Mt. San Jacinto Community College District

1. Mt. San Jacinto Community College District 2006-2007 Adopted Budget September 14, 2006 Board of Trustees Eugene V. Kadow Dorothy J. McGargill Ann Motte Gwendolyn Schlange Joan F. Sparkman Superintendent/President Mark J. Zacovic, Ph. D.

2. Mt. San Jacinto College 2006-07 Adopted Budget PRESENTATION OUTLINE • Economic Profile • 2006-07 State Budget for Community Colleges • MSJC Budget Planning Assumptions • Impact of State Budget, Trailer Bills • Enrollment trends • Major funding issues • Adopted Budget 2006-07 Recommendation Business Services, September 14, 2006

3. Mt. San Jacinto College 2006-07 Adopted Budget ECONOMIC PROFILE • Federal • Rapid growth is slowing from previous pace • Housing market continues to cool • Consumer spending and business investments have decelerated • Demand for labor moderated - hiring pace slowed • Price inflation in energy, shelter costs • U.S. International trade deficit widened • The impact of Federal Reserve Board interest rate increases is reflected in the slowdown in economic growth. Business Services, September 14, 2006

4. Mt. San Jacinto College 2006-07 Adopted Budget ECONOMIC PROFILE • State • At June 30, 2006, California reported an overall gain in jobs with unemployment down slightly. • Residential and commercial construction continued to slow from prior year increases. • State revenue collections exceeded budget projections in fiscal 2005-06. • Last year, the State economy continued to grow but at a slower pace than the previous year. State budget assumptions have held up but are highly vulnerable. Forecasts for fiscal 2007 and 2008 project continued deceleration. Business Services, September 14, 2006

5. Mt. San Jacinto College 2006-07 Adopted Budget ECONOMIC PROFILE • Local • Inland Empire economic growth was strong in fiscal 2006 but below 2004 and 2005 rates. • Population composition has changed since 2004 and reflects growing diversity. • Substantial differences in educational attainment levels have resulted with the change in population. • New and existing home prices show modest increases with sales volume off. • Projection for the Inland Empire housing markets suggest sales volume will continue to slow and price increases will be moderate. Business Services, September 14, 2006

6. Mt. San Jacinto College 2006-07 Adopted Budget STATE BUDGET FOR CALIFORNIA COMMUNITY COLLEGES • The California Budget Bill signed on June 30, 2006 continues to recognize the extraordinary role of the Community Colleges in addressing the economic well-being of California. • Increase to Proposition 98 Revenues • AB1802, the education trailer bill, provides for a fee reduction from the current $26 per credit unit to $20 per credit unit effective Spring 2007. • SB361 (Scott), which has been unanimously approved by the legislature, awaits the Governor’s approval and provides for changes to the existing funding formula for the system. Business Services, September 14, 2006

7. Mt. San Jacinto College 2006-07 Adopted Budget STATE BUDGET FOR CALIFORNIA COMMUNITY COLLEGES • On-going Revenue: • 5.92% Cost-of-living Adjustment (COLA) • 2% Enrollment Growth • $159M Equalization • $30M Non-credit Enhancement • $48M Categorical Restoration • $37.5M Economic/Workforce Development/ Career Technical Training • Total on-going augmentation to the system is approximately $666 million. Business Services, September 14, 2006

8. Mt. San Jacinto College 2006-07 Adopted Budget STATE BUDGET FOR CALIFORNIA COMMUNITY COLLEGES • One-time Revenue: (AB1802) • $94.4M Instructional Equipment/Facilities • $40M Career Tech Equipment & Facilities • $100M General Purpose Block Grant • $40M Reimbursement of State Mandates • $3M Nursing Placement/Faculty Stipends • $30.7M Basic Skills Re-appropriation • $ 1.4M Internet Services to Centers • One-time appropriations are a result of AB1802 and also includes the fee reduction provision. Business Services, September 14, 2006

