Budget Scenario Planning FY2018 – FY2020 December 14, 2016 Presenter: David Bea, Ph.D. Facilitator: Anthony U. Martinez, J.D. www.pima.edu www.pima.edu
Overview of Study Session • Foundational information • Budget scenarios • Questions Capital • Discussion Designated Auxiliary Fund Fund $19.1 Fund $14.0 Restricted 8% $2.5 6% • Direction Fund 1% $58.3 23% General Fund $153.9 62% www.pima.edu
Foundational Tenets • Institutional Financial Health – Indicators • Enrollment Trends • Financial Health Indicators/Metrics • College Business Model – Revenue Sources – Cost Drivers • Expenditure Limitation • Future Needs – Educational Master Plan, Strategic Plan • Program Quality, Relevancy, Sustainability • Pathways to Student Success • Centers for Excellence • Outreach Centers • Organizational Challenges www.pima.edu
Financial Health Indicators Audited Financial Statements & Management Letters • Changes in Net Assets, Cash & Investments, Liabilities, Statistical Section Information • Ongoing concerns Key Red = Significant Concern = Improving Trend Orange = Moderate Concern = Maintenance of Trend Financial Ratios = Declining Trend Green = Minimal to No Concern Budget and Operational Measures • Revenue mix • Fixed versus variable costs – Personnel Costs Share of Total – Costs per student – Employees per student Market Position/Costs www.pima.edu
2004-2016 Dashboard of Financial Indicators Key Red = Significant Concern = Increase in Trend Orange = Moderate Concern = Maintenance of Trend = Decrease in Trend Green = Minimal to No Concern www.pima.edu
Gauging the market and anticipating the future www.pima.edu www.pima.edu
PCC Enrollment Summary PCC FTSE 25,000 20,000 1992, 15,364 15,000 2016, 15,382 10,000 5,000 - www.pima.edu
Enrollment Potential Age Pima County population % PCC students 18-24 116,000 58% 25+ 654,000 41% Percentage of students enrolling in CCs one year after HS graduation Pima CC Arizona United States 43% 37% Less than 30% Percentage of students attending online, nights, or weekends Pima CC Arizona Source: Arizona 2020 Vision 2015 reports; U.S. Census Bureau 61% 63% 2010-14 American Community Survey five-year estimates www.pima.edu
Pima County population projections compared with Fulltime equivalent enrollment 1,400,000 25,000 1,200,000 20,000 1,000,000 Pima County Population 15,000 800,000 Total Pop Other Ages 20-24 YO 600,000 10,000 FTSE 400,000 5,000 200,000 0 0 www.pima.edu
Market Comparison: Tuition www.pima.edu
Year over Year Fall Credits Taken, In-State versus Out-of-State Tuition Codes 300,000 20,000 18,000 250,000 16,000 14,000 200,000 Out of State Credits Taken 12,000 In State Credits Taken 150,000 10,000 8,000 100,000 6,000 4,000 50,000 2,000 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 In-state Out-of-state www.pima.edu
Expenditure Limitation Projections $130,000 $120,000 $110,000 $100,861 Expenditure Limit (in $000's) $100,000 $95,661 $90,000 $85,801 $80,000 $70,000 SB1322 Methodology Original Methodology $60,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Estimated Limit Flat Enrollment Grow 500/Yr Actual Expenses www.pima.edu
Admin Expenses Fac Staff Other Benefits Operations Capital General Fund Transfers Contingency – Predominately personnel (~75%) – Operational expenses – little to cut/reduce – Capital expenses – need to operationalize/find a sustainable revenue source Facts to Remember – 1% increase in salaries and wages = $900,000 – Health care increases ~ $1 million per year – Depreciation is $8 million per year – 1 % increase for adjunct faculty = $150,000 www.pima.edu
