faculty Position changes (2.5) (net of adjunct backfill), 15, 8, 6 95,000??? Add Teaching Units to maintain enrollment cap from (300,268,260) (474,360)??? Add Teaching Units to capture restoration/growth for ???? Step, Column, Longevity Increases, etc. (322,000) (325,000) (325,000) (325,000) Medical Plan Rate Increase-- 8% (50%-50% cost share in place) (178,000) (230,000) (230,000) (230,000) Retiree Benefit Increase (85,000) (145,000) (145,000) (145,000) PERS and Other Mandatory Benefit Rate Increases (165,000) (150,000) (175,000) (175,000) STRS Rate Increase???? Worker's Comp, Unemployment Insurance (50,000) (50,000) (50,000) TRAN Interest Expense (20,000) (25,000) (30,000) Utilities (100,000) (100,000) (100,000) Net Operating Increases (150,000) (150,000) (150,000) Labor agreements- all groups (487,000)??? Total Expenditure I ncreases (1,616,360) (1,170,000) (1,200,000) (1,205,000) Budget Reductions???? Ongoing Shortfall* (1,985,034) (1,890,034) (1,715,034) (1,435,034) Operating Reserves available to bridge deficit 1,985,034 *Deficit net of One-time funds Cost of 1% for all employees = $425,000 RDA continues to be a major threat. The RDA shortfall was backfilled for but there is no guarantee this will continue. Although RDA will be backfilled for , the state is delaying payments to CCCs because of a cash shortfall, increasing the amounts CCCs must borrow (in addition to apportionment deferrals). * COLA estimates projected based on School Services of California Financial Dartboard 0

10 August 5, 2013 ONE-TI M E OPERATI NG RESERVES Projected Reserves budgeted for Deficit $3,142,914 ADD: Projected Ending balance $1,500,000 LESS: Restore FTES Reserve in ($666,503) Budgeted Deficit for ($1,985,034) One-time allocation Compensation agreements for ($1,300,000) One-time subfund allocation ($24,736) Projected Operating Reserves available for $666,641 * Does not include FTES reserve of $1,000,000 or the 5% General Reserve

11 Cabrillo Community College District Sound Fiscal Management Self-Assessment Checklist August, Deficit Spending Is this area acceptable? No. Is the district spending within their revenue budget in the current year? No, the State of California has been in the midst of a catastrophic fiscal crisis since Since , the California Community Colleges were cut by $809 million, or 12 percent, and total enrollment has gone down by 300,000 students (California Community Colleges Media Statement; June 27, 2012). The college has employed the use of one-time reserves and made permanent reductions to the ongoing budget of the college to reduce the budget deficit. The college froze all vacant positions until programs and services could be prioritized. Savings was garnered from spending freezes and some one-time fund allocations were re-directed back to the reserves and used to bridge the budget deficit. These strategies allowed the college to shrink the college more thoughtfully and slowly. The reduction process was difficult but the college community worked together to avoided making knee jerk decisions that would have long term, adverse impacts on our students and the community we serve. Permanent reductions have been made to most of the operations and funds maintained by the college. Compared to the fiscal year budget, the college has cut over $11 million from the base operating expenditure budget and over $3 million in ongoing expenses from the categorical restricted fund programs. The District began using a multi-year budget planning assumption approach in This multi-year approach has allowed the college to take a longer perspective in budget planning. Has the district controlled deficit spending over multiple years? Yes, the district maintains 6 subfunds in the General Fund to track various activities; base budget (ongoing), restricted (grants and contracts), district match (required match for EOPS/DSPS programs), carryover (funds that are encumbered in the current year but unspent until the next), one-time, and community education. The 6 subfunds allow for tighter budget controls thus reducing unplanned deficit spending patterns. Careful budget planning and ongoing expenditure controls have resulted in an increase in the level of reserves above the 5% general reserve established statewide standard. In addition, the college established a $1 million FTES reserve that has been used to support college enrollment management practices during this period of uncertain state funding. If transferred for use during the fiscal year, the FTES Reserve is restored to $1 million in the annual budget process. Mid-year reserves and other operating reserves have been established to bridge the deficit while permanent reductions were identified and implemented. The college will continue to maintain one-time reserves above the 5% general reserve on an ongoing basis.

