1. Board of Directors Finance & Investment Committee 5/11/18
FY 2018/2019 Budget Review
Board of Directors
Finance & Investment Committee
5/11/18
FY 2018/2019 Budget Review

2. FY 2018/2019 Budget Agenda Action Items
General Assumptions/Key Drivers
Financial Summary
Budget Detail
Operating Statements (Detailed Hand Out)
Capital Expense and Funding (Hand out)
Cash Flow, Liabilities and Assets
Reserve Funding
Issues/Recap
FY 2018/2019 Budget Review

3. Action Items

4. FY 2018/2019 Budget Action Items
Seeking Approval of:
FY 2018/2019 Operating Budget
Operating Contribution of $331,022
Reported Net Contribution of $891,022
Individual Corporate Donations in excess of $2,500
Capital Funding
FY 2018/2019 Capital Request - $930,725
FY 2017/2018 Unbudgeted Expenditures -$0
$21,328 FY 2016/2017 Budgeted Carryover
Reserve Funding Schedule
See separate Donation Sheet.
- Items included in G&A and some part of contracted donations.
FY 2018/2019 Budget Review

5. General assumptions & key activities

6. FY 2018/2019 Budget General Assumptions
Enrollment up 1% per Campus Forecast
General price increases in most areas
Executing to contracts in place
Estimated 95% occupancy rate for Housing
All known rate increases accounted for
Annual insurance/contribution increases of 5-8%
Health Insurance, Workers Comp, PERS, Liability, etc.
Campus Allocations per EO-1000, Utilities
2650 Max %
1) Operating hours and volumes similar to current year but expanding for Housing
2) Housing peaked in 2014 and FY15/16. Fy17/18 at 2,505/2412 April 2018
3) Student rate increases selective by department area
5) Cost/Price escalation of 5+%, EO-1000
6)PERS – Escalating payment profile for unfunded liability
VEBA – off Balance Sheet
Campus Utilities “estimate” from facilities
FY 2018/2019 Budget Review

7. FY 2018/2019 Budget Key Activities/Drivers
Minimum Wage and Salary Labor increase
Residential Dining – 3.7% Rate increase
Japanese Garden – New Contract Pending
Facility Donation - $200K
Projected Sales- $500K
Ongoing Activities
Starbucks Library Contract renewal/Build out
Textbook Sales – Projected 4% increase
Amazon Locker
Campus Print Shop Management
Textbooks down Year-over-Year. Optimism prevails.
- Student Labor - $3,550,000 (285K
FY 2018/2019 Budget Review

8. FY 2018/2019 Budget Key Activities – Labor Impact
$370K+ Minimum Wage Impact
290K-320K Student hours employed annually
$80K – PT/Hourly Staff labor estimate
$112K - 3% Salary Pool Increase planned
$49,920 California Salary Exempt Minimum- 1/1/19
2X minimum wage
Minimum Wage to $ Escalation in future years. Jan 19 =$12.00
- Student Labor - $3,550,000 (295K
3% - Employee
Key Staffing – IT tech but no Accounting Manager Replacement
FY 2018/2019 Budget Review

9. FY 2018/2019 Budget Minimum Wage Administration
California Minimum Wage Increase
$12.00/hour on January 1,2019 (period 7)
Effects all Students, Hourly, and Temporary employees
Tiered Increase for those between $ $13.50
Budget Guideline for hourly rate adjustments
$ $11.99  $12.00 (up to 4.3% Escalation)
$ $12.49  $12.55 (up to 4.5% Escalation)
$ $12.99  $13.05 (up to 4.3% Escalation)
$ $13.49  $13.55 (up to 4.2% Escalation)
FY Budget Planning

10. FY 2018/2019 Budget Key Activities – Other Financial
$146,150 - Outpost Bond Interest Expense
Plus $90,000 Principal
Estimated 5% Investment Return
Incentive Comp placeholder in G&A
PERS Minimum Unfunded Liability Payment
$360,853 – July 2018 (Balance Sheet only)
$450K investment
$400K IC placeholder
Post Retirement Liability projection will take its course
FY 2018/2019 Budget Review

