1. Budget, Legislative, and Accountability Update Continuing Education Leadership Institute March 23, 2015 Jennifer Haygood, EVP and Chief Financial Officer North Carolina Community College System

2. Overview Quick Overview of State Budget Process 2015-17 Budget Priorities Non-Budget Legislation Accountability Update Please feel free to ask questions at any point! March 23, 2015

3. Biennial Budget Cycle: FY 2015-17 Summer and Fall 2014: – Develop base budget – Develop expansion budget request – Identify reduction options 2015 Long Session (begins in January) : – Adopt a two-year budget 2016 Short Session (begins in May): – Adjust second year of the budget March 23, 2015

4. The Gubernatorial Process Per the NC Constitution, the Governor shall: – Serve as “Director of the Budget” – Prepare and recommend a budget to the General Assembly – Administer the budget as enacted by the General Assembly March 23, 2015

5. 2015-16 Estimated BFTE FY 2014-15FY 2015-16 (Est.*)Change Curriculum186,499185,458-1,041 / -0.6% Continuing Ed29,06127,615-1,446 / -5.0% Basic Skills19,60317,226-2,377 / -12.1% Total235,163230,299-4,864 / -2.1% March 23, 2015 BFTE = Higher of: Previous Year’s FTE enrollment or Average of Prior 2 Years’ Prior FTE enrollment “Rolling 2-Year Average” provides a short adjustment window Actual Change in FTE (2014 vs. 2013) Continuing Ed: -6.2% Basic Skills: -20.2%

6. FY 2014-15 State Aid Allotments by Fund Source March 23, 2015 Total: $1.35 billion

7. Legislative Budget Process Governor’s Recommended Budget Full Appropriations Appropriations Subcommittees Full Appropriations House/Senate Floor Sent to Other Chamber House and Senate Appoint Conferees House and Senate Vote on Conference Report Conference Report Adopted Budget Bill Enrolled, Ratified, and Sent to the Governor to be Signed into Law March 23, 2015 Originating Chamber Fails to Concur The Conference Report must be voted up or down as submitted by the conference committee; it cannot be amended on the House or Senate floors. The House and Senate alternate preparation of the initial budget bill. Gov. veto can be overridden by 3/5 vote of each chamber.

8. Key Budget Priorities Address the Instructor and Staff Salary Crisis – Requesting $59 million over two years – NC ranks 11 th out of 16 for faculty salaries in the Southeast Rev Up Year-Round Production – Fund all curriculum courses year round, including summer Tuition Increases should only fuel CC Education March 23, 2015

9. Performance-Based Funding Absent legislative action, $24 million will be allocated in FY 2015-16 based on performance on eight measures (same as FY 2014-15) Proposed changes to measures – Remove GED attainment measure – Remove developmental education measures and substitute measures focused on success in gateway English and math courses March 23, 2015

10. Non-Budget Legislation H19/S37: Waive Tuition/Fallen Officer was Guardian H56/S6: State Health Plan/Rehired Retiree Eligibility H129: High Achieving Tuition Scholarships S251: In-State Tuition for Certain Veterans H87/S328: Bills impacting CC audits Bill Filing Deadlines: – Senate: March 26 – House: Early to mid-April depending on bill type March 23, 2015

11. Program Audit: 2013 Appropriations Act 1.Repeals G.S. 115D-5(m) effective July 1, 2015. 2.Eliminates recurring funds ($551,572) for Audit Services team and appropriates non- recurring funds ($551,572) for FY 2013-14 and FY 2014-15. 3.Establishes the Program Audit Study Committee. March 23, 2015

12. Proposed Revisions to G.S. 115D-5(m) “The State Board of Community Colleges shall maintain an education program auditing a compliance function that conducts an annual audit periodic reviews of each community college operating under the provisions of this Chapter. The purpose of the annual audit compliance review shall be to ensure that college programs and related fiscal operations comply with State law, State regulations, State Board policies, and System Office guidance data used to allocate State funds among colleges is reported accurately to the System Office and that colleges are charging and waiving tuition and fees consistent with law. All education program audit compliance review findings that are material shall be forwarded to the college president, local college board of trustees, the State Board of Community Colleges, and the State Auditor. The State Board shall adopt rules governing the frequency and scope of compliance reviews.” March 23, 2015

13. New Vision for Accountability Calculation of Budget FTE Calculation of Budget FTE Purpose and Scope of Audits Frequency/Scheduling of Audits Class Visits Materiality Roles and Responsibilities Use of Technology March 23, 2015

14. Accountability Core Principles Integrity Fairness Consistency March 23, 2015