1. Finance & Investment Committee 5/10/19 Board of Directors – 5/17/19
FY 2019/2020 Budget Review
Finance & Investment Committee
5/10/19
Board of Directors – 5/17/19
FY 2019/2020 Budget Review

2. FY 2019/2020 Budget Agenda Action Items
General Assumptions/Key Drivers
Campus Contributions
Financial Summary and Statements
Operating Statements (Detailed Hand Out)
Capital Expense and Funding (Hand out)
Cash Flow, Liabilities and Assets
Reserves
Issues/Recap
FY 2019/2020 Budget Review

3. Action Items

4. FY 2019/2020 Budget Action Items
Seeking Approval of:
FY 2019/2020 Operating Budget
Operating Contribution of $308,677
Reported Net Contribution of $888,677
Individual Corporate Donations in excess of $2,500
Capital Funding
FY 2019/2020 Capital Request - $821,200
FY 2018/2019 Unbudgeted Expenditures -$12,573
$26,135 FY 2017/2018 Budgeted Carryover
Reserve Funding
Fund Designation in the amount of $15,039,000
CalPER Unfunded Liability Options
See separate Donation Sheet.
- Items included in G&A and some part of contracted donations.
FY 2019/2020 Budget Review

5. General assumptions & key activities

6. FY 2019/2020 Budget General Assumptions
Enrollment up 2.3% per Campus Forecast
Executing to contracts in place
Full Occupancy rate for Housing
All known rate increases accounted for
Annual insurance/contribution increases of 5-8%
Health Insurance, Workers Comp, PERS, Liability, etc.
Labor per California Law
Campus Allocations per EO-1000, Utilities
General price increases in most areas
FY 2019/2020 Budget Review

7. FY 2019/2020 Budget Key Activities - Drivers
Minimum Wage and Salary Labor increase
Residential Dining – 2.8% Contract Rate increase
$3.2M in Campus Contributions
$300K Additional Donations
Textbook Sales Reduction
Textbooks down Year-over-Year. Digital conversion slow
Sales
17/18 $6,857,625
18/19 Fcst $6,110,119 $ 747, %
19/20 $5,481,451 $ 628, %
$1,376, % Aggregate
FY 2019/2020 Budget Review

8. FY 2019/2020 Budget Key Activities Minimum Wage Administration
California Minimum Wage Increase
$13.00/hour on January 1,2020 (period 7)
8.3% escalation from $12.00/hour
Tiered Increase for those between $ $15.50
Re-baseline hourly Salary Grades
Estimated 6% increase
California Salary Exempt Law – 1/1/20
2X Minimum Wage - $54,080
FY Budget Overview

9. FY 2019/2020 Budget Key Activities – Labor Impact
$350K+ Minimum Wage Impact
Affects All Students and Part Time/Temp employees
$150K - 3% Salaried Pool Increase planned
Salaried and Full Time Hourly
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

10. FY 2019/2020 Budget Key Activities – Other Financial
$142,400 - Outpost Bond Interest Expense
Plus $90,000 Principal
Estimated 3.5% Investment Return
$400K Incentive Comp placeholder in G&A
PERS Minimum Unfunded Liability Payment
$441,024 Due July 2019 (Balance Sheet only)
$450K investment
$400K IC placeholder
Post Retirement Liability projection will take its course
FY 2019/2020 Budget Review

11. Campus CONTRIBUTIONS Allocated through out)

12. FY 2019-2020 Budget Campus Contribution Summary
FY 2019/2020 Budget Review

13. Campus Contributions Donations & Partnership Detail
FY 2019/2020 Budget Review

14. Campus Contributions Reimbursed Services & Capital
FY 2019/2020 Budget Review

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

16. FY 2019/2020 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 2019/2020 Budget Review

17. FY 2019/2020 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 2019/2020 Budget Review

18. FY 2019/2020 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 2019/2020 Budget Review

19. FY 2019/2020 Budget General & Administrative (G&A)
Contains Corporate Donations of $513,190
Approval Action for items >$2,500 (See detail)
Include Japanese Garden & HFHM Chair
Contains Employee & Retiree Related Expense
$400,000 Incentive place holder (inclusive of tax)
$481,300 Medical Retiree Health Premiums
EO-1000 Campus increase.
VP 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 2019/2020 Budget Review

