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Financial Forecast Update November, 2008 - Clackamas Community College Fiscal Year 08/09

Financial Forecast Update November, 2008 - Clackamas Community College Fiscal Year 08/09. History Recap. Budget Challenges Faced Last Year 5% Enrollment Decline in 6/7 (while rest of state CC’s were flat) – loss of 380 fte / $1.6m Changes to community college distribution formula:

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Financial Forecast Update November, 2008 - Clackamas Community College Fiscal Year 08/09

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  1. Financial Forecast UpdateNovember, 2008 - Clackamas Community College Fiscal Year 08/09

  2. History Recap • Budget Challenges Faced Last Year • 5% Enrollment Decline in 6/7 (while rest of state CC’s were flat) – loss of 380 fte / $1.6m • Changes to community college distribution formula: • Equalization • Acceleration of enrollment gain / drop • Prior over-budgeting of tuition and other revenue

  3. 6/7 Enrollment Recap(note: CCC had largest enrollment drop in state / overall state enrollment was flat) • Instructions: • These are embedded graphs. • To edit a graph simply double-click anywhere on the graph. • When you’re done editing the graph, click outside of the graph to return to PowerPoint. • Labels above each column are added in PowerPoint.

  4. Recap of Funding Formula / Revenue • Major Components of Ongoing General Fund Revenue: • Funding Formula 76% * • Tuition 19% • All Other 5% • * (state support and property taxes – based on reimbursable fte)

  5. Projected Revenue Growth vs. Expenditure Growth – last year • Combination of flat revenue growth and increasing expenditures causes deficits / large reserve draws • Year+/-Total Reserve • 7/8 surplus +848k $4.1m • 8/9 deficit -1.4m $2.7m • 9/10 deficit -2.0m $0.7m • 10/11 deficit -3.6m$-2.9m • Note: Reserve balance net of deferred payment.

  6. Actions Taken to Help the Budget Cause • 1. Increase Revenue (approx. 800k) • Enrollment Increased in 7/8 • Up 3.0% / Rest of State also Growing – 3.5%. • Fall 08 enrollment growth is promising. • Other Revenue in 8/9 – 770k • $5 Tuition rate increase -from $57 to $62 per credit • $1 equals approx. 138k - so $5 generates around $690k • Misc. Other Revenue – 80k • High School Contracts / Nursing Contracts / Rent • 2. Shift Costs Away From General Fund – 600k • Deferral of ELC Capital Contribution in 8/9 / $500k savings ($1m over two years) • Shifts to Wired Grant / Fee funds / Tech. Mech. Fund - 100k per year

  7. 7/8 Enrollment Recap(note: CCC enrollment up, but still lags state average – 3.0% growth / vs. 3.5% state average) • Instructions: • These are embedded graphs. • To edit a graph simply double-click anywhere on the graph. • When you’re done editing the graph, click outside of the graph to return to PowerPoint. • Labels above each column are added in PowerPoint.

  8. Actions Taken to Help the Cause • 3. Reduce Expenses – approx. 700k • Elimination of one exempt position (purchasing manager) • Elimination of 1.5 classified positions (1 phone technician / .5 archivist) / leave vacant 2 custodial positions in addition • Food service subsidy elimination – 24k a year • Open new harmony building with existing non-instructional staff • Leaving five FTF positions open (English / Social Sciences / Business / Engineering / Human Services) – three additional openings (English / Math / Health-PE) held subsequent/ Part time backfill • Consolidation of some sections / Reduction of PTF costs / Various other efficiencies

  9. Actions Taken to Help the Cause • Adjustments Since Budget Prepared • Higher Costs (Bad News): • Absorbed 150k of unbudgeted WIA Grant costs • Likely shift of 125k of high school alternative fund costs • Higher COLA – 0.7 more than previous estimate of 3.0% (all employee groups received base increase of 4.5% (cap) plus steps) • Higher energy costs – NWNG 14% rate increase request • Possible higher than expected classified reclass adjustments • Higher Revenue / Lower Costs (Good News): • Higher than expected enrollment growth • Higher tuition revenue • New Sustainability Grant • Lower than budgeted medical costs – due to entrance into OEBB. • Higher carryover going into 8/9 - $4.1m vs. budget of $3.3m (net of payment deferral)

  10. Projected Revenue Growth vs. Expenditure Growth- current • Combination of flat revenue growth and increasing expenditures causes deficits / large reserve draws • Year+/-Total Reserve • 7/8 surplus +878k $4.1m • 8/9 deficit -.28k $3.8m • 9/10 deficit -.33m $3.5m • 10/11 deficit -2.5m $1.0m • Note: Reserve balance net of deferred payment

  11. Forecast Assumptions • Good News: • Actions taken with this budget have made a difference. We’re looking much better financially. • Bad News: • We faced a large hole / deficit and still face major challenges even if state funding grows at 10% next biennium. • The economy appears headed towards recession and there’s a very real possibility that state funding will be flat / less than 10% forecasted. We had planned on an increase of $3.5m.

  12. Progression of State of Oregon General Fund Revenue Forecast • Instructions: • These are embedded graphs. • To edit a graph simply double-click anywhere on the graph. • When you’re done editing the graph, click outside of the graph to return to PowerPoint. • Labels above each column are added in PowerPoint.

  13. Economy Risks • U.S. economy deteriorates further – prolonging and intensifying recession. • Stock market woes persist, undermining capital gains realizations in 2008 and 09. • Corporate profits fall significantly, depressing taxable incomes. • Unemployment increases depressing state personal income tax collections • Policy actions, both federal and state – i.e. budget cuts.

  14. If State Funding is Flat…. • Revenue growth over two years – around $1.4m (around 1.5% a year) – almost exclusively from tuition increases • Expenditure growth over same period: • Personal services – $6.2m (85% of total) • All Other 1.1m • Total $7.3m - about 5.5% a year • Difference $5.9m

  15. If State Funding is Flat…. • Available Reserves $3.8m • Board Minimum – 6% $2.8m • Difference $1.0m

  16. If State Funding is Flat…. • Total Estimated Shortfall $5.9m • Available from Reserves $1.0m • Remainder* $4.9m – over two years / 5.2% of total spending • *from revenue, cost shifts and expense reductions.

  17. Key Dates • External: • November • - Election / state initiatives decided • – State updates revenue forecast / Governor proposes budget • March and May – State updates revenue forecast • January to June – Legislative deliberations / ultimately approve state community college budget

  18. Budget Development Process/ Timeline • October – April (Development of Proposed Budget) • January – Board Workshop • Budget Work sessions (March 12 / April 9) • Budget Committee Meeting (May 14th) • Budget Adoption (June 18)

  19. Recap • College faces budget challenges even if state funding grows 10%. • Current economic news is unsettling and has the possibility to impact college budget significantly. • We will know more by the end of the month when the Governor proposes his budget. • I’m not trying to alarm anyone - but I also want all to be aware of the challenges we may face. • Let’s discuss how we can work on this together should significant challenges arise.

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