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North Orange County Community North Orange County Community College DistrictCollege District

2010-2011 2010-2011 Proposed BudgetProposed Budget

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IntroductionIntroduction State Budget ImpasseState Budget Impasse

Assumptions primarily based on Governor’s Assumptions primarily based on Governor’s May ReviseMay Revise

Cash Flow ConcernsCash Flow Concerns State’s Structural Deficit ContinuesState’s Structural Deficit Continues

Current projection is $17.9 billion Current projection is $17.9 billion NOCCCD ongoing Deficit of $2.3 million NOCCCD ongoing Deficit of $2.3 million

includes:includes: $2.5 million general apportionment deficit$2.5 million general apportionment deficit $3.2 million of non-faculty vacancies$3.2 million of non-faculty vacancies

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IntroductionIntroduction NOCCCD PrioritiesNOCCCD Priorities

Address potential for unfavorable State Address potential for unfavorable State budgetbudget

Potential mid-year budget reductionsPotential mid-year budget reductions Address the ongoing deep categorical Address the ongoing deep categorical

budget reductionsbudget reductions Increased Enrollment DemandsIncreased Enrollment Demands Negotiations/Staffing levelsNegotiations/Staffing levels Completion of Construction ProjectsCompletion of Construction Projects Retiree BenefitsRetiree Benefits

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Categorical Programs – Categorical Programs – 2009-102009-10

On average, many categorical On average, many categorical programs received ongoing cuts of programs received ongoing cuts of approximately 40 - 50%approximately 40 - 50%

One-time ARRA Backfill received of One-time ARRA Backfill received of approximately $800,000 approximately $800,000

Additional one-time District Additional one-time District contribution given of approximately contribution given of approximately $1.3 million $1.3 million

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Categorical Programs – Categorical Programs – 2010-112010-11

Despite reductions made in 2009-10, several Despite reductions made in 2009-10, several programs continue to have personnel costs in programs continue to have personnel costs in excess of State allocationsexcess of State allocations

Estimated Unrestricted General Fund Estimated Unrestricted General Fund encroachment for 2010-11 of approximately encroachment for 2010-11 of approximately $1.5 million – provided as one-time backfill for $1.5 million – provided as one-time backfill for 2010-11 by campuses and District2010-11 by campuses and District

Further discussions are necessaryFurther discussions are necessary Campuses continue to apply for new grant Campuses continue to apply for new grant

opportunitiesopportunities Potential for $5 million System-wide one-time Potential for $5 million System-wide one-time

backfillbackfill

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Full-Time Equivalent Students Full-Time Equivalent Students (FTES)(FTES)

2009-10 Actual FTES – 38,702.012009-10 Actual FTES – 38,702.01 4,004.84 FTES above target level4,004.84 FTES above target level

2009-10 Funded FTES – 33,111.442009-10 Funded FTES – 33,111.44 Resulted in 5,590.57; 16.88% of Actual FTES Resulted in 5,590.57; 16.88% of Actual FTES

UnfundedUnfunded

2010-11 Targets established at 34,780.17 2010-11 Targets established at 34,780.17 – essentially the same target levels as – essentially the same target levels as 2009-102009-10 Cypress College – 11,030Cypress College – 11,030

Fullerton College – 17,498Fullerton College – 17,498

SCE – 6,252.17SCE – 6,252.17

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FTESFTES

2010-11 Target projects 1,668.73; 2010-11 Target projects 1,668.73; 5.04% unfunded FTES5.04% unfunded FTES

Generating FTES above Target is Generating FTES above Target is Ideal…Without additional costsIdeal…Without additional costs

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FTES TrendsFTES Trends

2010-11 2009-10 2008-09 2007-08Target Actual Actual Actual

Cypress 11,030.00 12,428.32 11,803.33 11,226.22

Fullerton 17,498.00 19,478.30 18,501.56 17,489.26

SCE 6,252.17 6,795.39 8,247.26 7,828.93

Total 34,780.17 38,702.01 38,552.15 36,544.41

Targets 34,697.17 35,848.28 35,259.45

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Full-time Faculty ObligationFull-time Faculty Obligation 2010-11 Estimated Obligation – 529.82010-11 Estimated Obligation – 529.8

Reinstated 14 of the 40 vacant positions eliminated Reinstated 14 of the 40 vacant positions eliminated from the budget in 2009-10from the budget in 2009-10

Projected to be right at obligation for 2010-11Projected to be right at obligation for 2010-11

Depending on the outcome of the State budget, Depending on the outcome of the State budget, obligation may change for 2011-12obligation may change for 2011-12

No plans to fill vacancies beyond those needed to No plans to fill vacancies beyond those needed to meet the obligation meet the obligation

