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Mott Community College Special Committee of The Whole June 11, 2012 College Finances Slide 2 2 STRATEGIC PLAN 7-0. Budget/Finance 7-1. Focus on controllable revenues and costs to sustain our current reputation and facilities and provide funding for strategic priorities 7-2. Establish short and long-term budget and finance priorities that provide a balanced approach to the needs of a learning organization with the flexibility to realign resources 7-3. Implement a comprehensive strategy to address the long-term deficit which enables us to continue to provide affordable high quality education A balanced approach _____________________________________________________________________ Slide 3 PRIOR YEAR BUDGET IMPACT 3 Slide 4 Prior Year Impact in Dollars 4 $8,128,656 Slide 5 Tuition Keeps Up with Lost Funding/Increase in Non-controllable costs for prior year 5 $54.61 $153.29 Slide 6 Prior Years Budget Balancing Steps 6 Slide 7 Prior Year Budget Cuts Decreased Hiring (Open Position Pool)$ 750,000 Cut funding to Reserves$1,150,000 Capital Funding Reduction$3,000,000 Debt Contribution$ 850,000 Cut Contingency $ 750,000 Total budgetary expenditure cuts$6,500,000 7 Slide 8 Prior Year Budget Cuts (continued) Total Budgetary Expenditure Cuts (from previous slide) $6,500,000 Prior Year Shortfall ($8,100,000) Shortfall Remaining ($1,600,000) Received from tuition increase 8 Slide 9 FUNDING SOURCES (2012-2013) State Aid Property Taxes -Operating -Debt Tuition 9 Slide 10 Trends in Funding Sources & Enrollment Slide 11 Trends in Funding Sources & Enrollment, Fiscal Year Equated Students (FYES) 11 Slide 12 State and Local Funding Does Not Keep Up With Enrollment 12 Slide 13 Projected Property Tax Funding FYE 2010 through FYE 2016 13 Slide 14 Percentage of Property Tax and State Aid of Total Funding 14 Slide 15 CURRENT YEAR BUDGET IMPACT 15 Slide 16 FYE 2013 Impact in Dollars 16 $5,795,000 Slide 17 Tuition Keeps Up with Lost Funding/Increase in Non-controllable costs for FYE 2013 17 $40.87 $148.92 Slide 18 Current Year Budget Balancing Steps 18 Slide 19 Current Year Budget Cuts Decreased Hiring (Open Position Pool)$ 350,000 Health Insurance Savings$ 600,000 State Aid Increase$ 637,000 Cut Reserve Funding$ 620,000 Capital Funding Reduction$1,060,000 Cut Contingency $ 900,000 Total budgetary expenditure cuts$4,167,000 Beginning shortfall ($5,795,000) Shortfall remaining ($1,628,000) Slide 20 THEN and NOW 20 State Aid Funding $15,344,107 State Aid Funding $14,383,600 Slide 21 What if Tuition Covered State Aid Losses? Add in Property tax loss = $325.48 Slide 22 Tuition and Financial Aid 22 Slide 23 THE AMERICAN OPPORTUNITY TAX CREDIT (AOTC) PELL for Most EVERYONE ELSE ? Slide 24 Pell American Opportunity Tax Credit (AOTC) Pell for Most Everyone Else Maximum Award$5,550$2,500 EnrollmentSliding Scale up to full-timeAt least Half Time Income LimitsExpected Family ContributionModified AGI< $80,000 Single < $160,000 MFJ Program of StudyDegree or Certificate-Accredited Institution Can be used forTuition, fees, books, equipment, supplies, leftover can be for living expenses Tuition, fees, books, equipment, supplies Length of Award6 years4 years Other EligibilityNot convicted of a felony drug offense Available Financial Aid (Pell and American Opportunity Tax Credit) Estimated - $14.3 Billion available annually for AOTC Slide 25 American Opportunity Tax Credit (AOTC) How did they get this? Slide 26 INTENT OF THE AMERICAN OPPORTUNITY TAX CREDIT That means reducing financial aid for 8 million students and leaving our community