9. Mt. San Jacinto College 2006-07 Adopted Budget IMPACT OF STATE BUDGET ACTIONS CCCMSJC Cost of Living Adjust (COLA) 5.92% $ 294,387,000 $ 2,139,811 Student Access (Growth) 2% 97,508,000 1,570,515 Equalization 159,438,000 2,885,719 Non-credit Enhancement 30,000,000 TBD Categorical Restoration 48,000,000 TBD Economic/Workforce Dev/Career Tech 37,500,000 TBD The 2006-07 State budget includes line item on-going appropriations detailed above with direct fiscal impact on MSJC. The allocation mechanism for certain budget line items have not been disclosed and are to be determined (TBD) with trailer bill language or system office notification. These will be treated as budget modifications during the fiscal year. Business Services, September 14, 2006

10. Mt. San Jacinto College 2006-07 Adopted Budget IMPACT OF STATE BUDGET ACTIONS CCCMSJC Instructional Equipment Trailer Bill $ 47,200,000 $ 365,925 Scheduled Maintenance Trailer Bill 47,200,000 365,925 Career Tech Trailer Bill 40,000,000 309,954 General Purpose Block Grant 100,000,000 606,416 Basic Skills Re-appropriation 30,700,000 225,770 General Purpose Re-appropriation 22,300,000 174,054 Transfer and Articulation 545,000 5,000 The 2006-07 State budget includes one-time appropriations detailed above with direct fiscal impact on MSJC. These allocations are the result of AB1802 as signed by the Governor. The bill provides one-time appropriation of unexpended growth funds allocated in previous budget acts. Business Services, September 14, 2006

11. BUDGETING PROCESS PLANNING ASSUMPTIONS Mt. San Jacinto College 2006-07 Adopted Budget • Fiscal Stability is Highest Priority • Prudent Reserve of 5.83%, or $2.7 million • Resource Allocation Linked to Formal Planning: • Education Plan, Master Plan, Facility Master Plan • Budget Committee Recommendations • Compliance to 50% Law and Full-time Faculty Obligation • Hire 7 FT faculty; 2 FT classified support staff • Fund for enrollment growth and efficiency • Increase materials, service and equipment budgets by five percent • Provide technology upgrades for stability, quality • Continue with physical plant maintenance and repair projects for deteriorating infrastructure systems Business Services, September 14, 2006

12. Mt. San Jacinto College 2006-07 Adopted Budget ENROLLMENT – STATEWIDE SUMMARY • 2005-06 at P2 – a difficult year: • All districts were funded to actual enrollment • No unfunded enrollment in the System • 39 Districts received stability • 13 of 39 Districts were in the second year of decline • Source: Chancellor’s Office Budget Workshop 7/31/2006 Business Services, September 14, 2006

13. Mt. San Jacinto College 2006-07 Adopted Budget ENROLLMENT TREND • At P2, MSJC credit enrollment growth was funded at 1.6%. The 320 Attendance Report filed in July shows credit enrollment growth at 2.6%. (Actual certification will be received in February 2007.) • Chancellor’s Office 2006-07 calculated growth rate for MSJC is 6.4%. • MSJC Fall 2006 credit enrollments are up 10 percent at census compared to Fall 2005. • The schedule for Spring and Summer 2007 provides the access needed to achieve target enrollments. Business Services, September 14, 2006

14. Mt. San Jacinto College District Ten-Year Revenue Analysis 8,960 8,453 8,245 7,630 7,478 6,959 6,537 5,998 5,294 4,820 COLA 2.97 2.26 1 .41 4.17 3.87 2.00 0 2.41 4.23 5.92 FTES % of Increase 12.73 9.82 13.31 8.99 6.46 7.46 2.03 8.06 2.52 6.00 State FTES % of Increase 2.98 3.48 3.85 3.81 2.90 3.88 .71 3.67 -1.39 2.00 *Enrollment Target = 8,960 FTES Dollar Values are in Millions Credit Full Time Equivalent Student (FTES) Business Services September 14, 2006

15. Mt. San Jacinto College Ten-Year FTES Comparison Mt. San Jacinto College 2006-07 Adopted Budget ENROLLMENT TREND Business Services, September 14, 2006