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Ending Balances Ending Balances June 30, 2010June 30, 2010Ending Balances $45.4 million

(In millions)

$19.9

$10.3

$4.5

$3.8

$6.6 $0.30 Budget Center Carryovers

Board Policy Contingency

Board DiscretionaryContingency

Restricted Fund Balance

Districtwide Carryovers

Reserved Fund Balance

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Ending BalanceEnding BalanceBoard Policy ContingencyBoard Policy Contingency

Board Policy 6200 requires that unrestricted Board Policy 6200 requires that unrestricted general reserves shall be no less than 5% of general reserves shall be no less than 5% of unrestricted general fund expendituresunrestricted general fund expenditures

Unrestricted General FundUnrestricted General Fund ExpendituresExpenditures $206,385,831 $206,385,831

Contingency levelContingency level 5% 5%Board Policy ContingencyBoard Policy Contingency $ 10,319,292 $ 10,319,292

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Ending BalanceEnding BalanceBoard Discretionary Board Discretionary

ContingencyContingency Board Discretionary Contingency of Board Discretionary Contingency of

$4,475,453. Primarily consisting of:$4,475,453. Primarily consisting of: $2.3 million apportionment deficit below $2.3 million apportionment deficit below

budgetbudget $465 thousand Medicare Part D Subsidy$465 thousand Medicare Part D Subsidy $460 thousand Lottery proceeds in excess $460 thousand Lottery proceeds in excess

of budgetof budget $846 thousand Utility Savings (actual $846 thousand Utility Savings (actual

expenditures below budget) expenditures below budget)

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Ending Balance - Districtwide Ending Balance - Districtwide CarryoversCarryovers

Districtwide carryovers of $6,608,327:Districtwide carryovers of $6,608,327: Master Plan - $133,600Master Plan - $133,600 Facility emergency - $130,000Facility emergency - $130,000 Safety supplies budget - $157,572Safety supplies budget - $157,572 Information Services infrastructure budget Information Services infrastructure budget

- $3,751- $3,751 Staff development - $200,000Staff development - $200,000 Election expense - $525,000 Election expense - $525,000

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Ending Balance - Districtwide Ending Balance - Districtwide CarryoversCarryovers

Districtwide Carryovers (cont.):Districtwide Carryovers (cont.):

Supplemental Retirement Plan - $137,404Supplemental Retirement Plan - $137,404 Scheduled Maintenance contribution - Scheduled Maintenance contribution -

$1,600,000$1,600,000 Categorical contribution - $1,000,000Categorical contribution - $1,000,000 Self-Insurance contribution - $1,221,000Self-Insurance contribution - $1,221,000 Retiree Benefit contribution - $1,500,000Retiree Benefit contribution - $1,500,000

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Budget Center CarryoversBudget Center Carryovers

2009-10 2008-09 $ %Carryovers Carryovers Change Change

District Offices 2,833,197$ 2,294,519$ 538,678$ 23.48%

Info. Services 342,292 207,147 135,145 65.24%

Cypress College 8,164,416 6,583,338 1,581,078 24.02%

Fullerton College 8,375,210 8,018,211 356,999 4.45%

SCE 199,374 543,706 (344,332) -63.33%

Total 19,914,489$ 17,646,921$ 2,267,568$ 12.85%

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Apportionment Revenue – SB Apportionment Revenue – SB 361361

Foundation Grant 8,857,454$ FTES 144,469,389 Negative COLA (-0.38%) (573,142) Property Tax Deficit (2,500,000)

2010-11 Budgeted Base 150,253,701$

The 2010-11 Proposed Budget contains no The 2010-11 Proposed Budget contains no provision for 2.2% Growth funding – approx. provision for 2.2% Growth funding – approx. $3.2 million$3.2 million

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Revenues – OtherRevenues – Other Lottery - $3,999,720Lottery - $3,999,720

$4 per FTES increase from prior year$4 per FTES increase from prior year Part-time Faculty Comp. - $996,501Part-time Faculty Comp. - $996,501 Fee Waiver & Enrollment Fee - Fee Waiver & Enrollment Fee -

$322,051$322,051 Non-resident Tuition - $1,000,000Non-resident Tuition - $1,000,000 Interest - $500,000Interest - $500,000

Rates estimated at 0.73% (0.62% Rates estimated at 0.73% (0.62% decrease from prior year)decrease from prior year)

Miscellaneous Income - $10,000Miscellaneous Income - $10,000

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ExpendituresExpenditures Salaries - $3.1 million increaseSalaries - $3.1 million increase

Step and Column increases and Reinstatement of Step and Column increases and Reinstatement of 14 full-time faculty – approx. $1.3 million14 full-time faculty – approx. $1.3 million