20. FY 2019/2020 Budget Corporate Donations Approval Required >$2,500@
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 $25-$1,500 Range
Jewels of the night, HFHM, Athletics, Alumni, Relay for Life, etc.
$97,500 Coke Sponsorship included in Athletics Contract
$134,808 Meal Plan donation – National Merit/Faculty in Residence
Part of Residential Dining Contract
FY 2019/2020 Budget Review

21. FY 2019/2020 Budget Bookstore/Computer Store
Sales Flat from Current Forecast at $14.9M
Traditional Textbook Sales down 10%
$5,481,451 Compared to $6,110,119 this year
Anticipated D1DA Digital Growth of $100K
Retail and Gradfair $’s increasing
Other Revenue 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 2019/2020 Budget Review

22. FY 2019/2020 Budget Retail Food Sales
Retail Dining/C-Stores Sales Flat at $10.8M
Incremental 4% growth over this year
Down from FY18/19 Budget
Business Remains Price/Cost Challenged
Large percentage of Minimum wage employees
High Credit Card fees and Facilities Cost
Completed Inventory System Implementation
Starbucks Remodeled – New Depreciation
Japanese Garden - new Business in Flux
Not Budgeted
Market is limited but saturated
FY 2019/2020 Budget Review

23. FY 2019/2020 Budget Residential Dining
2.8% Meal Plan increase per Contract
Based on Higher Education Pricing Index (HEPI)
Anticipate continued full Res Hall occupancy
Planned Occupancy of 2,550 Residents
2,600 Fall/2,500 Spring
Campus Contributions
$899,591- Housing Commission
$134,808K - Meal Donations
Anticipated full occupancy around 2,550 Ave
2018 Fall/2019 Spring 2,552/2,502 Standard Pay. 2651/2601 Total
Large staffing of min wage employees
- Shops Contributes Faculty (12) and NM (14) Scholar Plans (up to)
FY 2019/2020 Budget Review

24. FY 2019/2020 Budget Residential Dining Plan Rates
New Agreement
- Declining Balance Eliminated after 16/17
- Similar Flex Offering -
Large staffing of min wage employees
- Shops Contributes Faculty (12) and NM (14) Scholar Plans (up to)
FY 2019/2020 Budget Review

25. FY 2019/2020 Budget Division 5-ID Card Office
Pass-Through program to Campus
No P&L Impact
Blackboard Contract renewal through CO
Current Year Billing still Pending
Relocating Server to Campus ITS
Moving to Campus Domain
Business Continuity/Disaster Recovery
Expanded use for Laundry & Door Locks
FY 2019/2020 Budget Review

26. CAPITAL FUNDING
APPROVAL REQUIRED
(See Hand out)

27. FY 2019/2020 Budget Capital Summary
FY 2019/2020 Budget Review

28. FY 2019/2020 Budget FY2018/2019 Capital Status
Action Item – Approval Required
Unbudgeted item(s) - $12,573 (to be expensed)
Carry Over - $26,135 (Reference only)
Current Year Planned Expenditures of $443K
Anticipate $7K balance for the year
Major Projects
Library Starbucks Completed
UDP Starbucks Interim refresh
UDP Sewer Emergency Repair
Bookstore A/C Deferred - No breakdown
- See memos
FY 2019/2020 Budget Review

29. FY 2019/2020 Budget Capital Funding Request
ACTION ITEM
Requesting Capital funds of $821,200
Approval Required*
See Memo (detail)
Mid Level Projects planned
Contingencies for
UDP Repair
Elevator Retrofit
Japanese Garden treated as donation
See Memo
FY 2019/2020 Budget Review

