KCCD Budget Allocation Model Workshop - SB 361 Implementation Update

1. Kern Community College District Chancellors Cabinet Budget Allocation Model Taskforce Update

2. KCCD Budget Allocation Model (BAM) Task Force Membership • A business manager, faculty and classified rep from all 3 colleges, CCA union rep, KCCD CFO and Internal auditor • Cerro Coso College – Gale Lebsock, Lisa Fuller, Lia Bement • Porterville College – Donna Berry, Ann Marie Wagstaff, Tom Bethurum • Bakersfield College – John Griffith, Janet Fulks, Marissa Schiffman • LSC – Tom Burke, Sean James • CCA – Mary O’Neal

3. KCCD Budget Model Workshop • The purpose of this workshop is to: • Describe the new state allocation formula implemented by SB 361 • Address limitations of our current formula • Describe the process for developing the new allocation • Explain the new KCCD allocation formula • Display various scenarios to demonstrate how they would influence the allocation • Answer questions and Collect feedback

4. KCCD - BAM(Budget Allocation Model) • Taskforce Charge: 1. Develop a new District allocation model to replace the current model for implementation in Fiscal Year 2007-08 2. Align our allocation model with our income or revenue formula 3. Address the current allocation model’s problems and limitations 4. Report out and get feedback – participatory governance 5. The budget model will be officially vetted through CC, PC and BC senates (AB 1725)

5. SB 361 – The State Allocation to KCCD Senate Bill 361 addresses many statewide key issues such as: • Primary Allocation based on FTES - Supports Growth • College Size (Economies & Diseconomies of scale) with Base/Foundational allocations • Geography/Centers by additional center allocations based on FTES • Simplicity • COLA • Decline/Reductions in income

6. KCCD Current Budget Allocation Model Problems and Limitations • Never fully implemented • Never evaluated • Never addressed documented outstanding issues • Transparent but complex -- hard to follow • Perpetuated past allocation levels • Not as flexible as anticipated • Did not define or facilitate decline mechanisms

7. KCCD Budget Model Process • Business Managers did initial reviews and brainstorming • BAM committee reviewed key documents including SB361 model, CCC Strategic Plan; District Strategic Plan • All Brainstormed key issues for model to potentially address

8. KCCD Budget Model Process Cont’d • BAM evaluated: • an SB 361 approach • different approaches for developing base allocations • different approaches for District Office allocations • An approach that shared FTES losses with all entities (campuses & LSC)

9. KCCD Budget Model Process Cont’d • Then Bam Drafted and evaluated: • an SB 361 like model • several other models with different bases • SB 361 plus FTES and Faculty cost model • BAM members will report out and get feedback for final model

10. BAM Issues and Discussion • Geography • Centers • Faculty Demographics • Added Facilities • College Size • Supporting growth • Allocation to District Office, Reserves, District-wide costs

11. BAM Issues and Discussion • Class Size – Comprehensive College vs. Center • Allocation model should not control college budgets • FON (Faculty Obligation Number) and 75:25 • 50% Law • Fiscal Responsibility • Special program funding • How to deal with budget shortfalls

12. BAM Issues and Discussion • Tie into District Strategic Plan • Base Foundations; minimum cost to open the doors • District-wide program coordination costs • Benchmarks • Consistency across colleges • Equalized rates per FTES • Equal playing field

13. BAM Issues and Discussion • Technology support • Centralization vs. Decentralization • Economies of scale, classroom sizes, staffing • Headcount • Maintain individuality, autonomy • Training needs • Student centered

14. BAM Issues and Discussion • Protecting base allocations • Funding District mandates Community demographics • Operations must live within their allocations • Enrollment management • COLA distribution • Quality Education

15. BAM Issues and Discussion • Grants management • Annual evaluation of model performance • Interface with restricted funding, capital outlay etc.. • Carryover • Other fund opportunities • Collective bargaining issues i.e. expanded benefits etc.