Historical Budget Summary: General Fund and Combined All Funds Budgets $350 $300 $250 $200 $ Millions $150 $100 $50 $ 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Al Other Funds $71.5 $76.2 $83.7 $105.2 $138.3 $137.4 $122.3 $107.8 $106.5 $94.0 General Fund $134.2 $142.7 $142.3 $172.3 $149.6 $161.5 $161.7 $158.4 $152.2 $153.9 General Fund Al Other Funds www.pima.edu
Staffing Levels www.pima.edu
National Community College Data Comparisons: Integrated Post Secondary Education Data System 2014-2015 Staffing Comparison Average of Sample PCC PCC’s Rank 2-Year Colleges Headcount 17,025 39,912 20 FTSE 7,469 15,799 36 FTSE/FT Faculty 45.7 45.1 174 FTSE/FT Total Staff 26.3 11.8 308 FTSE/FTE Total Staff 11.7 9.5 258 2013-2014 Expenditure Comparison FY14 Total $/FTSE $11,308 $11,620 148 www.pima.edu
Full Time Staff Comparison: 2014-15 FTSE/FT Staff, 333 2-yr Colleges 2,000 1,800 1,600 y = 0.0544x + 55.613 1,400 R² = 0.7701 1,200 # FT Staff 1,000 800 600 400 200 0 0 5,000 10,000 15,000 20,000 25,000 FTSE Regression for FT Staff Ratio with Estimated Reduction Impact FTSE FT Staff Vs. PCC % Pos. Cut 14,000 817 -527 -39% 15,000 872 -472 -35% 16,000 926 -418 -31% 17,000 980 -364 -27% 18,000 1,035 -309 -23% 19,000 1,089 -255 -19% 20,000 1,144 -200 -15% 21,000 1,198 -146 -11% 22,000 1,252 -92 -7% 23,000 1,307 -37 -3% PCC 1,344 www.pima.edu
IPEDS Expenditure Comparison, FY2014 Peer Institutions Total Expenses and FTSE 400,000 y = 10.733x + 3669.1 350,000 R² = 0.9225 300,000 Total Expenditures ($000s) 250,000 200,000 150,000 100,000 50,000 0 0 10,000 20,000 30,000 40,000 FTSE www.pima.edu
Future State Realities • Fewer Resources • More Competition • Faster Speed of Change • Increased Accountability • Increased Regulatory Compliance Requiring colleges to: • Be More Nimble, Adaptive, and Responsive – Innovative, Entrepreneurial, and Inventive • Continuously Improve – Employ Evidence and Data-Based Decision Making – Assess Effectiveness • Improve Coordination & Communication www.pima.edu
Revising and Renewing Pima Community College: What We’ve Done & What We Need to Do • Recognize new reality – Reorganize and improve efficiency – Adapt to state changes • State budget reduction • SB1322 • Strategic Enrollment Management – Maximize Pima County enrollment • Recruitment, Enrollment, Retention, Completion – Lifelong Learner tuition program, Tuition cap – Stimulate and support out-of-state and international enrollment • Anticipate the future and adapt – Educational Master Plan • Programmatic needs and capabilities • Reinvestment www.pima.edu
Funding the Renewal of the College • Educational Master Plan Priorities – Ensure program quality, relevancy, and sustainability – Create pathways to student success – Establish centers for excellence – Emphasize outreach centers and leverage adult education www.pima.edu
Finance and Administration Financing the Educational Master Plan Priorities: Revenue Bonds • Revenue bonding authority defined in ARS Title 15, Chapter 12, Article 5 – Board Authority to Issue – Inform Joint Committee on Capital Review (JCCR) – Annual debt service limited to 8 % of annual expenditures Sample Finance Tables for various Rev. Bond Scenarios with Finance Metrics Bonds ($mil) $ 40.0 $ 50.0 $ 40.0 $ 40.0 $ 60.0 Interest Rate 5.0% 5.0% 5.0% 4.0% 5.0% Years 20 20 10 20 15 Annual Payment ($mil) ($3.21) ($4.01) ($5.18) ($2.94) ($5.78) % Rev Bond Capacity 22% 27% 35% 20% 39% Est. Viability Ratio (>1.0 goal) 2.3 1.8 2.3 2.3 1.5 www.pima.edu www.pima.edu
Budget Scenarios • Scenario A: Delay Impacts for Now with Larger Tuition Increases – Small to no reductions for FY18 and FY19. Plan for $15 mil reduction in FY20 – 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 FY20 – 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 GO 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 www.pima.edu
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