OPERATING BUDGET FOR FY 2016-2017 Presented to Staff Council: May - - PowerPoint PPT Presentation

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OPERATING BUDGET FOR FY 2016-2017 Presented to Staff Council: May - - PowerPoint PPT Presentation

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OPERATING BUDGET FOR FY 2016-2017 Presented to Staff Council: May 10, 2016 1 AGENDA SMC Budget Realities Private Higher Education Environment Global, PACCON, and SMC Changes to Prior Budget Assumptions Major Budget

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OPERATING BUDGET FOR FY 2016-2017

Presented to Staff Council: May 10, 2016

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SLIDE 2
  • SMC Budget Realities
  • Private Higher Education Environment – Global,

PACCON, and SMC

  • Changes to Prior Budget Assumptions
  • Major Budget Assumptions, Projections, and Trends
  • Budget Stress Points
  • Questions

AGENDA

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SLIDE 3

REVENUE BUDGET REALITIES

  • Student Related Revenues (Net Tuition, Fees, and

Auxiliary Enterprises) Comprise 90% of Total Operating Revenue and Reflect the Award of $53.5 Million in College Funded Financial Aid ($47.2 million) and Athletic Grants-in-aid ($6.3 million)

  • Endowment Income (6%) and Unrestricted Gifts

(2%) Comprise 8% of Total Operating Revenue

  • All Other Revenue Sources Comprise 2% of Total

Operating Revenue

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SLIDE 4

EXPENSE BUDGET REALITIES

  • By Object of Expense, Salaries (50%) and Employee

Benefits (15%) Comprise 65% of Total Operating Expense with Non-Salary Expenses Comprising the Remaining 35%

  • By Functional Expense, Instruction (39%), Academic

Support (9%), Student Services (8%), Auxiliary Services (8%), and Athletics (6%) Comprise 70% of Total Operating Expense, with Administration (13%), Physical Plant (7%), Technology (4%), Debt Service (3%), and Other (2%) Comprising the Remaining 30% of Total Operating Expense

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HIGHER EDUCATION ENVIRONMENT - GLOBAL

  • Growing Public Concern Over Affordability, Student

Loan Debt Levels, Employability, and Funding

  • Continued Federal Oversight of Higher Education

Including President Obama’s College Score Card

  • Increased Transparency and Competition in Net

Tuition Pricing

  • Somewhat Stagnant Domestic Stock Valuations,

Increased Volatility in Global Financial Markets, and Very Slowly Rising Interest Rates

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SLIDE 6

HIGHER EDUCATION ENVIRONMENT - PACCON

  • PACCON Includes 29 Private West Coast

Comprehensive and Liberal Arts Institutions

  • Most Institutions Did Not Meet Some Aspect of Fall

2015 Enrollment and/or Financial Aid Targets with Graduate Programs Experiencing Flat or Down Enrollments; Law Schools Down up to 40%

  • Net Asset Growth Minimally Positive for FY 2015
  • Institutions Adjusting to No/Slow Revenue Growth

Environment with Emphasis on Reduction and/or Reallocation of Existing Resources

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HIGHER EDUCATION ENVIRONMENT - SMC

  • Higher than Projected 4-Year UG Graduation Rate

for Spring 2015

  • Lower than Budgeted Total Undergraduate and

Total Graduate Enrollments for Fall 2015

  • Higher than Budgeted New Undergraduates for Fall

2015, with Higher than Budgeted Financial Aid

  • In-State Enrollment Growth Projected for UC

System for Fall 2016 through Fall 2018

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HIGHER EDUCATION ENVIRONMENT - SMC

  • Freshmen and Transfer Apps./Deposits for Fall 2016

Trending Behind Fall 2015, with NTR Trending Higher

  • Vibrant SF Bay Area Economy with High Real Estate

Prices, Low Unemployment, and Increased Turnover

  • Increased Efforts to Reallocate and Reduce Operating

Expenses with Emphasis on Workforce Planning for Vacant Staff Positions

  • Strategic Plan Provides Guidance in Allocation and

Reallocation of Financial and Physical Resources

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CHANGES TO PRIOR FY 2016-2017 BUDGET ASSUMPTIONS FORMULATED IN JAN. 2015

  • Little Change in Total Fall 2016 Undergraduate

Enrollment (2,779 vs 2,784) and Lower Undergraduate Comprehensive Fee Increases (3.2% vs 3.7%)

  • Higher New Undergraduate Student Tuition Discount

Rate (40.0% vs 38.0%, but Lower than Current Year 43.6%) with Lower Net Tuition Revenue (NTR) Per New UG Student

  • Higher Net Income from Graduate and Professional

Programs ($8.6 million vs $8.3 million)