16. BAM - SB 361-Like Approach • 361 model mirrors future District allocations from the state. • Assumes the district exists only to serve the colleges • Addresses many key identified issues:

17. SB 361 Budget Allocation Model • Using the Spreadsheet – Walk through the model • Step 1 Project revenues to be allocated. • Step 2: Reserves are established. • Step 3 Campus Base Allocations are allocated. • PC and CC stabilized by a greater percentage foundation budget and less fluctuation due to FTES. • Bakersfield has a smaller percentage foundation and is more dependent upon FTES revenues

18. SB 361 Budget Allocation Model • Step 4 District Wide Operational Base is Allocated • Based on 06-07 actual budget • Need to re-evaluate fixed costs versus district office costs • Base will be reviewed annually at P1 for potential changes • Step 5 District Office Operational Base is Allocated • Reviewed with benchmarks annually

19. SB 361 Budget Allocation Model • Step 6 COLA applied to all foundation and bases • Step 7 Changes to mandated or fixed District Wide costs • Step 8 District Office Operational Base is increased or decreased • Step 9 Changes in reserves (one time)

20. SB 361 Budget Allocation Model • Step 10 Reserves for District Wide Strategic Initiatives • Strategic initiatives – set aside to be determined by ?? • Need process to allocate • Step 11 Stabilization • Step 12 Base FTES Allocation • Step 13 FTES Growth – this FTES amount is equal to all colleges

21. SB 361 Budget Allocation Model • Step 14 FTES Decline • FTES decline is a manual adjustment • During any decline in FTES, the reserves stabilize for one year • Step 15 Other Allocation Changes (e.g. apportionment reductions)

22. SB 361 Budget Allocation Model • Step 16 Evaluation of the Process • The allocation process WILL BE evaluated annually in September or October after the adoption of the budget. • Over cap considerations are determined • Carry over • 75/25 implications • FTFO obligations • 50% implications • Others?

23. Scenarios with this Model • The secret super duper formula

24. Recommendation #1 to Facilitate the Model • Creation of a District Wide Enrollment Management Committee (EMC) • Vice Chancellor of Instruction work with college representatives • Mirrors KCCD Strategic Plan Initiative C1 & D8 • Annually established.

25. Recommendation #1 to Facilitate the Model • Enrollment Management Committee Charge: • Analyzes critical data as pertains to district policy initiatives, FTES, and labor issues. • Monitors growth to maximize growth to CAP for each college. • EMC should look at the district-wide CAP not on each college alone. • This committee would make recommendation concerning funding of over cap FTES

26. Recommendation #2 to Facilitate the Model • Establish a District Wide Budget Committee/Chancellor’s Cabinet • Chancellor’s Cabinet discussion • Cabinet is District Wide budget committee or • a separate sub-committee including business managers

27. Recommendation #2 to Facilitate the Model Charge: • Annually review the current year district budget in February using P1 and comparable bench marks • College budget decreases trigger automatic review of the district budget in order to estimate a potential share in the decline • Review district office budget changes; nothing in this model should imply that the district office gets automatic changes to their budget • Manage the restoration process

28. Recommendation #3 to Facilitate the Model • There will be an annual evaluation concerning the effectiveness of the Model • The BAM will recommend an evaluation tool and process, after the budget allocation model is completed. • The annual evaluation will compare KCCD against key benchmarks and compliance requirements (50%; FTFO; 75:25) • There are expectations that the allocation model will be evaluated and tweaked annually to meet current needs

29. SB 361 Budget Allocation Model • What key areas are not directly addressed by model • Direct link to FTFO; 75:25 • Direct link to 50% Law • Direct link to salary and benefits cost changes

30. Kern Community College DistrictBudget Allocation Model • Next steps: • Input from various District stakeholders • Determine how to set aside money for strategic initiatives • Incorporate any changes • Model will be utilized to establish initial 2007-08 budget allocations • Establishment of benchmarks to monitor model performance • Create evaluation tool

31. Kern Community College DistrictBudget Allocation Model • Other Recommendations • Move up budget process to complete Tentative Budget in May • Continue incorporating detail District Office and District –wide budgets in presentation • Post to web site high level budget vs. actual activity

32. Kern Community College DistrictBudget Allocation Model • FEEDBACK and COMMENTS • Respond now • Send to your local representative • Feedback due by February 10, 2007 Thank You