colleges without the resources they need to prepare our students for the jobs of the future. The Amelias, Maynards, Mahans..How about the Students? Slide 27 The Students Joe and Jane are 28 years old They are married and live in Genesee County They have a 3-year old daughter, Mary Slide 28 More about Joe and Jane Joe went into construction right out of high school but unfortunately has been laid off more than employed for the past 4 years Jane is a paralegal, attending MCC at nights working on 3 + 1 transfer program Slide 29 Joe and Jane in 2011 This was an especially rough year for the Students Joe was laid off most of the year and and had to collect nearly $11,000 in unemployment benefits $11K = almost 1/3 of their Household Income Slide 30 Financial Aid Jane applied for a Pell Grant at MCC Unfortunately she was ineligible due in part to the fact that the EFC Formula considered their family earnings and Adjusted Gross Income of $39,787 too high for a family of 3 Fortunately, MCC offered a payment plan that helped tremendously Pell Grant Slide 31 Tax Time March 2012 In March, 2102, the Students filed their tax return Due to their income level and a new Higher Education Tax credit, the Students were delighted to receive a refund of $2,178 for their tuition Net Tuition Cost for Full Time for 1 Year at MCC = $535 Comparable to Tuition and Fees in 1980-81 or $21/contact hour Slide 32 More in 2012 Joe and Jane were advised by their CPA That Jane should reduce her federal withholdings to get more money throughout the year instead of waiting until tax time The Students were worried since Joe was back to work, their income would be too high. Their CPA informed them that the income limits were $160,000 MFJ and $80,000 Single Reduce withholdings CPA Slide 33 EXPANDED BENEFIT OF A REFUNDABLE CREDIT Tax Year 2011 Students Total Tax Liability equaled $1,658 They had Paid in (withheld from wages) $2,699 Refund without any credits would be $1,041 But Wait They were refunded with the AOTC $3,219 Only the Hope Credit? The refund would have been $2,348 Or a Federal Financial Aid Award of $871 Slide 34 More in 2012 Tax Year 2012 CPA calculated that tuition/fee amounts = $2,957 for 24 contact hours Higher Education Refund (from improved tax credit) = $2,239 Net tuition/fee for full-time = $718 or $29/contact hour or 1983-1984 rates Slide 35 Total tuition/fees increase Annual Amount $ Increase AOTC Refundable Credit Year: 2011-2012 12 Contact Hours (PT)137.66634.79 24 Contact Hours (FT)256.60895.78 30 Contact Hours (FT)316.07964.33 Tuition Increases and Amount Refunded from the AOTC Slide 36 BUDGET SHORTFALL 2012-2013 Remaining Shortfall $ 1,628,000 Tuition To Cover $9.18/contact hour Slide 37 Tuition Increases and Amount Refunded from the AOTC $ Increase AOTC Refundable Credit 24 Hours Total tuition/fees increase 2008-2009 35.10 (826.32) 2009-2010 97.32 (836.05) 2010-2011340.73 (870.12) 2011-2012256.60 (895.78) 729.74(3,428.28) (2,698.54) Slide 38 (2,782.79) $ Increase AOTC Refundable Credit 30 Hours Total tuition/fees increase 2008-2009 43.44 (880.05) 2009-2010 120.42 (892.09) 2010-2011406.30 (932.72) 2011-2012316.07 (964.33) 886.22(3,669.19) Tuition Increases and Amount Refunded from the AOTC Slide 39 What Have We Done Regarding Controlling/Cutting Costs? 