  • Use of Prior Year Funds ($1.0 million) as Offsets

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CHANGES TO PRIOR FY 2016-2017 BUDGET ASSUMPTIONS FORMULATED IN JAN. 2015

  • Lower Base Salary Increases (2.0% vs 2.5%)
  • Higher Levels of Faculty and Staff Salary Savings

($2.3 million vs. $1.3 million)

  • Lower Level of Increase in Employer Contribution to

Health Insurance (5% vs 6%)

  • Lower Strategic Initiative Funding ($0.9 million vs

$1.2 million)

  • Reductions in Non-Salary Expense ($1.5 million) and

Facility Renewal Expense ($2.7 million vs $3.9 million)

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SLIDE 12

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Graduate and Undergraduate Fall 10-Year Headcount Enrollment Trends Fall 2006 through Fall 2015

1461 1289 1309 1243 1284 1265 1354 1368 1319 1252 2699 2611 2514 2379 2621 2823 2853 2873 2778 2754 4160 3900 3823 3622 3905 4088 4207 4241 4097 4006 500 1000 1500 2000 2500 3000 3500 4000 4500 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Graduate and Professional Undergraduate Total

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Undergraduate Fall Headcount Enrollment 5 Yr. Trends and 5 Yr. Projections Fall 2011 through Fall 2020

648 623 626 581 653 635 635 635 635 635 199 203 175 181 181 175 175 175 175 175 2006 2047 1977 1992 1,926 1,969 1,995 2,037 2,089 2,128 2853 2873 2778 2754 2,760 2,779 2,805 2,847 2,899 2,938 500 1000 1500 2000 2500 3000 3500 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Enrollment-New Freshmen Enrollment - Transfer Enrollment-Returning Total Enrollment

Projected Fall Enrollment Actual Fall Enrollment

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SLIDE 16

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Undergraduate Net Tuition Revenue January Approved Budget vs Actual Fiscal Years Ended 2012-2015

$54,793,000 $63,686,000 $66,174,000 $69,246,000 $63,967,000 $67,203,000 $70,557,000 $70,187,000 50,000,000 55,000,000 60,000,000 65,000,000 70,000,000 75,000,000 2011-2012 2012-2013 2013-2014 2014-2015 Undergraduate January Budget (Net) Undergraduate Actual Revenue (Net)

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SLIDE 17

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Graduate Net Income Budget vs Actual Fiscal Years Ended Fiscal Years Ending 2012-2015

$6,215,000 $6,298,000 $6,834,000 $7,424,000 $6,455,106 $8,559,577 $8,205,796 $6,848,000 5000000 5500000 6000000 6500000 7000000 7500000 8000000 8500000 9000000 2011-2012 2012-2013 2013-2014 2014-2015 Graduate and Professional Projections Net Graduate and Professional Actuals - Net

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BUDGET STRESS POINTS

  • Eliminate Reliance on Prior Year Funds (Addressed
  • ver 3 years)
  • Provide Greater Net Income Margin to Buffer Future

Enrollment Related Variances (3 years)

  • Increase Funds for Renewal of Existing Facilities

(3 years)

  • Restore Full Funding for Strategic Plan Initiatives

(1 year)

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BUDGET STRESS POINTS

  • Reduce Faculty and Staff Salary Savings Targets

($0.3 million and $2.0 million reductions target – 1 to 4 years)

  • Moderate Increases in Net Income from Graduate and

Professional Programs (2 years)

  • Restore Non-Salary Operating Budget Levels

($1.5 million reduction target - not addressed)

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Questions?

May 10, 2016

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FY 2016-2017 OPERATING BUDGET PIE CHARTS

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OPERATING BUDGET REVENUES Fiscal Year Ended June 30, 2017 $131,213,000

22 Net Undergraduate Tuition and Fees 50.7% Auxiliary Enterprises 16.7% Endowment Income 5.9% Gift Revenue 1.6% Graduate and Professional Programs Revenue 23.2% Other 1.9%

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OPERATING BUDGET EXPENSES BY OBJECT Fiscal Year Ended June 30, 2017 $130,900,000

23 Faculty Salary 24.9% Staff Salary 25.1% Employee Benefits 15.2% Debt Service 3.0% Non-Salary Expenses 29.9% Depreciation Funding 0.6% Strategic Initiatives 0.6% Other Expenses 0.7%

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OPERATING BUDGET EXPENSES BY FUNCTION Fiscal Year Ended June 30, 2017 $130,900,000

24 Instruction 39.1% Academic Support 9.0% Information Technology 4.2% Administration 13.4% Student Services 7.5% Athletics 6.3% Auxiliary Services 8.2% Plant Renewal 0.6% Plant Operations 7.2% Debt Service 3.0% Strategic Initiatives 0.6% Other Expenses 0.7%