1. Presentation to the Chancellor’s Cabinet October 14, 2013 Inspiration. Innovation. Graduation. Presented by Mr. Roy Stutzman, RvStutzman Consulting

2. WHY REVIEW CURRENT MODEL?  Allocation model “check up”  “Fixed cost” elements of current model  FTEF/FTES allocation alignment  Campus “dedicated” revenue  Local allocation model and SB 361 state model alignment  Assure linkage between revenues and expenditures  Fiscal stability and accountability  Documentation and understanding (transparency) 2 October 14, 2013, rvStutzman Consulting

3. ACCREDITING COMMISSION STANDARD IIID October 14, 2013, rvStutzman Consulting 3 “Financial resources are sufficient to support student learning programs and services and to improve institutional effectiveness. The distribution of resources supports the development, maintenance and enhancement of programs and services. The institution plans and manages its financial affairs with integrity and in a manner that ensures financial stability. The level of financial resources provides a reasonable expectation of both short-term and long-term financial solvency. Financial resource planning is integrated with institutional planning at both college and district/system levels in multi-college systems”.

4. ACCREDITATION COMMISSION STANDARD IV3C October 14, 2013, rvStutzman Consulting The district/system provides fair distribution of resources that are adequate to support the effective operations of the colleges.

5. ALLOCATION PRINCIPLES October 14, 2013, rvStutzman Consulting 5  Must be simple and easy to understand  Must provide for financial stability  Must provide for an appropriate level of reserves consistent with board policy and direction  Must be responsive to the District/College’s planning process and related goals and objectives  Must provide means to address any current or future emphasis directed by the Governing Board  Must promote efficient use of District resources

6. ALLOCATION PRINCIPLES (cont’d) October 14, 2013, rvStutzman Consulting 6  Must be flexible and allow for appropriate decisions to be made at the local level  Must allow colleges to initiate, implement and be responsible for new program initiatives  Must provide for transparency of District Office and District Wide expenditures in support of college operations.  Must match resources with service levels using objective standards or measures to assure equity

7. PROPOSED ALLOCATION FUNDAMENTALS October 14, 2013, rvStutzman Consulting 7  Use sound and rational formula to distribute state apportionment revenue to colleges (workload basis credit/non credit FTES)  Allocation Model must address the economy of scale issues for small and large colleges  Each College shall receive a basic allocation for state approved centers  District Wide and District Office costs that are recognized as appropriate shall be provided in the model, either “off the top” or through an assessment to the colleges

8. PROPOSED ALLOCATION FUNDAMENTALS (cont’d) October 14, 2013, rvStutzman Consulting 8  Allocation Model should lead colleges to maximize revenues through enrollment management and provide incentives to improve student access and excellence  Ending balances will be retained by the respective Colleges and by District Office and District Wide services  Required District reserve and regulatory costs will be provided for in the model

9. PROPOSED ALLOCATION FUNDAMENTALS (cont’d) October 14, 2013, rvStutzman Consulting 9  Assure funding source and on-going revenue to support collectively bargained salary schedule increases  Must provide clear accountability and define areas of District level oversight, describe the nature of that oversight and the degree to which it will be exercised, i.e., FTES targets, faculty and staff productivity, full time faculty requirements, 50% law, etc.

10. TYPICAL ALLOCATION MODEL ISSUES October 14, 2013, rvStutzman Consulting 10  How to handle ending balances  Reserves and deficits – accountability  Reserves  Accountability for over spending  Allocation of new revenues  COLA  Growth  Long term planning  District salary increases  Shifting of resources between colleges

11. Allocation Model Issues (cont’d)  50% Law  Faculty Obligation Number (FON)  Employee Step and Column Costs  Periodic review of the procedures  1 year after implementation  3 year review  Timing of allocations to colleges  District Services and District Wide Cost February 12, 2013, CCCD Administrative Services 11

12. POTENTIAL IMPACT OF MAJOR CHANGE IN ALLOCATION METHODOLOGY October 14, 2013, rvStutzman Consulting 12  Culture shift  Accountability/Responsibility/Authority  Autonomy  Transparency and accountability for DO & DW Services  Transparency of college allocations and expenditures  Impact and involvement of colleges in negotiations  May requires an investment to transition  Interest revenue, undesignated reserves, retiree health

13. PROCESS October 14, 2013, rvStutzman Consulting 13  Chancellor’s Cabinet review and input  Meet with colleges senior leadership  Model changes or adjustments to current practice  Develop findings and recommendations  Chancellor’s Cabinet review and input  Present findings and recommendations to the District Budget Advisory Committee  Recommendation to Chancellor

14. QUESTIONS/COMMENTS/OBSERVATIONS October 14, 2013, rvStutzman Consulting 14 Resource Allocation