11. Financial summary and division OPERATING STATEMENTS (see Hand out)

12. FY 2018/2019 Budget Summary Operating Statement
Forecast is based on March YTD Actuals and remaining budget w/adjustments
Key activities include
Min Wage increase
Residential Dining Plan changes
Flat enrollment
Give/take investment differences
Amazon Locker Program
Physical Inventory slated for June
Sales Forecast assumes consistent enrollment with ongoing business for Bookstore, C-Store/Cash food,
100%? Residential at 2,555
New contract with no price increase
Declining Balance Plan eliminated: will pick back up some sales
Limited Summer Residency programs
Computer Store optimistic but minimum margin impact
Textbooks in year-over-year decline
Starbuck up for relicensing
ID Card Pass Thru – No changes anticipated
Margin Challenges
Minimum wage impact on market
Escalating wholesale Price Increase i.e. Food eroding margins
Competition/Technology transition within Bookstore
No pricing increase on Res Hall plan
EXPENSE
Minimum Wage Impact
- Minimum/none Staffing replacement
2% labor pool increase
- Beach on 2nd St continued Rent/Management reduction
- Depreciation uptick due to major projects (Amazon, Accounting, Cameras). Pending Starbucks, Outpost Patio
C&R
Grad Merchandise
Print Shop Management
FY 2018/2019 Budget Review

13. FY 2018/2019 Budget Operating Statement Trend
Forecast is based on March YTD Actuals and remaining budget w/adjustments
Key activities include
Min Wage increase
Residential Dining Plan changes
Flat enrollment
Give/take investment differences
Amazon Locker Program
Physical Inventory slated for June
Sales Forecast assumes consistent enrollment with ongoing business for Bookstore, C-Store/Cash food,
100%? Residential at 2,555
New contract with no price increase
Declining Balance Plan eliminated: will pick back up some sales
Limited Summer Residency programs
Computer Store optimistic but minimum margin impact
Textbooks in year-over-year decline
Starbuck up for relicensing
ID Card Pass Thru – No changes anticipated
Margin Challenges
Minimum wage impact on market
Escalating wholesale Price Increase i.e. Food eroding margins
Competition/Technology transition within Bookstore
No pricing increase on Res Hall plan
EXPENSE
Minimum Wage Impact
- Minimum/none Staffing replacement
2% labor pool increase
- Beach on 2nd St continued Rent/Management reduction
- Depreciation uptick due to major projects (Amazon, Accounting, Cameras). Pending Starbucks, Outpost Patio
C&R
Grad Merchandise
Print Shop Management
FY 2018/2019 Budget Review

14. FY 2018/2019 Budget Divisional Operating Statement
Forecast based on March Actuals w/ PERS adjustments. Budget projection optimistic given Res Dining volume decline.
Revised Division to match future reporting
Separated C-Store from Bookstore – Moved to Retail Dining Director
Combined Computer Store with Bookstore – Staffing synergy
Reporting Retail Dining and Residential Dining separately
FY 2018/2019 Budget Review

15. FY 2018/2019 Budget Division 2 - G&A
Contains Corporate Donations
Approval Action for items >$2,500 (See detail)
Include Japanese Garden
Contains Employee/Retiree Related Expense
$410,000 Incentive place holder (inclusive of tax)
$504,000 Medical Retiree Health
No Retiree Actuarial Adjustments estimated
Increased cost for
Campus EO-1000 Allocation
Depreciation of Prior System Upgrades
EO-1000 Campus increase.
Scott/Carmen allocations costs
IT Port cost increase plus , new Switches, and Network charges.
Camera depreciation
Ongoing benefit cost increase
- Includes Herff-Jones Pass thru
HR/IT/Accounting running lean with openings
No Accounting Manager replacement
FY 2018/2019 Budget Review

16. Corporate Donations Over $2,500@ Approval Required
Japanese Garden one time
SMIF approved by BOD 4/20/18
-Excludes Textbook Scholarship Pass Thru Funds
Herrf-Jones, US Foods
The Rest of monies raised is directly paid to Foundation
All Other Donations in the $500-$1,500 Range
Jewels of the night, HFHM, Athletics, Alumni, Relay for Life, etc.
$97,500 Coke Sponsorship included in Athletics Contract
$108,000 Meal Plan donation – National Merit/Faculty in Residence
Part of Residential Dining Contract
FY 2018/2019 Budget Review

17. FY 2018/2019 Budget Bookstore/Computer Store
Sales Optimistic at $16.2M
Enrollment and “Largest Freshman Class Ever”
Textbook Projection up 4% to 7,204,864
Continued Faculty Outreach with D1DA Digital Growth
Gradfair $’s increasing
Other Activities
Campus Print Shop Management
Amazon Locker
Cal Maritime Support
Printshop EO-1000 , $145K
Amazon 5 year plan
Facilities cost/compliance eroding anticipated revenues
$175K , Depreciation $137K.
Credit Card processing affiliated with specific POS
Limited selection with who to go with
FY 2018/2019 Budget Review

