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Fiscal Year 2018 Proposed Budget

Governing Board MeetingMay 10, 2017

Presenter: David Bea, Ph.D.

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Foundational Elements to theFiscal Year 2018 Proposed Budget

• Stewardship and Financial Health – Indicators

• Financial and Operational Health Metrics• Enrollment Trends

• College Business Model– Expenditure Limitation– Revenue Source Realities – Competition– Cost Drivers

• Future Needs– Educational Master Plan and Strategic Reinvestment

• Other Organizational Challenges

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• Institutional goal for 2030: Achieve 60 Pima County• Strategic Direction 1: Improve student success• Strategic Direction 2: Enrich the community through

engagement• Strategic Direction 3: Cultivate institutional

excellence through continuous improvement

Proposed 2017-2021 Strategic Plan

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Fiscal Year 2018 Budget CalendarDecember 2016

• Fiscal Year 2018-2020 Budget Scenarios developed by ELT

• Fiscal Year 2018-2020 Budget Scenarios feedback at a Governing Board study session

January 2017• Fiscal Year 2018-2020 Budget Outlook presentations at numerous College locations

• Fiscal Year 2018-2020 Budget Scenarios presented to the Finance and Audit Committee

February 2017• Fiscal Year 2018 Budget Outlook and Tuition presented to student leaders

• Property tax levy letter was received from Pima County

March 2017

• Fiscal Year 2018 Budget Outlook presented to the community Fiscal Year 2018 Budget Outlook and Tuitionpresented to the Finance and Audit Committee

• Employee benefits contracts for Fiscal Year 2018 were presented to the Governing Board and approved

• Academic Year 2017-2018 tuition and fees presented to the Governing Board

April 2017

• Fiscal Year 2018 Budget Outlook presented to the community

• Fiscal Year 2018 Budget Update and Tuition and budget model presented at a Governing Board study session

• Academic Year 2017-2018 tuition and fees approved by the Governing Board

• Fiscal Year 2018 Capital Budget and Projects approved by the Governing Board

• Fiscal Year 2018 Budget Outlook and Property taxes presented to the Finance and Audit Committee

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Fiscal Year 2018 Budget Calendar (continued)

May 2017

• Fiscal Year 2018 Budget Overview presented to the Executive Leadership Team

• Proposed Fiscal Year 2018 preliminary budget, tax rate, and tax levy with a request for approval to allow publication according to statutory guidelines are presented to the Governing Board

• Proposed Fiscal Year 2018 budget and 'Truth in Taxation Notice of Tax Increase' (if necessary) are published and a press release is distributed as required by Arizona Revised Statutes

June 2017

• Proposed Fiscal Year 2018 budget and 'Truth in Taxation Notice of Tax Increase' (if necessary) are published as required for a second time as required by Arizona Revised Statutes

• A Public Hearing is scheduled on the proposed budget, property tax rates, and levies

• A Special Meeting is scheduled to vote on the budget and property tax levies and rates. A roll call vote to levy the proposed property tax and vote to approve the proposed budget occurs

• The documents are transmitted to the Property Tax Oversight Commission as required by Arizona Revised Statutes

July 2017 • Fiscal Year 2018 budget is implemented on July 1

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Budget Communications• Budget Outlook

– Presentations provided to:• Student Leaders• Governing Board• Finance and Audit Committee• Executive Leadership Team• Faculty and Staff at locations College-wide• Community Members at three Learning Center locations

– Survey tool collected feedback from presentations– Presentations posted online to Fiscal Year 2018 Budget Calendar and

Documents• Numbers! – PCC’s Finance Newsletter

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Expenditure Limitation Projections

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Budget Scenarios• Scenario A: Delay Impacts for Now with Larger Tuition Increases

– Small to no reductions for 17-18 and 18-19. Plan for $15 mil reduction in 19-20– Continue to reduce via attrition – Mitigate cost increases and Expenditure Limitation impacts with larger tuition increases– No funding to implement Educational Master Plan or other strategic changes until 19-20– Large reduction pending due to Expenditure Limitation

• Scenario B: Rejuvenate the College– Reduce current operations by $5 mil per year in each of next 3 years– Identify programs for elimination and begin phasing out– Reduce infrastructure/staffing – Implement most of the first 5 years of the Educational Master Plan (EMP)– Rely on revenue bonds for some EMP projects

• Scenario C: Revolutionize the College– Reduce current operations by about $10 mil per year in each of next 3 years– Identify programs for elimination and begin phasing out– Eliminate at least one location– Significantly reduce infrastructure/staffing– Large and immediate investment in Educational Master Plan– Ensure future financial stability and ability to grow

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Revenues

http://www.jpacaz.org/index.asp

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FY 2018 Revenue Summary• Tuition and Fees

– $3.00 increase to in-state resident tuition, from $78.50 per unit to $81.50 per unit– New $75.00 per/semester fee for international students

• Property Tax– Primary

• Growth of 1.43%, $1.5 million• Max Levy Increase of 3.01%, $3.3 million

– Secondary• $0.00 – No Debt!