Medical Costs – 7% average increase – approx. Medical Costs – 7% average increase – approx. $894,000$894,000

PERS rate – increase from 9.709% to 10.707% - PERS rate – increase from 9.709% to 10.707% - approx. $600,000approx. $600,000

SUI rate – increase from 0.30% to 0.72% - approx. SUI rate – increase from 0.30% to 0.72% - approx. $363,000$363,000

Retiree Benefits – $5,049,143 per actuarial Retiree Benefits – $5,049,143 per actuarial study study

Extended Day Budgets – decreased by Extended Day Budgets – decreased by approx. $290 thousand:approx. $290 thousand: Adjusted for reinstated full-time facultyAdjusted for reinstated full-time faculty Adjusted for minor change in FTES targetAdjusted for minor change in FTES target

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ExpendituresExpenditures Energy Costs – $3.8 million – net savings approx. $472,000Energy Costs – $3.8 million – net savings approx. $472,000

Reflects a net decrease due to decline in energy pricesReflects a net decrease due to decline in energy prices Reflects a net savings due to Cypress CogenReflects a net savings due to Cypress Cogen Factors increased costs for new facilities Factors increased costs for new facilities

Child Care Program Contribution - $167,063Child Care Program Contribution - $167,063 No ongoing contributions for Retiree Benefits or Self No ongoing contributions for Retiree Benefits or Self

InsuranceInsurance No ongoing budget for Scheduled Maintenance contributionNo ongoing budget for Scheduled Maintenance contribution

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Ongoing Revenues & Ongoing Revenues & ExpendituresExpenditures

Revenues 157,081,973$ Expenses 159,430,592

Ongoing Deficit (2,348,619)$

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Outstanding IssuesOutstanding Issues Salary NegotiationsSalary Negotiations

Each 1% increase for Unrestricted General Fund Each 1% increase for Unrestricted General Fund positions is estimated at $1,024,049positions is estimated at $1,024,049

Each 1% increase for Extended Day positions is Each 1% increase for Extended Day positions is estimated at $218,442estimated at $218,442

No assumptions made for furloughs or salary roll-No assumptions made for furloughs or salary roll-backs for 2010-11 backs for 2010-11

Temporary Suspension of $1.5 million Retiree Temporary Suspension of $1.5 million Retiree Benefits Fund ContributionBenefits Fund Contribution Unpaid Balance as of June 30, 2010 - $12 millionUnpaid Balance as of June 30, 2010 - $12 million

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Outstanding IssuesOutstanding Issues

GASB 45 - Unfunded Retiree LiabilityGASB 45 - Unfunded Retiree Liability $166.1 million unfunded liability$166.1 million unfunded liability $12.4 million Annual Required Contribution (ARC)$12.4 million Annual Required Contribution (ARC)

$4.8 million in pay-as-you-go costs (2009-10)$4.8 million in pay-as-you-go costs (2009-10) Unfunded ARC of $7.6 millionUnfunded ARC of $7.6 million

$50.6 million set aside in Retiree Benefits Fund$50.6 million set aside in Retiree Benefits Fund $5.0 million budgeted pay-as-you-go cost (2010-$5.0 million budgeted pay-as-you-go cost (2010-

11)11) General Apportionment DeferralsGeneral Apportionment Deferrals

Cash Flow ConcernsCash Flow Concerns Interest Income directly impactedInterest Income directly impacted

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Outstanding IssuesOutstanding Issues Further decisions needed on deep ongoing cuts to Further decisions needed on deep ongoing cuts to

categorical programs categorical programs Personnel costs in excess of State AllocationsPersonnel costs in excess of State Allocations One-time backfill provided, pending further discussionsOne-time backfill provided, pending further discussions

Uncertain outcome of 2010-11 State BudgetUncertain outcome of 2010-11 State Budget

50% Law concerns50% Law concerns Necessary Budget ReductionsNecessary Budget Reductions Categorical ContributionsCategorical Contributions

Increases in PERS and STRS employer Increases in PERS and STRS employer contribution rates could have a significant fiscal contribution rates could have a significant fiscal impact on future budgetsimpact on future budgets

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Current ReservesCurrent Reserves

Board Policy Contingency - $10,319,292Board Policy Contingency - $10,319,292

Board Discretionary Contingency - Board Discretionary Contingency - $2,126,834:$2,126,834:

$ 4,475,453 As of June 30, 2010$ 4,475,453 As of June 30, 2010

(2,348,619)(2,348,619) Ongoing Deficit Ongoing Deficit

$ 2,126,834$ 2,126,834

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Questions?Questions?

2010-2011 Proposed 2010-2011 Proposed BudgetBudget