12 Is deficit spending addressed by fund balance, ongoing revenue increases, or expenditure reductions? During difficult budget years the district has reduced on-going expenditure budgets and set aside one-time funds to bridge budgeted deficits. At the same time, the district revises ongoing revenue and expenditure estimates to reflect changes in the state and local economic environment. Budgets are revised accordingly as new economic information becomes available. Are district revenue estimates based upon past history? The district utilizes the state s base revenue computation as the basis for the current year estimates. Base revenue is adjusted up or down based on actual fluctuations in FTES, enrollment fees, changes in the per FTES funding rate, etc. Revenue estimates for nonapportionment related revenue are calculated and updated separately. A deficit factor is usually applied to the apportionment revenue projection to adjust for potential shortfalls in property tax, redevelopment, and student fee revenue. The district updates a budget planning parameter document and a multi-year planning document that tracks incremental increases and decreases in revenue and expenditure estimates. The budget planning parameter document includes estimates based on best, mid or worst case scenarios for revenue, expenditures and reserves. Preliminary and Final Budgets are developed based on the mid range estimates. All budget development steps for the Preliminary and Final Budgets along with on-going adjustments are reviewed with the College Planning Council and presented for review and approval at regularly scheduled Board of Trustees meetings. Does the district automatically build in growth revenue estimates? No. The district analyzes FTES on an ongoing basis to determine whether it is realistic to project the receipt of growth revenue. 2. Fund Balance Is this area acceptable? Yes. Is the district s fund balance stable or consistently increasing? The district s fund balance has been stable and within the required guidelines set by the State Chancellor s Office. Fluctuations in the ending fund balance are anticipated based on designations or commitments that cross fiscal years. Is the fund balance increasing due to on-going revenue increases and/or expenditure reductions? Fluctuations in the fund balance are based on variances between budgeted revenues/expenditures versus actual revenues/expenditures. Variances in state apportionment revenue projections occur based on unanticipated changes in the state s economy. An example of an operational expenditure variance is salary savings. Salary savings occurs when there are unexpected changes in staffing either through retirement or attrition. The college receives a large percentage of its revenue from state apportionment. As the state has increased the level of cash deferrals, it has been necessary for the college to increase the ending fund balance and increase borrowing in order to meet the District s cash flow need.

13 3. Enrollment Is this area acceptable? No. Has the district s enrollment been increasing or stable for multiple years? The college was significantly over the enrollment cap during the budget crisis. Enrollment is now decreasing statewide due to the improvements in the economy and the unemployment rate. Cabrillo College budget planning will be based on realistic enrollment projections and concomitant state apportionment revenue estimates. Below is a table summarizing the district s enrollment over a 21-year period: ANNUAL APPORTIONMENT ATTENDANCE FULL-TIME EQUIVALENT STUDENTS (FTES) Year FTES Increase (Decrease) Student Fees ,685 - $13 per Unit ,370 (3.6%) *$13 per Unit ,459 1% $13 per Unit No Differential ,228 (2.7%) $13 per Unit , % $13 per Unit , % $13 per Unit , % $13 per Unit-Fall , % $12 per Unit-Spring $12 per Unit-Fall $11 per Unit-Spring ,175 5% $11 per Unit , % $11 per Unit ,391 4% $11 per Unit ,410.17% $18 per Unit ,159 (2.2%) $26 per Unit , $26 per Unit ,981 (funded) (1.44%) $20 per Unit ,462 (reported) $20 per Unit ,467 (funded) $20 per Unit ,610 (reported).786% $20 per Unit ,472 (reported) $20 per Unit ,847 (funded) $20 per Unit ,799 (reported) (5%) $26 per Unit ,357 (funded) (4%) $26 per Unit ,915 (reported) (7%) $26 per Unit ,651 (funded) 2.5% $26 per Unit ,483 (reported) 5% $36 per Unit ,683 (funded) (8%) $36 per Unit ,894 *Differential fee of $50 for holders of BA/BS degrees Are the district s enrollment projections updated at least semiannually? Yes. Actual enrollment figures are updated daily. Enrollment projections are available online and are provided to the district s management team on a regular basis. The President s Cabinet reviews actual enrollment and projections on a weekly basis. FTES