• State-Based Funding– $0.00 - Operating State Aid– $0.00 - STEM and Workforce programs State Aid

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Primary Property Tax Levy Detail – Proposed

FY 2017FY 2018

Levy NeutralFY 2018

Proposed

Net Taxable Value Current Year ($100s) $ 78,166,998 $ 80,749,577 $ 80,749,577

Overall Change in Valuation 2.58% 3.30% 3.30%

Change from New Property 1.89% 1.43% 1.43%

Estimated Primary Tax Rate Authorization (per $100 net assessed valuation)

$ 1.3733 $ 1.3484 $ 1.3890

Primary Tax Levy $ 107,346,737 $ 108,882,730 $ 112,161,162

Change from previous fiscal year $ 1,535,993 $ 4,814,425

Truth in Taxation Levy Increase $ 3,278,432

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PCC Primary, Secondary, and Combined Tax Rates (Fiscal Years 2000-2018*)

* proposed

FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018*

Primary Property Tax Rate 1.1626 1.1709 1.1455 1.1530 1.1358 1.1143 1.0930 1.0570 1.0191 0.9787 0.9356 0.9755 1.0846 1.1484 1.2746 1.3344 1.3689 1.3733 1.3890

Secondary Property Tax Rate 0.2070 0.3865 0.4015 0.3803 0.3526 0.2285 0.2184 0.1945 0.1654 0.1502 0.1414 0.1093 0.0248 0.0257 0.0187 0.0000 0.0000 0.0000 0.0000

Combined Primary + Secondary Tax Rates 1.3696 1.5574 1.5470 1.5333 1.4884 1.3428 1.3114 1.2515 1.1845 1.1289 1.0770 1.0848 1.1094 1.1741 1.2933 1.3344 1.3689 1.3733 1.3890

1.3696Proposed 1.3890*

0.0000

0.2500

0.5000

0.7500

1.0000

1.2500

1.5000

1.7500

Levy Neutral1.3484

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Fiscal Year 2017 Tax Rates for All Arizona CCs (Rates Per $100 Net Assessed Valuation. Combined rates are shown)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

Graham Pinal Yuma/LaPaz

Cochise Yavapai Navajo Maricopa Pima Mohave Coconino

Primary Tax Rate Secondary Tax Rate

$3.0768

$2.6269 $2.6255

$2.2860$2.0561

$1.7884

$1.4651 $1.3733 $1.3288

$0.6214

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Truth in Taxation

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Budget Comparison – Adopted Fiscal Year 2017 vs. Proposed Fiscal Year 2018Adopted Fiscal Year 2017 Budget Revenues -$247.8 million (all funds, in $ millions)

Proposed Fiscal Year 2018 Budget Revenues -$246.1 million (all funds, in $ millions)

Property Tax Revenue$112.146%Grants, Contracts, Financial Aid

$53.222%

Tuition & Fees$48.219%

College Equity$27.8

11%

Other Revenue$4.82%

Property Tax Revenue

$107.343%

Grants, Contracts, Financial Aid$58.023%

Tuition & Fees$48.220%

College Equity$28.8

12%

Other Revenue$5.52%

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FY 2008-2018* Budget Revenue and Fund Balance by Source (all funds, in $ thousands; *Proposed)

$-

$25,000

$50,000

$75,000

$100,000

$125,000

$150,000

$175,000

$200,000

$225,000

$250,000

$275,000

$300,000

$325,000

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

College Equity

Grants, Contracts & Financial Aid

Other Revenue

Tuition and Fees

Property Tax Levy

State Aid (Operations + Capital)

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FY 2017-2018 Proposed General Fund Revenues by Source (in $ millions)

