College Budget/Finances

1. Mott Community College Employee Forum Mott Community College June 26, 2012 College Budget/Finances

2. STRATEGIC PLAN _____________________________________________________________________ • 7-0. Budget/Finance • 7-1. Focus on controllable revenues and costs to sustain our current reputation and facilities and provide funding for strategic priorities • 7-2. Establish short and long-term budget and finance priorities that provide a balanced approach to the needs of a learning organization with the flexibility to realign resources • 7-3. Implement a comprehensive strategy to address the long-term deficit which enables us to continue to provide affordable high quality education • A balanced approach

3. FUNDING SOURCES(2012-2013)State AidProperty Taxes-Operating-Debt Tuition

4. Trends in Funding Sources & Enrollment

5. Projected Property Tax Funding FYE 2010 through FYE 2016

6. Percentage of Property Tax and State Aid of Total Funding

7. THEN and NOW State Aid Funding $15,344,107 State Aid Funding $14,383,600

8. Trends in Funding Sources & Enrollment, Fiscal Year Equated Students (FYES)

9. Prior Years Budget Balancing Steps

10. Prior Year Budget Cuts • Decreased Hiring (Open Position Pool) $ 750,000 • Cut funding to Reserves $1,150,000 • Capital Funding Reduction $3,000,000 • Debt Contribution $ 850,000 • Cut Contingency $ 750,000 Total budgetary expenditure cuts $6,500,000

11. Prior Year Budget Cuts (continued) Total Budgetary Expenditure Cuts $6,500,000 Prior Year Shortfall ($8,100,000) Shortfall Remaining ($1,600,000) Received from tuition increase

12. CURRENT YEAR BUDGET IMPACT

13. FYE 2013 Impact in Dollars $5,795,000

14. Tuition Keeps Up with Lost Funding/Increase in Non-controllable costs for FYE 2013 $40.87 $148.92

15. What if Tuition Covered State Aid Losses?

16. Steps Taken to Control/Cut Costs

17. Expenditure Reductions • Energy Conservation Project - Utility costs averaged 8.2% in 2003, Now they are 3.1% • Hold on vacant positions • Average savings of $750K per year • Change in timing of custodial shift • Savings of approximately $170K per year • Eliminating and restructuring food service • Was losing approximately $100K per year • Now generating $48K per year in revenues

18. Expenditure Reductions • Utility Reduction Analyst Project • Resulted in $720K savings between 2004-2010 on Telecommunications/IT, Water, and Waste • Course Section Efficiency • Maximizing section seat count before adding new sections • Discretionary budget cuts • Average savings of $400K per year 8) Reduction of ORP (optional retirement plan) costs • Average annual savings of $400K • Combining Deans position • Fine Arts and Social Science combined saving $168K per year 10) Outsourcing custodial and grounds work at sites • Savings of approx. $350K per year

19. Expenditure Reductions 11) Health Insurance changes to coverage and plans • Savings $550K • New print shop lease • Savings of $200,000 per year • New Auditors • Savings of $60,580 over five years 14) Employee Contract Bargaining • Employees agreed to pay freezes with incremental increases over 9 years at 1.35% • Industry average is 2.8% • Savings of $460K per year

20. Compensation as a Percentage of the General Fund Budget Compensation expense would be $1.25 M higher if it was at 2001 levels as a percentage of budget. Ten year average salary increases are 1.35%.

21. Current Year Budget Balancing Steps

22. Current Year Budget Cuts • Decreased Hiring (Open Position Pool) $ 350,000 • Health Insurance Savings $ 600,000 • State Aid Increase $ 637,000 • Cut Reserve Funding $ 620,000 • Capital Funding Reduction $1,060,000 • Cut Contingency $ 900,000 Total budgetary expenditure cuts $4,167,000 Beginning shortfall ($5,795,000) Shortfall remaining ($1,628,000)

23. THE FINANCIAL AID AND TUITIONRELATIONSHIP

24. Tuition and Financial Aid

25. FEDERAL FINANCIAL ASSISTANCEPELL GRANTS

26. Increased Five-Fold in Ten Years

27. Pell Distribution – 10/11 Sample of Approx. 9,540 Students

28. Pell Distribution – 11/12 Sample of Approx. 9,700 Students

29. Pell Award & Cost of Tuition Student Receives Remaining Balance Student Needs Unmet

30. the american OpportunityTax credit (AOTC) “PELL for Most EVERYONE ELSE ?”

31. Available Financial Aid (Pell and American Opportunity Tax Credit) Estimated - $14.3 Billion available annually for AOTC

32. American Opportunity Tax Credit (AOTC) How did they get this?

33. INTENT OF THE AMERICAN OPPORTUNITY TAX CREDIT • “That means reducing financial aid for 8 million students and leaving our community colleges without the resources they need to prepare our students for the jobs of the future.” The Amelias, Maynards, Mahans…..How about the Students?

34. The Students • Joe and Jane are 28 years old • They are married and live in Genesee County • They have a 3-year old daughter, Mary

35. More about Joe and Jane • Joe went into construction right out of high • school but unfortunately has been • laid off more than employed for the • past 4 years • Jane is a paralegal, attending MCC at • nights working on 3 + 1 transfer program

36. Joe and Jane in 2011 • This was an especially rough year for the Students • Joe was laid off most of the year and • and had to collect nearly $11,000 in unemployment benefits $11K = almost 1/3 of their Household Income

37. Financial Aid • Jane applied for a Pell Grant at MCC • Unfortunately she was ineligible due in part • to the fact that the EFC Formula considered • their family earnings and Adjusted Gross • Income of $39,787 too high for a family of 3 • Fortunately, MCC offered a payment plan that • helped tremendously Pell Grant

38. Tax Time March 2012 • In March, 2012, the Students filed their • tax return • Due to their income level and a new Higher • Education Tax credit, the Students were • delighted to receive a refund of $2,178 • for their tuition Net Tuition Cost for Full Time for 1 Year at MCC = $535 Comparable to Tuition and Fees in 1980-81 or $21/contact hour

39. More in 2012 • Joe and Jane were advised by their CPA • That Jane should reduce her federal • withholdings to get more money throughout the • year instead of waiting until tax time • The Students were worried since Joe was back to • work, their income would be too high. • Their CPA informed them that the income limits • were $160,000 MFJ and $80,000 Single CPA Reduce withholdings

40. EXPANDED BENEFIT OF A REFUNDABLE CREDIT • Tax Year 2011 • Students Total Tax Liability equaled $1,658 • They had Paid in (withheld from wages) $2,699 • Refund without any credits would be $1,041 • But Wait…… • They were refunded with the AOTC $3,219 • Only the Hope Credit?…… • The refund would have been $2,348 • Or a “Federal Financial Aid Award” of $871

41. Tuition Increases and Amount Refunded from the AOTC

42. BUDGET SHORTFALL 2012-2013 • Remaining Shortfall $ 1,628,000 Tuition To Cover $9.18/contact hour

43. A Comparisonto 7 Other MichiganPeer Community CollegesBased on 2010 –2011 ACS Data

44. MCC is 3rd Lowest in Millage Rate, and has the Largest Property Tax Decline

45. MCC is 3rd Lowest in Millage Rate, and has the Largest Property Tax Decline

48. MCC is 4th lowest in Total Revenue

49. Tuition & Fees: Local Comparison Cost as based on in district/state rates from the College’s web sites MCC’s annual cost is approximately 45% of that of the next most affordable college/university in our area.

50. 7-YEAR FORECAST