18. FY 2018/2019 Budget Retail Food Sales
Retail Dining/C-Stores in recovery mode
7% Growth to $9.4M – Prior year level
Marketing Campaign
Financial plan/Pricing Strategy
Starbuck Remodel
Japanese Garden new Business
$500K in new Catering Sales Planned
FY 2018/2019 Budget Review

19. FY 2018/2019 Budget Retail Food Sales (cont’d)
Pricing Cost management strategy
Core-Mark Distributors – Fresh Food Supply Chain
Oracle Inventory System
Completed Implementation for C-Stores
Planned for all of Retail
Business Remains Price/Cost Challenged
Large percentage of Minimum wage employees
High Credit Card fees and Facilities Cost
FY 2018/2019 Budget Review

20. FY 2018/2019 Budget Residential Dining
3.7% Meal Plan increase per Contract
Anticipate increased Res Hall occupancy
Current Occupancy at 2,412
Planned Occupancy of 2,550 Residents
2,600 Fall/2,500 Spring
Campus Contributions
$848K - Housing Commission
$108K - Meal Donations
Anticipated 96% full occupancy around 2,550
2016 Fall/2017 Spring 2,538/2,463?
New Agreement
- Declining Balance Eliminated
- New Flex Offering -
Large staffing of min wage employees
- Shops Contributes Faculty (12) and NM (14) Scholar Plans (up to)
FY 2018/2019 Budget Review

21. FY 2018/2019 Budget Residential Dining Plan Rates
Anticipated 96% full occupancy around 2,550
2016 Fall/2017 Spring 2,538/2,463?
New Agreement
- Declining Balance Eliminated
- New Flex Offering -
Large staffing of min wage employees
- Shops Contributes Faculty (12) and NM (14) Scholar Plans (up to)
FY 2018/2019 Budget Review

22. FY 2018/2019 Budget Division 5-ID Card Office
Pass-Through program to Campus
No P&L Impact
Blackboard Contract renewal through CO
Off Campus Vendor program Minimal
Expanded use for Laundry & Door Locks
Increased admin/Technical Support
Coordination efforts with Housing/ITS
FY 2018/20198 Budget Review

23. CAPITAL FUNDING
APPROVAL REQUIRED
(See Hand out)

24. FY 2018/2019 Budget Capital Summary
FY 2018/2019 Budget Review

25. FY 2018/2019 Budget FY2017/2018 Capital Status
Action Item – Approval Required
Unbudgeted item(s) - None
Carry Over - $21,328 (Reference only)
Current Year Planned Expenditures of $810K
Anticipate $112K balance for the year
Key Major Projects aborted/deferred
$280K – Starbucks UDP. Interim refresh
$270K – Japanese Garden Contract delay
Will move towards a donation
$200K – Server Room. System moves
- See memos
FY 2018/2019 Budget Review

26. FY 2018/2019 Budget Capital Funding Request
ACTION ITEM
Requesting Capital funds of $930,725
Approval Required*
See Memo (detail)
Key Projects planned
Starbucks Library Renewal
A/C contingency
Japanese Garden treated as donation
See Memo
FY 2018/2019 Budget Review

27. Cash flow, assets and liabilities

28. FY 2018/2019 Budget Cash Flow Projecting Positive Cash flow - $623,451
5% Investment return factored in
Considers Minimal Capital budget
Capital Investment less than Depreciation
Ongoing PERS Unfunded Liability Payments
$360,853 – July 2018
Outpost Bond Principal & Interest ($236,150)
FAS 106 Audit in process for year-end
FY 2018/2019 Budget Review

29. FY 2018/2019 Budget FYE Cash Flow Projection
Cash flow Anticipated subject to Capital Spending
FY 2018/2019 Budget Review

30. FY 2018/2019 Budget Cash/Investment Balance Trend
Cash/Investments benefited from FY2016/2017 Investments
- Added $1.5M since Gains from investment
- Excludes VEBA – Off Balance sheet
FY 2018/2019 Budget Review

31. FY 2018/2019 Budget Long Term Liabilities
Long Term Liabilities of $12,691,499 (6/18 est)
PERS Unfunded Liability - $6,122,342
$360,853 Payment required in July - Annual increase
Currently at 30 year Term
Other Term Options available (See PERS report)
SRB Principal (Outpost) -$3,383,766
FY2018/2019 pay down $90K
2016 Refunding saves $500K over the remaining term (2039)
Medical Post Retirement liability past its peak
Currently at $3,185,391
VEBA Funding Plan mitigating long term exposure
Bond is $3.3M plus $200K unamortized deferred refinancing.
FY 2018/2019 Budget Review