FY17Proposed

FY18 Change

Property Tax Levy $ 107.3 $ 112.1 $ 4.8

Tuition and Fees 40.4 40.4 0.0

Other Revenue 0.6 0.6 0.0

College Equity 5.6 5.3 -0.3

Total Resources $ 153.9 $ 158.4 $ 4.5Property Tax Levy

70.8%

Tuition and Fees25.5%

Other Revenue

0.4%

College Equity

3.3%

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Budgeted General Fund Revenue Sources as a percent of Total Revenue (Excludes College Equity like use of fund balance / reserves / savings to more clearly show revenue from external sources)

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018Property Tax 59% 61% 62% 60% 62% 62% 64% 66% 69% 72% 73%Tuition 24% 24% 24% 28% 32% 32% 31% 29% 31% 27% 26%State Aid 15% 13% 13% 11% 5% 5% 5% 4% 0% 0% 0%Other 2% 1% 1% 0% 1% 1% 1% 1% 0% 0% 0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

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Expenditures

http://www.jpacaz.org/index.asp

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FY 2018 Budget Expenditure Priorities• Employee Benefits: No increase or decrease expected• Contractual Obligations: +$ 1.4 million• Wages: Proposed 3.0% increase to Salary Pools• Debt Service

– Lease Financing: IT and various capital project equipment– Implementation of the Educational and Facilities Master Plans:

$45.0 million in revenue bonds ($3.6 million debt service)• Operational/Position Reductions

– Closure of Existing Vacant Positions: $6.3 million

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Vacant Positions as of March 2017 (General Fund)

Budgeted FTE

Filled FTE

Vacant FTE

Administrators 48 41 7

Faculty 355 307 48

Staff 886.8 753 133.8

Total 1289.8 1101 188.8

Administrators3.2%

Faculty23.8%

Staff58.4%

Vacant14.6%

Currently Filled and Vacant Positions (Total FTE)

Administrators Faculty Staff Vacant

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Budgeted PCC Staffing Levels 2007-2018 (General Fund)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017* 2018**Staff 779.8 785.1 791.3 815.2 785.1 796.8 811.0 835.7 858.6 889.6 886.8 756.8Faculty 378.0 380.0 380.0 381.0 383.0 387.0 387.0 370.0 373.0 373.0 355.0 345.0Administrators 51.0 57.0 57.0 49.5 50.5 49.5 51.5 51.0 51.0 54.0 48.0 46.0

-

200

400

600

800

1,000

1,200

1,400

Staf

fing

Notes: * Number of positions funded as of December 31, 2016.** Projected FY 2018 positions.- All figures are budgeted full-time equivalent regular positions in the General Fund.

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PCC Staff Positions(Filled or Vacant, General Fund only)

Note: As of April 2017, there were 886.8 total staff positions in the General Fund, including 130 open/vacant positions - 14.7%

Budgeted Vacant Positions, -60

Eliminated Positions, -40

Critical Positions, 30

Filled Staff Positions, 756.8

-100

0

100

200

300

400

500

600

700

800

900

FY 2018

Num

ber o

f Pos

ition

s

All Staff Positions,

886.8

-100

0

100

200

300

400

500

600

700

800

900

FY 2017

Num

ber o

f Pos

ition

s

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General Fund Expenditures (in $ millions)

FY 2017 Proposed FY 2018 Change

Administrators $ 6.2 $ 6.2 $ 0.0

Faculty 22.8 22.7 -0.1

Staff-Classified 43.3 40.1 -3.2

Other Compensation 4.9 3.7 -1.2

Fringe 25.9 24.6 -1.3

Subtotal 103.1 97.3 -5.8

Operations 26.5 26.6 0.1

Capital 0.5 0.5 0.0

Transfers (net)Designated FundDebt ServiceCapitalMiscellaneous

18.613.10.72.91.9

27.113.15.36.42.3

8.50.04.63.50.4

Contingency / Reserves 5.2 6.9 1.7

Total $ 153.9 $ 158.4 $ 4.5

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Designated Fund Summary (by program, in $ millions)

FY 2017 Proposed FY 2018 Change

Professional Development $ 0.8 $ 0.9 $ 0.1

Athletics 2.2 2.1 -0.1

Course Fees 1.8 2.3 0.5

Academic Programs 14.2 13.6 -0.6

Center for Training & Development 2.9 2.7 -0.2

Contract Training 0.9 2.1 1.2

Prison Program 0.6 0.7 0.1

Public Safety Institute 0.8 0.7 -0.1

Community Education 0.4 0.5 0.1

Other 1.1 1.5 0.4

Contingency / Reserves 1.4 1.4 0.0

Transfers -13.1 -13.1 0.0

Total $ 14.0 $ 15.4 $ 1.4

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Auxiliary Fund Summary (in $ millions)

