Mott Community College Board of Trustees and Employee Open Forum June 25, 2013 Financial State of the College Update

Final FY12-13 General Fund Budget Actual12-13 Amend # Amend #2 Revenues$ 76,604,567$ 73,180,846$ 72,823,915 Expenditures 77,564,207 73,507,430 73,266,137 Excess (Deficit) Revenues Over Expenditures $ (959,640)$ (326,584)$ (442,222) Fund Balance – Beginning$ 7,466,087$ 6,506,447 Fund Balance – Ending$ 6,506,447$ 6,179,863$ 6,064,225 Fund Balance Percent*8.39%8.40%8.28% 2 Summary *Target = 5% - 10% of Expenditure budget

PROPOSED FY BUDGET 3

Budget Adoption. “Budget revisions will be brought forward for Board action as necessary, but not less than twice per year in January and June.” 3920,3930 Financial Stability, Fiscal Reserves. “The College will designate and set aside appropriate fund reserves to support plans for long-term capital and operating commitments.” 5100 Compensation Philosophy. “The Board has determined based on long-term budget projections, and other related budget data, that total compensation/ benefits should not exceed 77% of the total operating budget.” RELEVANT BOARD POLICIES : _____________________________________________________________________

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 7-4. Seek and cultivate alternative resources to supplement and/or increase existing revenue streams and funding sources 5 _____________________________________________________________________

FUNDING SOURCES ( ) State Aid Property Taxes -Operating -Debt Tuition 6

Enrollment and State and Local Funding per Fiscal Year Equated Students (FYES) 7

THEN and NOW 8 State Aid Funding $15,344,107 State Aid Funding $15,021,410

Projected Property Tax Funding FYE 2010 through FYE 2016 ($19.3 Million lost since ) 9

MCC is 3 rd Lowest in Millage Rate, and has the Largest Property Tax Decline Grand Rapids SchoolcraftHenry Ford Wayne County Mott Delta Kalamazoo Valley Washtenaw 0% 2% -2.4% 0.2% -1.0% 0% 1.7%

Percentage of Property Tax and State Aid of Total Funding 12

Budget Balancing per Contact Hour 13

FEDERAL STUDENT FINANCIAL AID AND MCC 14

Tuition and Financial Aid 15

Increased Five-Fold in Ten Years

Pell Award & Cost of Tuition Mott Community College In-District (Published 13/14) Saginaw Valley State University In-State Pell Awarded$5,635 Tuition & Fees (30 contact hours) $4,042$8,120 Books & Supplies$1,000 Difference$593-$3,485 Student Needs Unmet Student Receives Remaining Balance

Pell Distribution – 12/ /1 – 2013/4 - Preliminary Awarded Educational Tuition & Fees Educational Books & Supplies Charges Non-Educational $$ Given To Students $23,621,967 $17,675,343$3,040,480$2,906,145 Approx. 7,635 Students

THE AMERICAN OPPORTUNITY TAX CREDIT (AOTC) “PELL for Most EVERYONE ELSE ?”

American Opportunity Tax Credit (AOTC) How did his come to be?

Pell American Opportunity Tax Credit (AOTC) “Pell for Most Everyone Else” Maximum Award$5,635$2,500 EnrollmentSliding Scale up to full-timeAt least Half Time Income LimitsExpected Family ContributionModified AGI< $80,000 Single < $160,000 MFJ Program of StudyDegree or Certificate-Accredited Institution Can be used forTuition, fees, books, equipment, supplies, leftover can be for living expenses Tuition, fees, books, equipment, supplies Length of Award6 years4 years Other EligibilityNot convicted of a felony drug offense Available Financial Aid (Pell and American Opportunity Tax Credit) Estimated - $14.3 Billion available annually for AOTC

Tuition and Fee Recommendation 22

Tuition & Fees: Local Comparison CollegeYearly Tuition & Fees Mott CC 4,042 Baker College - Flint 7,560 Eastern Michigan University7,701 Saginaw Valley University 8,120 University of Michigan - Flint 9,102 Ferris State University10,440 Central Michigan University 10,950 Oakland University 11,183 Davenport University11,544 Michigan State University12,622 University of Michigan – Ann Arbor13,625 Kettering University29,536 Cost as based on rates published from the Peterson’s Guide at as of 5/2/2013www.petersons.com MCC’s annual cost is approximately 48% of that of the next most affordable college/university in our area. 23

What if Tuition Covered State Aid Losses?

25 Initial FY General Fund Budget Amend #2Initial Revenues$ 72,823,915$ 75,223,819 Expenditures 73,266,137 75,657,116 Excess(Deficit) Revenues Over Expenditures$ (442,222)$ (433,297) Fund Balance – Beginning$ 6,506,447$ 6,064,225 Fund Balance – Ending$ 6,064,225$ 5,630,928 Fund Balance Percent* 8.28% 7.44 Summary *Target = 5% - 10% of Expenditure budget

CAPITAL FUNDING

MCC’s mission statement directs the college to… “maintain its campuses, state-of-the-art equipment, and other physical resources that support quality higher education. The college will provide the appropriate services, programs, and facilities to help students reach their maximum potential.” Link to Mission and Strategic Plans

Asset Value NewEnd of LifePremature End of Life MCC Asset Value vs. Time (Asset Life) Planned Maintenance points Extended Life

Capital Asset Funding Current 10 year needs are approximately $85 million Taxable Values Declining Availability of Bonds? Approx. $1.6 million in tech fees annually

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Key Assumptions – Revenue Tuition and fee revenue increases at 3.9% each year Property tax revenue remain flat for 1 year with slight increases ( %) thereafter Mill Voted Operating Millage is renewed for 10 years starting with FY08-09 State appropriations increase at 2% Other revenues increase by 2% each year Total revenue increases by avg. of 2.9% 31

Key Assumptions - Expenses Salaries and wages increase by 3.2% each year Fringe benefits increase at a rate of 3.0% each year Other expenses increase by avg. of 2.4% each year Total expenses increase by avg. of 3.0% each year 32

Projected General Fund Balance would be $692 thousand at end of FY19-20, if current trends continued (Revenue growth of 2.9% vs. expenditure growth of 3.0%) Based on an average projected gap of $823 thousand per year to be filled with budget-balancing solutions Short-term savings and flexibility continues to be key Long-term strategy of managing total compensation costs 33

7 Year Forecast at June 2012 Forecasts:>>>>>>>>>>>>>>>>>>> Note: the forecast illustrates proforma data if current trends were to continue. The College is obligated to balance it’s budget each year and will take necessary steps to do so. 34

Mott Community College Board of Trustees Committee of the Whole Meeting June 24, 2013 Questions or Comments? For More Info.: Contact Larry Gawthrop, CFO (810) or Details Provided with Board Resolutions 1.39 and 1.40