32. FY2018/2019 Budget Long Term Liabilities
Post Retirement Liability will be abated by VEBA long term
PERS is at a 30 year pay down schedule with an assumed 7% rate
FY 2018/2019 Budget Review

33. FY2018/2019 Budget Long Term Liabilities
FY 2018/2019 Budget Review

34. FY 2018/2019 Budget VEBA Status VEBA Trust Funding complete per plan
Current YE Balance estimated $5,269K
Initial Plan assumed $5.3M balance after 7 Years
Projected FY18/19 holdings of $5,466K
Planned Actuarial assessment for year-end
Medical Costs have outpaced inflation
FAS 106 Audit in process for year-end
FY 2018/2019 Budget Review

35. FY2018/2019 Budget VEBA Trend
Post Retirement Liability will be abated by VEBA long term
Dollar Cost Ave but offset by lower returns
Board Approved $4M, 7 Year Investment Plan
FY 2017/2018 Budget Review

36. FY2018/2019 Budget Long Term Assets\Liabilities Comparison
Outpost & Starbucks
FAS106 Retiree Medical
PERS GASB68
Need Reserve Plan
VEBA Set Up
Bookstore Bond Paid off
Investment Portfolio
Addressed Key Liabilities
No Reserves against long term facility needs
Operating leveraged mode
PERS Liability at 7% Discount Rate
Need to set aside reserves for rebuilding
FY 2018/2019 Budget Review

37. Cash Designation & Funding
Reserves

38. FY2018/2019 Budget Reserve Planning
Per CSU Policy accommodations made for:
Working Capital
Annual Capital Replacement /Major Maintenance
Adequate funds on hand for Midterm Support
Planned Positive Cash Flow in FY2018/19
Assumes Minimal Capital investment plan
Auditor recommendation for “Designating” funds for existing liabilities and future needs
See Policy for Controller reporting requirements and thresholds.
Working Capital targeted at 8% of expenses = $2.7M
Reserve Funding Opportunities are:
Beach Card – Student funds
Alumni Center/Catering Kitchen
Designate/Grow funds for early Bond payoff – 2 year assessment
Pay down PERS Unfunded Liability
Develop long term plan for UDP Renovation
FY 2018/2019 Budget Review

39. FY2018/2019 Budget Reserve Planning (Cont’d)
PERS Unfunded Liability largest debt/risk
Accrues Interest exceeding Operating ROI
VEBA funding (Off Balance Sheet)
Mitigates Long Term Retiree Medical Liability
Assumes no additional investment
No Facility set aside funding in place
Need to start reserving and/or Designate Funds for long term rebuild
PERS assumes 7% earnings. Net Contribution and Investment policy much lower.
Reserve Funding Opportunities are:
VEBA – 1 year or so funding continuum, turn over to TPA
Alumni Center/Catering Kitchen
Designate/Grow funds for early Bond payoff – 2 year assessment
Pay down PERS Unfunded Liability
Develop long term plan for UDP Renovation
FY 2018/2019 Budget Review

40. FY 2018/2019 Budget Reserve Matrix
Per Reserve Policy definitions/Requirements we’ve satisfied the need for Operating Statement items.
-FY2017/2018 is done hence zero WC. $2.8M estimated for FY2018/19 as percentage of expense
- Classic definition of Current Assets minus Current Liabilities
Beach Club Deposits $350K$750K. Currently at $460K.
Paying as we go for all:
Facilities/Capital Replacement & Major Repair Funding accommodated through depreciation
Vacation/Holiday payout - Unrestricted. Ongoing accrual/Pay-out
Unemployment Insurance (UIT) held with CSURMA
Post Medical current year premiums being paid through Operating Statement
- Overall liability is being addressed through VEBA and future returns on investment.
SMIF held at Wells Fargo already in a separate account – Not restricted or designated but isolated
FY 2018/2019 Budget Review

41. FY 2018/2019 Budget Reserve Funding Opportunities
All but Facilities are recorded on the Balance Sheet
Provisioning and recognized various liabilities. Paying down on some:
- Facilities Infrastructure pending
- Vacation/Holiday is partially designated on the asset side in name only
SRB Funding Payments – Finite pay down schedule
Refunding save $500K in interest over the remaining 22 years.
10 year Bond Call again.
VEBA assumes funding to initial commitment only – Future unfunded liability paid from VEBA investment returns
Beach Club is ongoing projected average with holding increasing due to Flex $’s
Liability is being addressed regularly. Could designate percentage of funds if balance increased dramatically.
SMIF – No liability unless we run out of cash and need to call in the account
FY 2018/2019 Budget Review