FY 2017 Proposed FY 2018 Change

Food Service 0.2 0.1 $ -0.1

Business Relations 0.2 0.2 0.0

Rentals 0.0 0.2 0.2

Transfers 0.7 0.7 0.0

Contingency / Reserves and Other 1.4 1.1 -0.3

Total $ 2.5 $ 2.3 $ -0.2

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Restricted Fund Summary (in $ millions)

FY 2017 Proposed FY 2018 Change

Student Financial Aid $ 37.2 $ 33.4 $ -3.8

Workforce Development (Prop 301) 2.4 2.0 -0.4

Grants

Health Profession Opportunity Grant (HPOG) 3.0 3.0 0.0

Adult Education 3.7 3.9 0.2

Title III – Improving graduation rates, particularly STEM 0.4 1.1 0.7

Title V – Developing Hispanic Serving Institutions 1.2 1.7 0.5

TRIO (Upward Bound, Student Support Services, Talent Search) 2.1 2.9 0.8

Other 1.7 2.0 0.3

New Grants 6.6 3.0 -3.6

Total $ 58.3 $ 53.0 $ -5.3

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Capital Fund Summary (in $ millions)

FY 2017 Proposed FY 2018 Change

Budget Year Projects

General Capital Projects $ 1.9 $ 4.7 $ 2.8

Technology Fee Projects 0.6 1.4 0.8

Proposition 301 Projects 2.8 1.6 -1.2

Contract/Auxiliary Projects 0.5 0.0 -0.5

Total Budget Year Projects $ 5.8 $ 7.7 $ 1.9

Carry Forward Projects 16.0 15.0 -1.0

Contingency / Reserves 2.2 2.1 -0.1

Total All Projects $ 24.0 $ 24.8 $ 0.8

Less Transfers from Other Funds

Proposition 301 Funding -2.2 -1.6 0.6

General Fund Transfer -2.9 -6.4 -3.5

Other Funds Support (including grants) 0.2 0.2 0.0

Net Budget $ 19.1 $ 17.0 $ -2.1

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FY 2017-2018 Proposed Budget By Fund,$ 246.1 million (all funds, in $ millions)

General Fund$158.4

64%

Restricted Fund$53.022%

Capital Fund$17.0

7%

Designated Fund$15.4

6%Auxiliary Fund

$2.31%

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FY 2017-2018 Proposed Budget Expenditures, $246.1 million (all funds, in $ millions)

Administrative Personnel, $6.5, 3%

Faculty, $22.9, 9%

Additional Compensation-Faculty, $1.5, 1%

Adjunct Faculty, $11.7, 5%

Classified Staff, $50.4, 21%

Other Compensation, $5.0, 2%

Student Employment, $0.5, 0%

Fringe Benefits, $30.2, 12%Travel, $3.4, 1%Communications and Utilities, $6.0, 2%

Contractual Services, $18.0, 7%

Supplies and Materials, $9.3, 4%

Current Fixed Charges, $1.6, 1%

Other Expenditures, $6.9, 3%

Student Financial Aid, $34.6, 14%

Capital Equipment, $23.1, 9%

Contingency and Reserves, $14.5, 6%

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FY 2017-2018 Proposed General Fund Expenditures Budget, $ 158.4 million (in $ millions)

Administrators$6.24%

Faculty$22.715%

Staff-Classified$40.125%

Other Compensation$3.72%

Fringe Benefits$24.6

16%

Operations$26.6

17%

Contingency / Reserves$6.94%

Capital$0.50%

Transfers$27.117%

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Next Steps• Governing Board to endorse the Fiscal Year 2018 Proposed Budget as

presented or make recommendations for tax levy and rate, estimated debt, and/or salary pool increases

• June 2017 Public Hearing and Special Board Meeting to adopt budget and set tax levies and rates

Chancellor’s Recommendation

Finance and Audit Committee’s Recommendation

Governing Board’s Recommendation

Property Taxes (Primary Tax Rate)

3.01% Increase to Levy Max 3.01% Increase to Levy Max

Salary 3% Increase to Salary Pools 2% FY18 Stipend (to be divided across the total number of annual

pay periods for each employee)

Estimated Debt $45.0 million -

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Questions?