30. Cash flow, assets and liabilities

31. FY 2019/2020 Budget Cash Flow Projecting Positive Cash flow - $640,929
3.5% Net Investment return factored in
Conservative Capital budget
Capital Investment less than Depreciation
Ongoing PERS Unfunded Liability Payments
$441,024 due July 2019 – Per Actuarial
Outpost Bond Principal & Interest ($232,400)
$90,000 Debt Payment
$142,400 Interest (In Operating Statement)
FAS 106 Audit in process for year-end
FY 2019/2020 Budget Review

32. FY 2019/2020 Budget FYE Cash Flow Projection
Cash flow Anticipated subject to Capital Spending
FY 2019/2020 Budget Review

33. FY 2019/2020 Budget Cash/Investment Balance Trend
Cash/Investments benefitting from Investments
- Excludes VEBA – Off Balance sheet
FY 2019/2020 Budget Review

34. FY 2019/2020 Budget Long Term Liabilities
Long Term Liabilities of $11,963,785 (6/19 Est)
Anticipated Reduction
PERS Unfunded Liability - $5,964,920
$441,024 Payment required in July 2019
Moving to 20 Year Pay Down Terms (See PERS report)
SRB Principal (Outpost) -$3,280,957
FY2019/2020 pay down $90K
Remaining Term to 2039
Medical Post Retirement liability past its peak
Currently at $2,717,908
VEBA Funding Plan Mitigating This Exposure Long Term
Bond is $3.3M
FY 2019/2020 Budget Review

35. FY2019/2020 Budget Long Term Liabilities
Post Retirement Liability will be abated by VEBA long term
PERS moving to a 20 year pay down schedule with an assumed 7% rate
FY 2019/2020 Budget Review

36. FY2019/2020 Budget Long Term Liabilities
FY 2019/2020 Budget Review

37. FY 2019/2020 Budget VEBA Trust Status
Board Approved $4M investment
Funding complete per plan
Initial Plan assumed $5.3M balance after 7 Years
Medical Costs have outpaced inflation
Actuarial assessment has us a year out
Current YE Balance estimated $5,550K
Projected FY19/20 holdings of $5,788K
FAS 106 Audit in process for year-end
FY 2019/2020 Budget Review

38. FY2019/2020 Budget VEBA Trend
Post Retirement Liability will be abated by VEBA long term
Dollar Cost Ave but offset by lower returns
FY 2019/2020 Budget Review

39. FY2019/2020 Budget Long Term Assets and Liabilities Comparison
Outpost & Starbucks
FAS106 Retiree Medical
PERS GASB68
Reserve Plan
VEBA Set Up
Bookstore Bond Paid off
Investment Portfolio
Addressed Key Liabilities
Excludes Short Term 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 2019/2020 Budget Review

40. Cash Designation & Funding
Reserves

41. FY2019/2020 Budget Reserve Planning
Per Reserve Policy accommodations needed for:
Working Capital
Annual Capital Replacement and Major Maintenance
Post-Retirement Medical
CalPERS Unfunded Liability
New Projects/Other
Accounting Standards Update – ASU
“Designating” funds for existing liabilities and future needs
Liquidity Reporting
See Policy for Controller reporting requirements and thresholds.
Working Capital targeted at 8% of Operating expenses including G&A
FY 2019/2020 Budget Review

42. FY2019/2020 Budget Reserve Planning(Cont’d)
Adequate funds on hand for Midterm Support
Planned Positive Cash Flow
PERS Unfunded Liability largest debt/risk
Accrued Interest exceeds Operating ROI
VEBA funding (Off Balance Sheet)
Mitigates Long Term Retiree Medical Liability
Assumes no additional investment
No Facility Set Aside Funding in Place
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 2019/2020 Budget Review

43. FY 2019/2020 Budget Reserve Recommendation
Recommend That Monies be Designated as Assets Without Donor Restrictions in the amount of $15,039,000
$10,339,000 - Priority 1
Committed and Incurred Liability
Non-Asset backed Liabilities
$4,700,000 - Priority 2
Incurred Liability & Asset Backed
Designation subject to Holdings Limit
No available funds for Priority 3
Estimated $35M for Future Repair/Replacement
FY 2019/2020 Budget Review