14 projections are used in the development of budget planning assumptions used for the Preliminary and Final Budgets. The College Planning Council receives semi-annual updates on the status of the college s enrollment and the anticipated impact on the budget. The college s Student Success Task force is in the process of forming an enrollment management subcommittee. Are staffing adjustments consistent with the enrollment trends? Yes, enrollment trends are part of the criteria used in determining the number of full-time faculty and classified support positions needed to support the college operations. Does the district analyze enrollment and full-time equivalent student (FTES) data? Yes. The President, Vice President of Instruction, Vice President of Administrative Services, Vice President of Student Services, Instructional Deans and Director of Research & Planning (currently vacant) analyze enrollment and FTES as a function of developing schedules of classes on a daily basis during registration periods and prior to submitting enrollment reports to the state each January, April and July. Does the district track historical data to establish future trends between P-1 and annual for projection purposes? Yes. The Office of Planning and Research tracks enrollment trends and works very closely with the Vice President of Instruction to reconcile enrollment data. Enrollment data is reviewed by an ad hoc team that includes staff from enrollment services, research and planning, instruction, information technology, and the business office prior to each submission to the Chancellor s Office. Has the district avoided stabilization funding? Yes. 4. Unrestricted General Fund Balance Is this area acceptable? Yes. Is the district s unrestricted general fund balance consistently maintained at or above the recommended minimum prudent level (5% of the total unrestricted general fund expenditures)? Yes, the Unrestricted General Fund ending balance consistently exceeds 5%. Is the district s unrestricted fund balance maintained throughout the year? Yes. 5. Cash Flow Borrowing Is this area acceptable? No. State Apportionment deferrals in addition to funding cuts have caused a marked increase in the need for borrowing, and made it significantly difficult to manage cash at the college. In 2009 the college developed a quarterly cash flow report in order to keep the college community and the Governing Board up-to-date on the college s cash flow challenges and how they impact college operations. The table below is a permanent addition to the college s Board approved budget documents. (See table next page.)

15 Preliminary Budget ENDING FUND BALANCE vs. CASH BALANCE ( Preliminary Budget Page 26) Ending Balance 6/30/2010 6/30/2011 6/30/2012 Unrestricted Funds 5% General Reserve - Fund 11 $3,209,000 $3,209,000 $3,000,000 Carry Over - Fund 14 3,599,048 3,744,031 3,197,718 One-Time - Fund 17 6,134,217 7,593,195 3,370,652 FTES Reserve - Fund ,000 1,000,000 1,000,000 Community Ed - Fund , , ,446 Total Unrestricted Funds $13,893,379 $16,308,121 $11,559,816 Restricted Funds 1,119,666 1,136, ,337 Total General Fund Ending Balance $15,013,045 $17,444,811 $12,407,153 Cash Balance 5,568,430 14,130,344* 6,933,116** Apportionment Allocation Deferrals $7,000,000 $8,000,000 (est.) $9,000,000 (est.) $8,000,000 (est.) * Cash balance includes $5 million in mid-year TRAN borrowing. ** Cash balance includes $4 million in mid-year TRAN borrowing. *** Projected cash balance includes $8.8 million in mid-year TRAN borrowing. Can the district manage its cash flow without interfund borrowing? Yes. The college participates in both the mid-year and summer Tax Revenue Anticipation Note program and thereby avoids the need for inter-fund borrowing. Is the district repaying TRANS and/or borrowed funds within the required statutory period? Yes. The college participates in the mid-year tax revenue anticipation note program because cash flow is deemed inadequate. 6. Bargaining Agreements Is this area acceptable? Yes. Has the district settled bargaining agreements within new revenue sources during the past three years? Yes. The Vice President of Administrative Services reviews budget planning assumptions and fiscal parameters with bargaining units and the Board of Trustees as a part of the negotiation process.

