Victor Valley Community College District

2010-2011 Budget Workshop

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Agenda

California BudgetDistrict Trends and Analysis2010/11 Budget Assumptions 5-Year Budget PlanBudget Options - Discussion

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California Budget

• Community College League of California (CCLC) Projects:• 2010-11: expect flat budget• 2011-12: return of COLA / Growth • 2012-13: COLA/Growth

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Legislative Analyst Office (LAO) Recommendations:

• Raise student fees to $40/unit

• Reject the Governor’s proposal to implement a negative COLA (-0.38%) and would use the increase in fees to fund COLA.

• LAO believes it is not realistic to expect $6.9 billion in federal relief. If Federal relief does not materialize, the Governor’s plan proposes to trigger certain revenue increases and expenditure reductions.

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REVENUE AND EXPENDITURE COMPARISON BY FISCAL YEAR

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IRREVOCABLE TRUSTYear Investment Int. Rate Int. Earned Pay-Go Difference

1 $ 6,500,000 12.0% $ 780,000 $ 345,000 $ 435,000 2 $ 6,935,000 5.5% $ 381,425 $ 365,000 $ 16,425 3 $ 6,951,425 5.5% $ 382,328 $ 365,000 $ 17,328 4 $ 6,968,753 5.5% $ 383,281 $ 365,000 $ 18,281 5 $ 6,987,035 5.5% $ 384,287 $ 365,000 $ 19,287 6 $ 7,006,322 5.5% $ 385,348 $ 365,000 $ 20,348 7 $ 7,026,669 5.5% $ 386,467 $ 365,000 $ 21,467 8 $ 7,048,136 5.5% $ 387,647 $ 365,000 $ 22,647 9 $ 7,070,784 5.5% $ 388,893 $ 365,000 $ 23,893

10 $ 7,094,677 5.5% $ 390,207 $ 365,000 $ 25,207 11 $ 7,119,884 5.5% $ 391,594 $ 365,000 $ 26,594 12 $ 7,146,478 5.5% $ 393,056 $ 390,000 $ 3,056 13 $ 7,149,534 5.5% $ 393,224 $ 390,000 $ 3,224 14 $ 7,152,758 5.5% $ 393,402 $ 390,000 $ 3,402 15 $ 7,156,160 5.5% $ 393,589 $ 390,000 $ 3,589 16 $ 7,159,749 5.5% $ 393,786 $ 390,000 $ 3,786 17 $ 7,163,535 5.5% $ 393,994 $ 390,000 $ 3,994 18 $ 7,167,529 5.5% $ 394,214 $ 390,000 $ 4,214 19 $ 7,171,744 5.5% $ 394,446 $ 390,000 $ 4,446 20 $ 7,176,189 5.5% $ 394,690 $ 390,000 $ 4,690 21 $ 7,180,880 5.5% $ 394,948 $ 390,000 $ 4,948 22 $ 7,185,828 5.5% $ 395,221 $ 390,000 $ 5,221 23 $ 7,191,049 5.5% $ 395,508 $ 390,000 $ 5,508 24 $ 7,196,557 5.5% $ 395,811 $ 390,000 $ 5,811 25 $ 7,202,367 5.5% $ 396,130 $ 390,000 $ 6,130 26 $ 7,208,497 5.5% $ 396,467 $ 390,000 $ 6,467 27 $ 7,214,965 5.5% $ 396,823 $ 390,000 $ 6,823 28 $ 7,221,788 5.5% $ 397,198 $ 390,000 $ 7,198 29 $ 7,228,986 5.5% $ 397,594 $ 390,000 $ 7,594 30 $ 7,236,580 5.5% $ 398,012 $ 390,000 $ 8,012

$ 744,592

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EXPENSE SAVINGS(1000's) Academic Salaries

1 SERP #2 - Salary savings from offering Supplemental Early Retirement Program 67,433$

(2000's) Classified Salaries1 SERP #2 - Salary savings from offering Supplemental Early Retirement Program 307,192$

(3000's) Employee Benefits1 SERP #2 - Benefit savings from offering Supplemental Early Retirement Program 87,875$ 2 OPEB Funding of Trust - Savings from not having to pay annual premium 345,000$

(5000's) Services & Operations 1 TRAVEL - Budgets will be allocated to VPs only. Requested travel must be approved by 60,000$

VP and, if approved, will be transferred into department budget2 UTILITIES - Agreement between VVC and Telepacific Comm. Corp (3/10) was approved 32,400$

to replace telephone carrier svcs. ($2,700/mo) Potential for greater savings in the future3 UTILITIES - Implementation of energy savings measures (electricity & water) 400,000$ 4 LICENSES - Working with IT Dept. to determine if amount of l icenses can be reduced in review5 MEMBERSHIPS - Reviewing if need for membership is critical to department or program in review

REVENUE1 EXCELSIOR - Lower portables rental 391,475$ 2 SOLAR -Credit for 5 years beginning 2010-11 ($800k/yr) 800,000$ 3 WIB GRANT - Indirect revenue 100,000$