44. FY 2019/2020 Budget Reserve Designations Approval Required
FY 2019/2020 Budget Review

45. FY 2019/2020 Budget Reserve Matrix Build up
Per Reserve Policy definitions/Requirements we’ve satisfied the need for Operating Statement items.
Beach Club Deposits $350K$650K.
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 2019/2020 Budget Review

46. FY 2019/2020 Budget Reserve Designations Future Consideration
FY 2019/2020 Budget Review

47. FY2019/2020 Budget CalPERS Actuarial Update
Unfunded Accrued Liability (UAL) - $5,964,920
Legacy employee participant plan
Shrinking participant funding pool ongoing
CalPERS GASB 68 Publications – March 2019
Miscellaneous Risk Pool Measurement update
Measurement Date of June 30, 2018
Baselines Liabilities and Assets for YE June 2019
Public Agency Schedules
Employer Allocation for Components of Net Pension Liability
FY 2019/2020 Budget Review

48. FY2019/2020 Budget PERS Liability Reduction
Annual payments increasing to $700K
$441,024 – July 2019, $687,000 – July 2024
Current schedule incurs $6.2M in interest
Discount rate of 7%
See Backup Slides 56-57
CalPERS adopting a 20 year minimum schedule
Recommend a Pay-down Plan similar to VEBA
FY 2019/2020 Budget Review

49. FY 2019/2020 Budget CalPERS UAL Funding Action For BOD Submittal
Proposing Several Funding profiles
Annual amounts are above and beyond the Mandated Annual Employer Contributions (Slide 56)
Considers $441,024 Payment Due July 2019
UAL Pay-Down Options
$1M Initial Payment - $500K/Year for 7 years
$2M down, $500K for 6 years (Recommended)
$3M down, $500K for 3 years
Actuarial Will Address Ongoing Status
FY 2019/2020 Budget Review

50. Issues and concerns

51. FY 2019/2020 Budget Issues and Concerns
Ongoing Wage and Compliance Impact
CA minimum wage trend to $15/hour by 2022
Retail Foods Limited growth opportunity
Market Saturation prevails without a Master Food Plan
Textbook Sales/Digital Transition
Campus effort to increase Sell-Thru
Aging Facilities/High Maintenance Costs
Major Capital/Repair Costs Pending with no ROI
No Reserves Available to Fund
PERS based on optimistic fund returns
FY 2019/2020 Budget Review

52. FY 2019/2020 Budget Issues and Concerns (Cont’d)
Credit Card fees
Consider Minimum $ Charge or Beach Card option
PERS unfunded liability and Investment Rate
What is the right amount of Campus Donations and to whom?
Desired Reserves in excess of Funds
PERS based on optimistic fund returns
FY 2019/2020 Budget Review

53. FY 2019/2020 Budget Summary Wrap-up
Good Financial shape heading into FY2019/20
Adequate funding and reserves in place Short Term
Positive Cash Flow anticipated
Continued Shift in Product Lines
Challenging but Realistic targets set
Accounted for Labor increases and Contract Rates
FY 2019/2020 Budget Review

54. Hidden Presentation Slides
Back Up Files
Hidden Presentation Slides
FY 2019/2020 Budget Review

55. FY 2019/2020 Budget Financial Details (Hand-outs)
Financial Detail Back-up
Hidden Slides for Audit Back-up
See Hand Outs
FY2019/2020 Annual Operating Statements
History and Forecast by Division
FY2019/2020 Additional Capital Expenditure Memo
FY2019/2020 Capital Budget Request
Enrollment History
PERS Liability Payment Table Extract Do
FY 2019/2020 Budget Review

56. CSULB Enrollment
Done
Budget Overview

57. PERS Unfunded Liability Funding (Excludes PEPRA)
Done
FY 2019/2020 Budget Review

58. PERS Unfunded Liability Payment
Done
FY 2019/2020 Budget Review