16 Compensation reductions were negotiated for all employee groups of the college in Some of the compensation reductions were temporary and others such as the implementation of a cost sharing program for employee health benefits are ongoing. The college just concluded negotiations with all bargaining units for Compensation increases were negotiated. The compensation increases included ongoing and one-time adjustments to compensation for the fiscal year. Did the district conduct a pre-settlement analysis identifying an ongoing revenue source to support the agreement? Yes. Did the district correctly identify the related costs? Yes. Did the district address budget reductions necessary to sustain the total compensation increase? Yes. 7. Unrestricted General Fund Staffing Is this area acceptable? No. The state budget crisis and the corresponding reductions have decreased staffing levels of all employee groups college-wide, in all operations. As state revenue stabilizes and increases over the next few years the college will prioritize programs and services to increase student success and continue to serve the community. Is the district ensuring it is not using one-time funds to pay for permanent staff or other ongoing expenses? Yes. Permanent staffing costs are not paid from the District s one-time sub fund. Is the percentage of district general fund budget allocated to salaries and benefits at or less than the statewide average (i.e., the statewide average for is 85%)? Yes. Cabrillo s allocation is currently 84.1%. 8. Internal Controls Is this area acceptable? Yes. Does the district have adequate internal controls to insure the integrity of the general ledger? Yes. To ensure the integrity of financial operations, external audits are routinely performed and those findings are presented to the Board. The most recent available report from 2012 found no material deficiencies in internal control of financial reporting when reviewing the college s financial practices. Does the district have adequate internal controls to safeguard the district s assets? Yes. 9. Management Information Systems Is this area acceptable? Yes. Is the district data accurate and timely? Financial reports, documents, and updates such as monthly college financial updates, investment reports, foundation updates, and bond reports reflect actual financial conditions of the college. The Governing Board receives a variety of financial updates at every meeting.

17 The Business Office makes information readily available in a variety of forms from a variety of sources. The Business Office maintains a web page that contains information about the current budget. The Business Office also maintains space on one of the college s file servers where it posts reports, updates, and other important information. The Business Office s updates to the college community on changes that affect the budget or financial conditions, including state budget changes. The Business Office also regularly prepares informational items and status reports for the Governing Board to keep them informed of current budget and financial conditions. These items are made public and are easily obtained through the Internet, file servers, or s. The Business Office also routinely sends reminders of forthcoming financial deadlines, such as deadlines for submission of purchase orders. The budget office provides budgetary information for use in the college-wide Program Planning process. Through the college s information systems and programs, timely financial information is readily available to appropriate administrators and their support staff. Are the county and state reports filed in a timely manner? Yes. Are key fiscal reports readily available and understandable? Yes. Key fiscal reports are readily available. The Business Office actively reviews how it presents financial and budget information and seeks input on improving the transmission of that information. The college is always looking for ways to improve the dissemination of fiscal information. The college community has ongoing discussions of better ways to educate staff and faculty about budget issues. Packets of budget education materials are now created and disseminated. The Business Office also tracks budget issues as they develop or change at the state level. 10. Position Control Is this area acceptable? Yes. Is position control integrated with payroll? Yes. The college has a position control system, and Board approved personnel actions are used to update changes in positions and compensation estimates used for budget planning. The college processes its own payroll utilizing the integrated ERP system. Does the district control unauthorized hiring? Yes. The District has formal processes in place for hiring faculty, staff and student workers. Does the district have controls over part-time academic staff hiring? Yes. The District has formal processes in place for hiring part-time academic employees. 11. Budget Monitoring Is this area acceptable? Yes. Is there sufficient consideration to the budget, related to long-term bargaining agreements? Yes. Are budget revisions completed in a timely manner? Yes, and submitted monthly to the Governing Board. Does the district openly discuss the impact of budget revisions at the board level? Yes. Summaries of budget revisions are presented to the Board of Trustees on a monthly basis.