16. Mt. San Jacinto College 2006-07 Adopted Budget MAJOR FUNDING ISSUES • Menifee Valley Technology Center will require District matching funds greater than projected: • State Funds $ 8,785,000 • District match 3,625,926 • The bid results exceeded the construction budget. The Adopted Budget includes $1.8 million District match. • Reserves for GASB 43/45 and GASB 16 are reflected in the proposed adopted budget. Full reserve is required in fiscal 2007-08. • Technology upgrade, repair and expansion is required to provide stability and quality for students and staff. • Maintaining the physical plant will require resources. Many systems continue to fail and require replacement or repair. Business Services, September 14, 2006

17. Mt. San Jacinto College 2006-07 Adopted Budget MAJOR FUNDING ISSUES State Budget Act Augmentations: On-going revenue $ 6,751,313 One-time revenue 2,053,000 Total State Augmentations $ 8,804,313* District Budget Requests Certificated, Classified Positions $ 1,249,644* Technology Center Match (100%) 3,625,926 Emergency Repairs 670,000* Technology Upgrade, Support 730,000* Budget Change Proposals 7,939,000 Total District Requests $ 14,214,570 * Included in the Adopted Budget. Business Services, September 14, 2006

18. Mt. San Jacinto College 2006-07 Adopted Budget MAJOR FUNDING ISSUES As in every cycle, the budget requests exceed resources available. The budget prioritization process will determine final distribution of budget augmentations. Formal planning documents such as the Master Plan, Facility Master Plan, Education Plan and program review will be used to determine funded requests. Safety, program stability and compliance will be determining factors for final allocations. Also, Chancellor’s Office expenditure criteria will be followed for all appropriations. Business Services, September 14, 2006

19. Mt. San Jacinto College 2006-07 Adopted Budget APPROPRIATIONS CAPITAL OUTLAY • MVC Technology Center Match $ 1,800,000 • SJC Cooling Tower Replacement 275,000 • SJC Electrical Upgrade 70,000 • MVC Boiler Replacement 325,000 • Sched. Maint. & Match Carryover 24,242 • Hazardous Materials Removal 117,406 • Facility Improvements 206,000 • Xerox Lease 550,000 • Equipment Replacement 50,000 • Lease Revenue Bond Pmt 467,498 • MVC Modular Lease 30,709 Business Services, September 14, 2006

20. Mt. San Jacinto College 2006-07 Adopted Budget APPROPRIATIONS CAPITAL OUTLAY RESERVE Funds on deposit with State Treasurer for land acquisition, MVC: $1,789,000 • The Board authorized funds on deposit with the State Treasurer for land acquisition, MVC. • These funds are held with the State Treasurer. • Accounting rules require disclosure of these funds on District statements. For clarity, these funds will be accounted for in one fund and in one line item. • Although disclosed on District statements, funds are physically held with State Treasurer. Business Services, September 14, 2006

21. Mt. San Jacinto College 2006-07 Adopted Budget LEASE REVENUE BOND LEASE REVENUE BOND $8,000,000 • First Draw (April 27, 2004) 2,975,072 • Second Draw (June 23, 2004) 600,089 • Total 3,575,161 • Interest Earned (thru June 30, 2006) 141,891 • First Payment FY0304 (Funds 12 & 41) 467,498 • Second Payment FY0405 (Funds 12 & 41)462,509 • Third Payment FY0506 (Fund 41 only) 452,377 • Fourth Payment FY0607 (Fund 41 only) 467,498 Business Services, September 14, 2006

22. MSJC 2006-07 Adopted BudgetREVENUE AND EXPENSE SUMMARY-ALL FUNDS Business Services, September 14, 2006

23. Mt. San Jacinto College 2006-07 Adopted Budget RECOMMENDATION • The Adopted Budget for fiscal year 2006-07 is recommended with the following: • Enrollment target set at 8,960 credit and • 269 non-credit FTES, or 6% growth • Adopted Budget based on 8,700 credit and • 262 non-credit FTES, or 3% growth • Budget Base/Revenue Limit = $42.6 million • Compliance with statutory requirements of the 50 Percent Law and FT Faculty Obligation • 5.83% Contingency & Reserve = $2,700,000 Business Services, September 14, 2006

24. Mt. San Jacinto College 2006-07 Adopted Budget QUESTIONS Business Services, September 14, 2006