42. FY2018/2019 Budget Reserve Designation
Recommend that monies be “Designated” as other assets in support of the following:
$500,000 - SMIF Portfolio(Held with Wells Fargo)
$500,000 – Beach Club Deposits (Student funds)
$5,000,000 - PERS Unfunded Liability (or pay down)
$3,000,000 – Outpost Bond
$2,000,000 – Short Term Facility repair
$1,000,000 – Alumni Center
$30,000,00 – UDP Replacement
FY 2018/2019 Budget Review

43. FY2018/2019 Budget PERS Liability Reduction
Current unfunded liability of $6.1M
Annual payments increasing to $700K
$360,853 – July 2018, $445,000 – July 2019
Current schedule incurs $7.6M in interest
Discount rate of 7%
CalPERS adopting a 20 year minimum schedule
See CalPERS Bulletin and backup files
Recommend to adopt a plan similar to VEBA
$2M down, $1M/year for 3-5 years
FY 2018/2019 Budget Review

44. Issues and concerns

45. FY 2018/2019 Budget Issues and Concerns
Ongoing Wage and Compliance Impact
CA minimum wage trend to $15/hour by 2022
Aging Facilities/High Maintenance Costs
Major Capital/Repair Costs with no ROI
High Credit Card fees – Min $ or Beach Card option
Retail Foods Limited mid-term growth opportunity
Market Saturation prevails without a Master Food Plan
Textbook Sales/Digital Transition
Escalating PERS unfunded liability
PERS based on optimistic fund returns
FY 2018/2019 Budget Review

46. FY 2018/2019 Budget Summary Wrap-up
Good Financial shape heading into FY2018/19
Adequate funding and reserves in place
Positive Cash Flow anticipated
Aggressive targets set towards optimism
Accounted for Labor increases and Contract Rates
Reserve for Future Re-Build
Debt Service Impacting Operations
Focus on process/Systems
FY 2017/2018 Budget Review

47. Hidden Presentation Slides
Back Up Files
Hidden Presentation Slides
FY 2018/2019 Budget Review

48. FY 2018/2019 Budget Financial Details (Hand-outs)
Financial Detail Back-up
Hidden Slides for Audit Back-up
See Hand Outs
FY2018/2019 Annual OS Forecast by Division
FY2017/2018 Additional Capital Expenditure Memo
FY2018/2019 Capital Budget Request
Enrollment History
PERS Liability Extract
Reserve Document Do
FY 2018/2019 Budget Review

49. CSULB Enrollment
Budget Planning

50. PERS Unfunded Liability Funding (Excludes PEPRA)
FY 2017/2018 Budget Review

51. PERS Unfunded Liability Payment
FY 2016/2017 Budget Review

52. CalPERS Bulletin April 18,2018
FY 2017/2018 Budget Review

53. CalPERS Bulletin April 18,2018
FY 2017/2018 Budget Review

54. Reserve Policy Extract
Policy
As part of the annual budget process the Forty-Niner Shops will evaluate the need for reserve funds and establish and/or revise funding levels as appropriate. The plan to build and maintain the recommended reserves will be integrated into and approved as part of the annual operating plan.
At the end of each fiscal year, the Forty-Niner Shops Controller will prepare a financial report of the reserve contributions made during the fiscal year. The report will be included as part of the year-end financial statement approval process. All expenditures from the reserve accounts require the approval or ratification of the Forty-Niner Shops Board of Directors.
Reserve accounts will consist of the following categories subject to change as approved by the Forty-Niner Shops Finance & Investment Committee:
A. Working Capital
B. Capital Replacement
C. Major Maintenance and Repair/Capital Renovation and Upgrade
D. New Projects and Planned Future Operations
E. Designated Fund – Funds for specific purposes as directed by the Board
F. Reserve for special projects as needed
Items A thru D are required expenses under CSU Executive Order 994 while items E and F are funds designated under Legal guidelines and Company Board discretion respectively
Adequacy of reserves does not require that funds be individually segregated for restricted use, but provides assurance that sufficient funds are available to accommodate routine as well as unexpected needs of the Forty-Niner Shops.
FY 2018/2019 Budget Review