18 Are budget revisions made or confirmed by the board in a timely manner after the collective bargaining agreements are ratified? Yes. Has the district s long-term debt decreased from the prior fiscal year? Yes. Has the district identified the repayment sources for the long-term debt? Yes. Long-term debt is repaid from the unrestricted general fund. Does the district compile annualized revenue and expenditure projections throughout the year? Yes. The District compiles annual updates revenue and expenditure estimates mid-year and throughout the budget development process. 12. Retiree Health Benefits Is this area acceptable? No. The college negotiated a limitation in retiree benefit coverage for certificated employees hired in the fiscal year and beyond. The college negotiated a cap on retiree benefits for classified and confidential employees in and changes in retiree benefits for new employees. These changes will reduce the liability over the long term. Has the district completed an actuarial calculation to determine the unfunded liability? Yes.. The most recent actuarial report was prepared in The total liability is approximately $19.8 million. The college is in the process of securing an update actuarial study. Does the district have a plan for addressing the retiree benefits liabilities? The District has implemented a plan for addressing the retiree benefits liability. The Board approved the establishment of a Retiree Benefit Fund in June 2007 to track retiree health benefit funding, interest income, expenditures and reserves. The District has developed a schedule and is committed to transferring ongoing and one-time funds towards the cost of future retiree benefits. The funds are invested in a separate fund at the County that will accrue interest. The college budgets ongoing and one-time resources for future retiree benefits. To date, the college has set aside over $2.8 million for future retiree benefits in addition to the annual required contributions. 13. Leadership/Stability Is this area acceptable? Yes. Has the district experienced recent turnover in its management team (including the Chief Executive Officer, Chief Business Officer, and Board of Trustees)? Yes. Two members of the administration changed recently. The Vice President of Instruction was hired in February of She was a former Dean of Health and Wellness at the college. The college also hired a new CEO effective July 15, District Liability Is this area acceptable? Yes. Has the district performed the proper legal analysis regarding potential lawsuits that may require the district to maintain increased reserve levels? Yes. The Vice President of Administrative Services works with the District s legal advisors to analyze the fiscal impact of pending lawsuits.