39 Slide 40 Expenditure Reductions 1)Energy Conservation Project - Utility costs averaged 8.2% in 2003, Now they are 3.1% 2)Hold on vacant positions Average savings of $750K per year 3)Change in timing of custodial shift Savings of approximately $170K per year 4)Eliminating and restructuring food service Was losing approximately $100K per year Now generating $48K per year in revenues 40 Slide 41 Expenditure Reductions 5)Utility Reduction Analyst Project Resulted in $720K savings between 2004-2010 on Telecommunications/IT, Water, and Waste 6)Employee Contract Bargaining Employees agreed to pay freezes with incremental increases over 9 years at 1.35% Industry average is 2.8% Savings of $460K per year 7)Course Section Efficiency Maximizing section seat count before adding new sections 8)Discretionary budget cuts Average savings of $400K per year 41 Slide 42 Expenditure Reductions 9)Reduction of ORP (optional retirement plan) costs Average annual savings of $400K 10)Combining Deans position Fine Arts and Social Science combined saving $168K per year 12)Outsourcing custodial and grounds work at sites Savings of approx. $350K per year 13)Health Insurance changes to coverage and plans Savings $550K 14)New print shop lease Savings of $200,000 per year 15)New Auditors Savings of $60,580 over five years 42 Slide 43 A Comparison to 7 Other Michigan Peer Community Colleges Based on 2010 2011 ACS Data Slide 44 Slide 45 MCC is 4 th lowest in Total Revenue Slide 46 MCC is 3 rd Lowest in Millage Rate, and has the Largest Property Tax Decline Slide 47 Slide 48 48 Slide 49 Slide 50 50 Slide 51 Tuition & Fees: Local Comparison CollegeYearly Tuition & Fees Mott CC 3,329 Saginaw Valley University 7,308 Eastern Michigan University8,377 Oakland University 9,285 Baker College - Flint 9,840 Ferris State University 9,930 University of Michigan - Flint 10,097 Central Michigan University 10,380 Michigan State University11,722 Davenport University11,814 University of Michigan - Ann Arbor 13,461 ITT Technical of Flint25,064 Kettering University 29,116 Cost as based on in district/state rates from the Colleges web sites MCCs annual cost is approximately 46% of that of the next most affordable college/university in our area. 51 Slide 52 Tuition & Fees: Community College Comparison CollegeYearly Tuition & Fees Mott CC (In-District)$3,229 Wayne County CC$3,310 Oakland CC$3,457 Macomb CC$3,760 Schoolcraft CC$3,910 Delta CC$3,977 Washtenaw CC$4,140 Lansing CC$4,300 Henry Ford CC$4,402 St. Clair CC$5,663 Costs based on published out of district rates for other Community Colleges for 30 Credit/Contact hours 52 Slide 53 COMPARISON PRIOR YEAR/CURRENT YEAR 53 20122013 Slide 54 Reserve Requirements 54 In millions Still need $757K Still need $1 mil Still need $92K Adequately funded Slide 55 Current Year Budget Balancing Steps 55 Slide 56 Current Year Budget Cuts Decreased Hiring (Open Position Pool)$ 350,000 Health Insurance Savings$ 600,000 State Aid Increase$ 637,000 Cut Reserve Funding$ 620,000 Capital Funding Reduction$1,060,000 Cut Contingency $ 900,000 Total budgetary expenditure cuts$4,167,000 Beginning shortfall ($5,795,000) Shortfall remaining ($1,628,000) Slide 57 FEDERAL FINANCIAL ASSISTANCE PELL GRANTS 57 Slide 58 Increased Five-Fold in Ten Years Slide 59 Pell Award & Cost of Tuition Mott Community College In-District (Published 10/11) Saginaw Valley State University In-State (Published 10/11) Delta CC Out of District Rate Pell Awarded$5,550 Tuition & Fees (30 contact hours) $3,535$7,815$4,510 Books & Supplies$1,000 Difference$1,015-$3,265$ 40 Student Receives Remaining Balance Student Needs Unmet Student Receives Remaining Balance Slide 60 Pell Distribution 11/12 Awarded Educational Tuition & Fees Educational Books & Supplies Charges Non- Educational Govt. Refund $31,013,885 $21,128,548$4,493,632$5,391,705 Sample of Approx. 9,700 Students Slide 61 COMMENTS/QUESTIONS? 61