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The Budget Process: From Development to Distribution

The Budget Process: From Development to Distribution. Jennifer Haygood, Vice President of Business & Finance & Chief Financial Officer Academic and Student Services Orientation November 14, 2008 NC Community Colleges www.nccommunitycolleges.edu. Overview. Overview of NCCCS Budget

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The Budget Process: From Development to Distribution

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  1. The Budget Process:From Development to Distribution Jennifer Haygood, Vice President of Business & Finance & Chief Financial Officer Academic and Student Services Orientation November 14, 2008 NC Community Colleges www.nccommunitycolleges.edu

  2. Overview Overview of NCCCS Budget NCCCS Budget Request The Gubernatorial Process Legislative Appropriations Process College Budget Allocation Process

  3. State G.S. 115D-31 Operating costs for instruction, administration, and support services Local G.S. 115D-32 Operation and maintenance of plant Financial Support of Institutions Capital construction is the legal responsibility of the county. However, G.S. 115D-31 authorizes the State to provide capital funds to local institutions, provided that it is matched on a dollar-to-dollar basis.

  4. Sources of NCCCS Funding:FY 2008-09 Total: $1.49 billion Source:BD-701 Report dated Sept.30, 2008; DCC 2-1 Summary. Does not include capital or institutional funds.

  5. State General Fund Appropriations for Education: FY 2008-09

  6. NCCCS General Fund Appropriations: FY 1998-2009 Budget Drivers: Enrollment Growth and Salary Increases Source: June 30 Authorized budgets (BD 701) FY 1997-2008; Sept. 30 BD-701 FY 2008-09

  7. Biennial Budget Cycle:FY 2009-11 • Summer and Fall 2008 • Develop continuation budget • Develop expansion budget request • 2009 Long Session (begins in January): • Adopt a two-year budget • 2010 Short Session (begins in May): • Adjust second year of the budget

  8. Development of NCCCS Continuation Budget • The “base budget”: what is necessary to continue the current level of services • Adjusted for: • Certain inflationary increases • Mandated rate increases (i.e. Social Security) • Annualization of positions • As of last biennium, continuation budget includes enrollment growth

  9. Development of NCCCS Expansion Budget Request • Collective work of representatives from: • Local Trustees • State Board of Community Colleges • Community College Presidents • System Office Staff • Identify priorities: Summer 2008 • State Board approves request: October 2008

  10. Four-Year Budget Request:$201 Million $1,000 Per Student over Four Years • Creating Success for NC’s Students • Faculty and Staff Salaries: $119 million • Technology & Equipment: $20 million • Creating Success in Critical Careers • Healthcare: $37 million • Technical Education $18 million • Creating Success for NC’s Businesses • Customized Training: $7 million

  11. The Gubernatorial Process When there is a change in administration, the incumbent Governor shall provide the Governor-elect budget recommendations by December 15. • Per the NC Constitution, the Governor shall: • Prepare and recommend a budget to the General Assembly • Administer the budget as enacted by the General Assembly • Governor is the “Director of the Budget”

  12. Governor’s Recommended Budget Full Appropriations Appropriations Subcommittees Full Appropriations House/Senate Floor Sent to Other Chamber House and Senate Appoint Conferees House and Senate Vote on Conference Report Conference Report Adopted Budget Bill Enrolled, Ratified, and Sent to the Governor to be Signed into Law Legislative Budget Process The House and Senate alternate preparation of the initial budget bill. Originating Chamber Fails to Concur The Conference Report must be voted up or down as submitted by the conference committee; it cannot be amended on the House or Senate floors.

  13. Appropriations Committee Structure Education Subcommittee Natural & Economic Resources Sub. General Government Subcommittee Transportation Subcommittee Health & Human Services Subcommittee Justice & Public Safety Subcommittee Capital Subcommittee (House only) Appropriations Committee

  14. Appropriations Process (Continued) • Full Appropriations • Subcommittee Chairs Report • Full Chairs Report (salaries & benefits, statewide reserves, etc.) • Amendments and Debate • Adopt Committee Substitute • House or Senate Floor • Full/Subcommittee Chairs Explain Bill, debate, and amendments • Vote on 2nd Reading • Additional Debate and Amendments (if passed 2nd reading) • Vote on 3rd Reading • Sent to Other Chamber • 1st:: For 1st Reading in Receiving Chamber • 2nd: For Concurrence by Originating Chamber

  15. Conference Process Ratified Budget Bill is Sent to the Governor to be Signed into Law • House and Senate Appoint Conferees • Review Differences • Conferees Negotiate Differences • Develop Conference Report Based on Agreements • House and Senate Vote on Conference Report • Summary and Debate (cannot be amended) • Vote on Conference Report • Conference Report Adopted

  16. Key Legislative Budget Documents Budget Bill (See Appendix B) Makes appropriations to provide for current operations and capital improvements for each year of the ensuing biennium. http://www.ncleg.net/Sessions/2007/Bills/House/PDF/H2436v9.pdf Committee Report (aka Money Report) Lists individual budget adjustments. http://www.ncleg.net/sessions/2007/budget/2008/conferencecommitteebudgetreport.pdf FRD Fiscal and Budgetary Highlights Summarizes fiscal and budget actions. http://www.ncleg.net/fiscalresearch/frd_reports/frd_reports_pdfs/overview/Overview_2007.pdf

  17. State Board Approval • Policy and Financial Issues • Provides information on the policy issues included in the Appropriations Act that surround budget adjustments, formula revisions, salary increases, studies, etc. • See Appendix C • College Budget Allocations • Outlines formula and categorical allotments • See Appendix D

  18. College Allotments: FY 2008-09 62% Total Allotments: $1.15 billion 30% 5% 3% Source: Budget Allocation Sheet. Note that this graph only captures funds distributed to colleges through the routine budget allocation process.

