Transcript Financial Update - David Douglas School District Fiscal

Financial Forecast Update
November, 2008
- Clackamas Community College
Fiscal Year 08/09
History Recap

Budget Challenges Faced Last Year

5% Enrollment Decline in 6/7 (while rest of state
CC’s were flat) – loss of 380 fte / $1.6m
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Changes to community college distribution
formula:
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Equalization
Acceleration of enrollment gain / drop
Prior over-budgeting of tuition and other revenue
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6/7 Enrollment Recap
(note: CCC had largest enrollment drop in state / overall state
enrollment was flat)
500
400
300
200
100
0
(100)
(200)
(300)
(400)
Recap of Funding Formula /
Revenue
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Major Components of Ongoing
General Fund Revenue:
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Funding Formula
Tuition
All Other
All Other
5%
Tuition
19%
76% *
19%
5%
Funding
Formula
76%
* (state support and property taxes –
based on reimbursable fte)
Funding Formula
Tuition
All Other
Projected Revenue Growth vs. Expenditure
Growth – last year

Combination of flat revenue growth and increasing
expenditures causes deficits / large reserve draws

Year
7/8
8/9
9/10
10/11

Note: Reserve balance net of deferred payment.

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+/surplus
deficit
deficit
deficit
Total
+848k
-1.4m
-2.0m
-3.6m
Reserve
$4.1m
$2.7m
$0.7m
$-2.9m
Actions Taken to Help the Budget Cause

1. Increase Revenue (approx. 800k)


Up 3.0% / Rest of State also Growing – 3.5%.
Fall 08 enrollment growth is promising.

Other Revenue in 8/9 – 770k
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Enrollment Increased in 7/8
$5 Tuition rate increase -from $57 to $62 per credit
 $1 equals approx. 138k - so $5 generates around $690k
Misc. Other Revenue – 80k
 High School Contracts / Nursing Contracts / Rent
2. Shift Costs Away From General Fund – 600k

Deferral of ELC Capital Contribution in 8/9 / $500k savings ($1m over two years)

Shifts to Wired Grant / Fee funds / Tech. Mech. Fund - 100k per year
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7/8 Enrollment Recap
(note: CCC enrollment up, but still lags state average – 3.0%
growth / vs. 3.5% state average)
500
400
300
200
100
0
(100)
(200)
(300)
(400)
Actions Taken to Help the Cause
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3. Reduce Expenses – approx. 700k
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Elimination of one exempt position (purchasing manager)
Elimination of 1.5 classified positions (1 phone technician /
.5 archivist) / leave vacant 2 custodial positions in addition
Food service subsidy elimination – 24k a year
Open new harmony building with existing non-instructional
staff
Leaving five FTF positions open (English / Social Sciences /
Business / Engineering / Human Services) – three additional
openings (English / Math / Health-PE) held subsequent/ Part
time backfill
Consolidation of some sections / Reduction of PTF costs /
Various other efficiencies
Actions Taken to Help the Cause
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Adjustments Since Budget Prepared
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Higher Costs (Bad News):
Absorbed 150k of unbudgeted WIA Grant costs
Likely shift of 125k of high school alternative fund costs
Higher COLA – 0.7 more than previous estimate of 3.0% (all employee groups received
base increase of 4.5% (cap) plus steps)
Higher energy costs – NWNG 14% rate increase request
Possible higher than expected classified reclass adjustments
Higher Revenue / Lower Costs (Good News):
Higher than expected enrollment growth
Higher tuition revenue
New Sustainability Grant
Lower than budgeted medical costs – due to entrance into OEBB.
Higher carryover going into 8/9 - $4.1m vs. budget of $3.3m (net of payment
deferral)
Projected Revenue Growth vs. Expenditure
Growth- current

Combination of flat revenue growth and increasing
expenditures causes deficits / large reserve draws

Year
7/8
8/9
9/10
10/11

Note: Reserve balance net of deferred payment
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+/surplus
deficit
deficit
deficit
Total
+878k
-.28k
-.33m
-2.5m
Reserve
$4.1m
$3.8m
$3.5m
$1.0m
Forecast Assumptions
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Good News:
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Actions taken with this budget have made a difference.
We’re looking much better financially.
Bad News:
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We faced a large hole / deficit and still face major challenges
even if state funding grows at 10% next biennium.
The economy appears headed towards recession and there’s
a very real possibility that state funding will be flat / less
than 10% forecasted. We had planned on an increase of
$3.5m.
Progression of State of Oregon General Fund
Revenue Forecast
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Economy Risks
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U.S. economy deteriorates further –
prolonging and intensifying recession.
Stock market woes persist, undermining
capital gains realizations in 2008 and 09.
Corporate profits fall significantly, depressing
taxable incomes.
Unemployment increases depressing state
personal income tax collections
Policy actions, both federal and state – i.e.
budget cuts.
If State Funding is Flat….
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Revenue growth over two years – around
$1.4m (around 1.5% a year) – almost
exclusively from tuition increases
Expenditure growth over same period:
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Personal services –
All Other
Total
Difference
$6.2m (85% of total)
1.1m
$7.3m - about 5.5% a year
$5.9m
If State Funding is Flat….
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Available Reserves
$3.8m

Board Minimum – 6%
$2.8m
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Difference
$1.0m
If State Funding is Flat….
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Total Estimated Shortfall $5.9m
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Available from Reserves $1.0m

Remainder*
$4.9m – over two
years / 5.2% of total spending
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*from revenue, cost shifts and expense
reductions.
Key Dates
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External:
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November
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- Election / state initiatives decided
– State updates revenue forecast / Governor proposes budget
March and May – State updates revenue forecast
January to June – Legislative deliberations / ultimately approve state
community college budget
Budget Development Process
/ Timeline
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October – April (Development of Proposed Budget)
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January – Board Workshop
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Budget Work sessions (March 12 / April 9)
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Budget Committee Meeting (May 14th)
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Budget Adoption (June 18)
Recap
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College faces budget challenges even if state funding grows 10%.
Current economic news is unsettling and has the possibility to impact
college budget significantly.
We will know more by the end of the month when the Governor
proposes his budget.
I’m not trying to alarm anyone - but I also want all to be aware of the
challenges we may face.
Let’s discuss how we can work on this together should significant
challenges arise.