19 Has the district set up contingent liabilities for anticipated settlements, legal fees, etc.? Yes. The Vice President of Administrative Services maintains a contingency reserve for anticipated settlements. 15. Reporting Is this area acceptable? Yes. Has the district filed the annual audit report with the System Office on a timely basis? No. The timing of the auditor s annual review has not traditionally coincided with the Chancellor s Office deadline of 12/31 due to scheduling difficulties. The audit firm normally drafts a letter to the Chancellor s Office prior to the deadline that communicates the timeline for the completion of the annual audit. The college has not incurred penalties or adverse consequences as a result of this process. The college worked with the audit firm to change the audit schedule to move closer to the 12/31 deadline. The transition will take another year. Has the district taken appropriate actions to address material findings cited in their annual audit report? Yes. No material findings have been identified in the annual audit reports to date. The District drafts formal responses to all other audit findings. The District s responses to findings are included in the final audit report. Subsequent actions taken by the District to address findings are discussed with the auditors during the entrance interview of the following audit cycle. Has the district met the requirements of the 50 percent law? Yes, however, meeting this requirement remains a challenge for Cabrillo and many other California Community College Districts. Cabrillo reported 50.93% for fiscal year The District is expected to report a similar result for the fiscal year. Have the Quarterly Financial Status Reports (CCFS-311Q), Annual Financial and Budget Reports (CCFS-311), and Apportionment Attendance Reports (CCFS-320) been submitted to the System Office on or before the stated deadlines? Yes. Revised 8/3/13

20 Analysis of Selected Data from the Annual Fin. and Budget Report (CCFS-311), Qtrly. Fin. Status Report (CCFS-311Q), and Fiscal Data Abstract For the period FY to Updated_1/10/ Unrestricted GF - Col. 2 Unrestricted GF - Fund 11, Col. 1 Cabrillo Community College District Budgeted Actual Actual Actual Actual Change from 11/12 to 12/13 Change from 10/11 to 11/12 Year-to-Year Change Change from 09/10 to 10/11 Change from 08/09 to 09/10 EDP No. Acct Description /13 Line Item % /12 Line Item % /11 Line Item % /10 Line Item % /09 Line Item % 8100 Federal Revenues 44, % 57, % 50, % 49, % 39, % -12, % 6, % 1, % 9, % 8600 State Revenues 32,496, % 31,485, % 38,379, % 36,916, % 38,246, % 1,010, % -6,894, % 1,463, % -1,329, % 8800 Local Revenues 24,158, % 25,419, % 24,619, % 24,691, % 25,042, % -1,260, % 799, % -72, % -351, % 8900 Other Financing Sources 3,558, % 3,228, % 329, % 325, % 306, % 329, % 2,898, % 4, % 19, % 801 Total Revenues 60,257, % 60,190, % 63,379, % 61,982, % 63,635, % 67, % -3,189, % 1,396, % -1,652, % 1000 Academic Salaries 25,224, % 25,660, % 25,788, % 26,906, % 28,003, % -435, % -127, % -1,118, % -1,097, % 2000 Classified Salaries 12,611, % 12,722, % 13,085, % 12,050, % 12,682, % -111, % -362, % 1,034, % -632, % 3000 Employee Benefits 13,600, % 13,851, % 12,841, % 11,648, % 11,268, % -250, % 1,009, % 1,193, % 379, % 4000 Supplies and Materials 1,880, % 800, % 958, % 758, % 635, % 1,080, % -158, % 200, % 122, % 5000 Other Operating Expenses and Services 7,888, % 6,354, % 5,394, % 6,095, % 6,202, % 1,534, % 959, % -700, % -107, % 6000 Capital Outlay 1,064, % 638, % 677, % 1,738, % 1,002, % 426, % -39, % -1,061, % 736, % 7000 Other Outgo 3,946, % 4,911, % 2,218, % 1,723, % 1,986, % -964, % 2,692, % 