  19. Full-Time Equivalent (FTE) Student • Curriculum FTE = • 16 hours x 16 weeks x 2 semesters = • 512 Membership Hours • Non-Curriculum FTE = • 16 hours x 16 weeks x 2 semesters + 16 hours x 11 Weeks = • 688 Membership Hours

  20. Budgeted FTE BFTE means the number of FTE which determines a college’s operating budget. Curriculum BFTE counting period = Fall, Spring (academic year) Non-curriculum BFTE counting period = Spring, Summer, Fall (calendar year)

  21. Budgeted FTE • Budgeted FTE is determined by the Modified Budget Stability Formula • A college’s budgeted FTE is determined by calculating the higher of • the prior year; or • the average of the three previous years’ enrollment

  22. Example College FTE FY 04-05 FY 05-06 FY 06-07 Average Curriculum 1,552 1,444 1,500 1,499 Con Ed 625 600 575 600 Basic Skills 100 107 115 107 Example College’s Budgeted FTE: Curriculum: 1,500 FTE Con Ed: 600 FTE Basic Skills: 115 FTE Total: 2,215 FTE

  23. Instruction Funding Formula Full-time Equivalent (FTE) Students The number of full-time equivalent students X Equivalent Value The dollar amount allocated for each FTE

  24. Curriculum Instruction Allotment Example College: Curriculum FTE – 1,500 Con Ed FTE – 600 Basic Skills FTE - 115 Step 1 Multiply # of FTE students up to 500 by corresponding equivalent value: = 500 X $4,048.85 = $2,024,425 Equivalent Values 1st 500 FTE $4,048.85 Above 500 $3,378.80 Step 2 Multiply # of FTE students above 500 by corresponding equivalent value: = 1,000 X $3,378.80 = $3,378,800 Step 3 Sum steps 1 through 2: $5,403,225 Total Curriculum Allotment: $5,403,225

  25. Continuing Education Allotment Example College: Curriculum FTE – 1,500 Con Ed FTE – 600 Basic Skills FTE - 115 Step 1 Multiply # of FTE students up to 500 by corresponding equivalent value: = 500 X $2,964.23 = $1,482,115 Equivalent Values 1st 500 FTE $2,964.23 Above 500 $2,479.82 Step 2 Multiply # of FTE students above 500 by corresponding equivalent value: = 100 X $2,479.82 = $247,982 Step 3 Sum steps 1 through 2: $1,730,097 Total Continuing Ed Allotment: $1,730,097

  26. Basic Skills Formula Calculation Example College: Curriculum FTE – 1,500 Con Ed FTE – 600 Basic Skills FTE - 115 • Step 1 Base Allotment: $20,000 • Step 2 Calculate State: 115 X $3,426.31 = $394,026 • Step 3 Calculate Federal: 115 X $566.26 = $65,120 • Step 4 Calculate Population: 10,150 X $0.25 = $2,538 • Step 5 Calculate Incentive Funding: • 225 GED certificates awarded x $50 = $11,250 • 30 Adult High School Diplomas x $150 = $4,500 • College level of effort above System = 0.30% • Level of effort: $10,000 X 0.30 = $3,000 • Step 6 Sum steps 1 through 5: $500,434 • Base Allotment: • $20,000 • State Funding: • $3,426.31 per FTE • Federal Funding: • $566.26 per FTE • Population Funding: • $0.25 per Target Population • Incentive Funding: • $50 / GED Certificate • $150 / AHS Diploma • $10,000 per 1% above system average for level of effort Total Basic Skills Allotment: $500,434

  27. Institutional Support Formula • Three Components: • Base allotment • FTE enrollment allotment • President’s salary & benefits • Salary Schedule Based on: • Total Size of College • Years of Experience as President

  28. Base Allotment • Represents what is needed to “open the doors” • Total of 31 positions • 9 Administrative Positions • 22 Instructional Support Positions • $92,000 for Other Costs (software licenses, office supplies, etc.) • FY 2008-09 Base Allotment: $2,034,861

  29. Enrollment Allotment • Per FTE funding for colleges with FTE > 750 • Recognizes that larger schools face larger institutional support burdens • FY 2008-09 Enrollment Allotment: $1,242 per FTE for Positions + $ 129 per FTE for Other Costs $1,371 per FTE

  30. Institutional Support Calculation Base Allotment $2,034,861 Enrollment Allotment $1,371 per FTE above 750 President’s Salary Per Salary Schedule Example College: Total Budgeted FTE 2,215 Step 1 Base allotment: $2,034,861 Step 2 Calculate allowable FTE: 2,215 – 750 = 1,465 Step 3 Calculate FTE allotment: 1,465 x $1,371 = $2,008,515 Step 4 Determine President’s Salary with Salary Schedule Total President’s Salary Requirements: $135,239 Step 5 Sum steps 1 through 3: $4,178,615 Total Administrative Allotment: $4,178,615

  31. Example College’s Total Formula Allotment Total Formula Allotment: $11,812,371 Curriculum: $5,403,225 Continuing Education: $1,730,097 Basic Skills: $ 500,434 Institutional Support: $4,178,615

  32. Why Do the Formula Factors Change? Legislative salary increases Other changes in benefit rates (i.e. hospitalization, retirement) Legislative adjustments to the formula

  33. Management Flexibility • The General Assembly has allowed colleges to have flexibility in order to meet individual college needs. • Formulas are for allocation purposes only. • Colleges can spend the money however they choose with the following exceptions: • Basic Skills funding may only be used for basic skills programs • Limitations on transfers out of instruction based on the college’s average faculty salary • Federal vocational education funding • Maintenance of plant funds for regional institutions

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