Cost Savings Measures for 2010-11

EXPENSE

REVENUE

DRAFT General Fund Preliminary Budget Assumptions

For Fiscal-Year 2010-2011 General Assumptions:

1. The District shall maintain legal compliance of the 50% law.

2. The District will develop a balanced budget with a minimum 5% ending fund balance (reserve).

3. The Program Review, Planning, and Budget Development Process will guide the allocation of resources.

4. The District will strive to maintain course offerings at 2009/10 levels.

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DRAFT Revenue Assumptions:

5. The State will not provide any funding for growth.

6. Funding for categorical programs will remain at 2009/10 levels. 7. The solar field will generate approximately $800,000 in new revenue from renewable solar

energy credits (REC). 8. Workforce Investment Board (WIB) revenues to the District will net approximately $100,000

above expenses. 9. Local revenue will increase by approximately $390,000 (rentals, leases, Head Start, etc). 10. Reserve funds will be utilized to partially offset revenue shortfall. 11. The State will backfill any decline in property tax revenues from the 2009/10 level. 12. The State apportionment will include an adjustment of -0.38% for COLA.

13. Current Statewide Enrollment Fee Revenue shortfall will continue in 2010/11 affecting

approximately $100,000 loss to VVC. 14. The base allocation will be maintained at approximately $1 million for medium college status

that was attained in fiscal year 2008/09 (10,001 FTES).

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DRAFT Expense Assumptions:

15. The District will limit the amount of unfunded FTES to 5% of the funded cap (approx. 500).

16. District health benefits will increase by approximately $630,000.

17. State Unemployment Insurance rate will increase from .30% to .72%.

18. Employer contribution to PERS will increase from 9.428% to 10.2%.

19. Vacancies due to retirement or resignation may not automatically be filled.

20. The District will save approximately $400,000 by implementing energy efficiency measures.

21. The District will apply any savings from Cost Saving Measures that are implemented to reduce the budget shortfall.

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Victor Valley Community College District Unrestricted General Fund

PRELIMINARY DRAFT ONLY 4/26/10

Current Budget Budget Budget Budget BudgetYear Year Year Year Year

2009-2010 2010-2011 2011-2012 2012-2013 2013-2014

Full-Time Equivalent Students (Funded)

9,489 -3.39%

9,489 0.00%

9,489 0.00%

9,489 0.00%

9,679 2.0%

Full-Time Equivalent Students (Unfunded)

512

512

512

512

322

BEGINNING FUND BALANCE $9,293,779 $3,091,897 $2,606,537 $2,686,826 $2,690,737 CATEGORY

ESTIMATED REVENUESState (Apportionment Only) $35,923,185 $35,786,677 $35,786,677 $35,786,677 $36,502,410 State (All Other) $393,643 $393,643 $393,643 $393,643 $393,643 Local (Property Tax included) $11,136,369 $11,514,403 $11,514,403 $11,514,403 $11,514,403 Transfers In: Reserve $5,900,000 $0 $0 $0 $0 Anticipated State Mid-Year Reduction ($786,033) $0 $0 $0 $0 TOTAL REVENUES $52,567,164 $47,694,723 $47,694,723 $47,694,723 $48,410,457

ESTIMATED EXPENDITURESAcademic Salaries $23,741,245 $24,045,409 $24,251,409 $24,457,409 $24,663,409 Classified Salaries $11,013,704 $11,420,107 $11,576,107 $11,732,107 $11,888,107 Employee Benefits $8,200,258 $8,852,691 $9,525,043 $10,239,421 $11,007,378 Fund OPEB Trust $6,500,000 $0 $0 $0 $0 Payoff SERP #1 and #2 $2,267,516 $0 $0 $0 $0 Cost to Maintain FTES (10,000) $0 $465,552 $465,552 $465,552 $465,552 Supplies, Software, Subscriptions $591,127 $591,127 $591,127 $591,127 $591,127 Services and Operations $5,663,000 $5,063,000 $5,063,000 $5,063,000 $5,063,000 Capital Outlay $540,996 $540,996 $540,996 $540,996 $540,996 Debt Svc., Transfers, Reserves $251,200 $301,200 $301,200 $301,200 $301,200 TOTAL ESTIMATED EXPENDITURES $58,769,047 $51,280,082 $52,314,434 $53,390,812 $54,520,769

FUND BALANCE $3,091,897 5.3% ($493,463) -1.0% ($2,013,174) -3.8% ($3,009,263) -5.6% ($3,419,575) -6.3%

Structural Deficit $ 3,100,000 $ 4,700,000 $ 5,700,000 $ 6,150,000 ENDING FUND BALANCE $2,606,537 5.1% $2,686,826 5.1% $2,690,737 5.0% $2,730,425 5.0%

                   

One Time Revenue $ 1,291,475 $ 1,072,000 $ 800,000 $ 800,000

Budget Shortfall $ 1,808,525 $ 3,628,000 $ 4,900,000 $ 5,350,000

Structural Deficit $ 3,100,000 $ 4,700,000 $ 5,700,000 $ 6,150,000                    

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GUARANTEED INVESTMENT CONTRACT (GIC)