494, % -263, % 501 Total Expenditures 66,218, % 64,938, % 60,964, % 60,921, % 61,783, % 1,279, % 3,974, % 43, % -862, % 11/12 to 12/13 $ Change 11/12 to 12/13 % Change 10/11 to 11/12 $ Change 10/11 to 11/12 % Change 09/10 to 10/11 $ Change 09/10 to 10/11 % Change 08/09 to 09/10 $ Change 08/09 to 09/10 % Change 201 Excess/(Deficiency) of Rev. over Expenditures -5,960,272 n/a -4,748,305 n/a 2,414,753 n/a 1,061,707 n/a 1,851,177 n/a -1,211, % -7,163, % 1,353, % -789, % 901 Net Increase/(Decrease) in Fund Balance -5,960, % -4,748, % 2,414, % 1,061, % 1,851, % -1,211, % -7,163, % 1,353, % -789, % 902 Net Beginning Balance, July 1 11,559, % 16,308, % 13,893, % 12,831, % 10,980, % -4,748, % 2,414, % 1,061, % 1,851, % 903 Prior Year Adjustment n/a 0 0.0% 0 0.0% 0 0.0% 0 0.0% n/a n/a n/a n/a 0 n/a 0 n/a 904 Adjusted Beginning Balance n/a 16,308, % 13,893, % 12,831, % 10,980, % n/a n/a n/a n/a 1,061, % 1,851, % 905 Ending Balance, June 30 5,599, % 11,559, % 16,308, % 13,893, % 12,831, % -5,960, % -4,748, % 2,414, % 1,061, % chk 11,559,816 16,308,121 13,893,368 12,831,661 Change from 11/12 to 12/13 Change from 10/11 to 11/12 Change from 09/10 to 10/11 Change from 08/09 to 09/ Fund Balance: % Change % Change % Change % Change Fund Balance % [905/501] 8.5% 17.8% 26.8% 22.8% 20.8% -9.3% -8.9% 3.9% 2.0% Required Fund Balance to meet 5% threshold 3,310,907 3,246,918 3,048,216 3,046,062 3,089,199 63, % 198, % 2, % -43, % Over -Under 5% threshold 2,288,637 8,312,898 13,259,905 10,847,306 9,742,462-6,024, % -4,947, % 2,412, % 1,104, % Change from 11/12 to 12/13 Change from 10/11 to 11/12 Change from 09/10 to 10/11 Change from 08/09 to 09/10 FTES: st Qtr 311Q Report # Change % Change # Change % Change # Change % Change # Change % Change FTES - Resident 11,225 11,142 11,601 12,799 13, % % -1, % % FTES - Nonresident % 0 0.0% 8 3.3% FTES - Apprentice n/a 0 n/a 0 n/a Total FTES 11,374 11,848 13,046 13, % -1, % % Change from 11/12 to 12/13 Change from 10/11 to 11/12 Change from 09/10 to 10/11 Change from 08/09 to 09/10 50 % Law: $ Change % Change $ Change % Change $ Change % Change $ Change % Change Instructional Salary Costs (AC and 6110) 29,040,269 28,682,573 27,460,049 29,152, , % 1,222, % -1,692, % Current Expense of Education (AC ) 57,018,037 55,268,878 54,422,229 57,457,239 1,749, % 846, % -3,035, % % of Instructional Salary Costs to CCE 50.93% 51.90% 50.46% 50.74% -1.0% 1.4% -0.3% 50% Requirement 28,509,019 27,634,439 27,211,115 28,728,620 Over -Under 50% Requirement 531,250 1,048, , ,276 % Change % Change % Change % Change Salaries and Benefits as % of Total Expenditures 77.7% 80.4% 84.8% 83.1% 84.1% -2.8% -4.4% 1.8% -1.0% Change from 11/12 to 12/13 Change from 10/11 to 11/12 Change from 09/10 to 10/11 Change from 08/09 to 09/10 GF Cash Balance (unrestricted and restricted): st Qtr 311Q Report th Qtr 311Q Report th Qtr 311Q Report th Qtr 311Q Report th Qtr 311Q Report $ Change % Change $ Change % Change $ Change % Change $ Change % Change Cash Balance Per 311Q (excluding investments) 14,943,546 7,546,568 13,687,488 6,716,923 8,207,832 7,396, % -6,140, % 6,970, % -1,490, % : For purposes of this analysis, Other Financing Sources is combined into Total Revenues and Other Outgo is combined with Total Expenditures. : FTES data for , , , and is from Chancellor's Office Data Abstract ; Total Resident FTES from latest 311Q and is a projected amount. : 50% law data from data abstract. (Instructional Salary Costs/Current Expense of Education) >= 50% Note: If "no data" is displayed for any FTES or GF Cash Balance, the district did not submit CCSF-311Q as of the date of this analysis. Cabrillo_Fiscal_Trend_Analysis_11_12 311_Analysis 1 of 1