History of withdrawals from the fund (established in 1996)Reserve balance by Fiscal Year

(includes interest income)39,875,755$ 6/30/2006

2006-07TRANSFER IN: GENERAL FUND 2,500,000$ Instructional equipment; lease/purchase of Datatel

software system 40,438,247$ 6/30/2007

2007-08

Advanced Tech Bldg.: Building Project CompletionSpeech/Drama Addition: Building Project Completion

TRANSFER IN: GENERAL FUND 4,800,000$ To balance General Fund budget 32,034,723$ 6/30/2008

2008-09

TRANSFER IN: CAPITAL OUTLAY FUND 2,000,000$ Adaptive PE Bldg.: for Building project completion

TRANSFER IN: GENERAL FUND 4,500,000$ To balance General Fund budget 27,829,952$ 6/30/2009

2009-2010

TRANSFER IN: CAPITAL OUTLAY FUND 2,700,000$ Adaptive PE Building: for building project completion

1,000,000$ Solar project

Fund SERP 1 and 2

Partially fund OPEB Trust

Projected ending balance in Guaranteed Investment Contract as of 6/30/10 (with interest) 19,929,254$ 6/30/2010

2010-2011

TRANSFER IN: GENERAL FUND 5,900,000$

TRANSFER IN: CAPITAL OUTLAY FUND 6,500,000$

REQUEST DIRECTION FROM GOVERNING BOARD FOR 2010-11

Potential – Employee Concession Information

FURLOUGHS 1 day 5 days 10 days 12 days

Faculty = 131 Per Ed. Code, faculty must teach 175 days, therefore cannot participate in this option.

Classified = 185 x $202 37,370$ 186,850$ 373,700$ 448,440$

Mgmt - Classified = 22 x $361 7,942$ 39,710$ 79,420$ 95,304$ Mgmt - Academic = 13 x $502 6,526$ 32,630$ 65,260$ 78,312$ Management Total 14,468$ 72,340$ 144,680$ 173,616$

51,838$ 259,190$ 518,380$ 622,056$

SALARY REDUCTION 1% 5% 10%Academic (includes Mgmt) = 24,056,838$ 240,568$ 1,202,842$ 2,405,684$ Classified (includes Mgmt) = 11,116,052$ 111,161$ 555,803$ 1,111,605$

351,729$ 1,758,645$ 3,517,289$

NOTE: All options must be negotiated.

*As of April, 2010

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Potential – Employee Insurance Benefit Contribution

MONTHLY CONTRIBUTION

# in $50 $75 $100 $125 $150 $175 $200 $250

group SAVINGS GENERATED WITH MONTHLY CONTRIBUTIONS (convert to 10thly for faculty)

Faculty 131 $ 78,600 $ 117,900 $ 157,200 $ 196,500 $ 235,800 $ 275,100 $ 314,400 $ 393,000

Classified 185 $ 111,000 $ 166,500 $ 222,000 $ 277,500 $ 333,000 $ 388,500 $ 444,000 $ 555,000

Management 35 $ 21,000 $ 31,500 $ 42,000 $ 52,500 $ 63,000 $ 73,500 $ 84,000 $ 105,000

Mgmt-Board 5 $ 3,000 $ 4,500 $ 6,000 $ 7,500 $ 9,000 $ 10,500 $ 12,000 $ 15,000

$ 213,600 $ 320,400 $ 427,200 $ 534,000 $ 640,800 $ 747,600 $ 854,400 $ 1,068,000

*Alternate methods may be used (e.g. percentage vs. flat rate)

NOTE: All options must be negotiated.

* As of April, 2010

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Potential – Other Insurance Benefit Options

OPT-OUT OF BENEFIT PACKAGE (Medical, Dental, Vision)

Cost of Benefit Package Per Employee: $ 11,220 Less: Cash in Lieu to Employee $ (2,400)

Net Annual Savings to the District: $ 8,820

Example: If 35 people choose this option: $ 8,820 x 35 = $ 308,700 Potential Annual Savings to District

*Based on an estimated annual Blue Cross package for Faculty/Classified.

                   

DISTRICT CAP OF BENEFIT PACKAGE (Medical, Dental, Vision, Life)

2010-11 Max Annual Benefit Package Paid By District: $ 11,496

If Package goes up by 10% for 2011-12: $ 11,496 x 10% = $ 1,150 (Becomes annual cost to employees)Number of Employees = 351: $ 1,150 x 351 = $ 403,510

Potential Annual Savings to District

Staff may consider options to offset the rise in cost and negotiate a different plan design to decrease out of pocket cost.For example, change in co-pay, prescription costs, etc.

*Based on an estimated annual Kaiser package for Faculty/Classified.

NOTE: All options must be negotiated.

As of April, 2010

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Options To Balance General Fund Budget

2010-2011 Use one-time revenue sources Negotiate concessions Supplemental Early Retirement Program Fund the balance of the deficit from reserves

2011-2012

Use one-time revenue sources Negotiate concessions Program reorganization Supplemental Early Retirement Program Fund the balance of the deficit from reserves

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Discussion

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