financial planning and accounting for the q2s conversion
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Financial Planning and Accounting for the Q2S Conversion. Ms. Lisa Eason Mr. Ken Kincaid. Three Questions. How’d we get into this ? How do we prepare for this? How do we make it through the first year?. How’d we get into this ?. Academic folks said: - PowerPoint PPT PresentationTRANSCRIPT
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Financial Planning and Accounting for the Q2S Conversion
Ms. Lisa EasonMr. Ken Kincaid
1
2 Three Questions
How’d we get into this ?
How do we prepare for this?
How do we make it through the first year?
3How’d we get into this ?
Academic folks said:
Convert to semesters and it will be good for students
Business folks said:
But this is a huge project, we’re just recovering from mergers, state revenue has crashed, it will impact the entire system’s operations, it’s very expensive, enrollment will drop, and the Regents’ experience has spooked everyone who witnessed it.
4Conversion will be Good
for Students
But it will be expensive
There are no state funds for this
We’ll need Other Funds: tuition, fees, etc
Tuition will need to go up $5 per hr in FY11
Tuition will need to go up $5 per hr in FY12
We’ll need tuition at $50 per quarter hr to make this happen
5
OK. We’ll raise tuition.The conversion will be good for students
Tuition Revenue is expected to increase by over $21,000,000 each year
Summer200901
Fall200902
Winter200903
Spring200904
Sum of 4Quarters*duplicated
Payment Due Hours
less than 15 hours Total Number Enrolled 53,381 72,072 68,569 72,824 266,846 less than 15 hours Total Hours 437,817 628,450 597,716 628,370 2,292,353 2,292,353 less than 15 hours Number Received HOPE 38,829 52,216 50,949 53,620 195,614 15 hours Total Number Enrolled 6,446 10,666 10,011 10,145 37,268 15 hours Total Hours 96,692 159,992 150,166 152,176 559,026 559,026 15 hours Number Received HOPE 4,302 6,868 6,760 6,798 24,728 over 15 hours Total Number Enrolled 7,794 12,478 10,896 12,871 44,039 over 15 hours Total Hours 139,795 224,784 195,203 234,047 793,829 660,585 over 15 hours Number Received HOPE 5,883 9,030 8,148 9,773 32,834 TOTAL Total Number Enrolled 67,621 95,216 89,476 95,840 348,153 TOTAL Total Hours 674,305 1,013,226 943,084 1,014,593 3,645,207 3,511,964 TOTAL Number Received HOPE 49,014 68,114 65,857 70,191 253,176
Additional Annual Revenue due at $45/hr if tuition increased by $5/hr 17,559,819 Amount of Additional Annual Revenue paid by HOPE 12,765,988
Additional Annual Revenue due at $45/hr if FY10 Credit Hours Increase by 20% 21,071,782
6
-
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
100,000,000
Scenario A Scenario B Scenario C
Personnel Costs Revenue Loss (FY12) Revenue Loss(FY13) Formula Loss (FY14)
Not Enough Money. Conversion may cost
$80M+
-3% Enrollment, -8% FTE -7% Enrollment, -13% FTE -9% Enrollment, -15% FTE
$54,000,000
$81,000,000
$92,000,000
7Conversion will be Good
for Students
Need Accumulated Reserves
Not enough Other Funds annually
Need to accumulate funds over two years
Carryover statute must be renewed
Carryover statute should include tuition revenue
Caps on reserves must be high enough to cover at least $80M cost of conversion
8
OK. We’ll fix the carryover.
The conversion will be good for students
HB 1128 as Passed
OCGA 20-4-21.1.
Revenue collected by any or all institutions under the Technical College System of Georgia from tuition, departmental sales or services, continuing education fees, technology fees, or indirect cost recoveries shall not lapse. The amount of revenue from tuition that shall not lapse under this Code section shall not exceed 15 percent of the tuition collected. This Code section shall stand repealed on June 30, 2010 2013."
9But there will be fewer terms… Longer terms.
All course-related costs and credits will have to be recalculated
Tuition
Fees
Course load
Credit hours
10
The conversion will be good for students
We’ll just recalculate the rates.
The Conversion Ratio for Financial Purposes is 1.5 to 1.0
Since 1 FTE = 45 Quarter Hrs = 30 Semester Hrs, therefore:3 Quarter Hrs = 2 Semester Hours1.5 Quarter Hr = 1.0 Semester Hr1.0 Quarter Hr = 0.6667 Semester Hr
And, therefore, for Tuition:$40/ Qtr Hr = $60/ Sem Hr$50/ Qtr Hr = $75/ Sem Hr
And also, for Student Fees:$28 Qtr Registration Fee = $42 Sem Registration Fee$18 Qtr Activity Fee = $27 Sem Activity Fee$4 Qtr Insurance Fee = $6 Sem Insurance Fee$35 Qtr Technology Fee = $53 Sem Technology Fee
Total Recurring Fees = $85 Qtr, $127 Sem
11Enrollment will drop.
Revenue will fall.
Cost Model produced the following scenarios:
• Scenario A—Enrollment decline of 3%; FTE decline of 8%
• Scenario B—Enrollment decline of 7%; FTE decline of 13%
• Scenario C—Enrollment decline of 9%; FTE decline of 15%
12Conversion will be Good
for Students
Maintaining enrollment is critical
Student Advisement can maintain FTE’s
Public information
System-wide education
Advisement software
Leadership Summit
13That’s how we came to the semester conversion.
14How do we prepare for
this?
Admin has a supporting role, once again
Maintaining FTE levels is critical to funding
Advisement is critical to maintaining FTE levels
Supporting Advisement is critical
Conversion will be good for students
If done right, it could also be good for the business office.
15Good Advisement, Good
Investment
What if Advisement does nothing?
FTE's Qtr Assume 3 5-Qtr-hr courses Assume 3 3-Sem-hr Courses FTE's Sem % Change
Summer 43,290 649,350 389,610 25,974 -40%Fall 63,283 949,245 569,547 37,970 -40%Winter 62,872 943,080 - - -100%Spring 63,240 948,600 569,160 37,944 -40%
Annual 77,562 3,490,275 1,528,317 50,944 -34%
16Poor Advisement, Very
Expensive
Poor Advisement could reduce tuition revenue by as much as $60M
FTE's Qtr Assume 3 5-Qtr-hr courses Assume 3 3-Sem-hr Courses FTE's Sem % Change
Summer 43,290 649,350 389,610 25,974 -40%Fall 63,283 949,245 569,547 37,970 -40%Winter 62,872 943,080 - - -100%Spring 63,240 948,600 569,160 37,944 -40%
Annual 77,562 3,490,275 1,528,317 50,944 -34%
Tuition @ $50/Qtr hr 174,513,750$ Tuition @ $75/Semester hr 114,623,775$ -34%
Change in Tuition (59,889,975)$ -34%
17Excellent Advisement, Very
Rewarding
What if Advisement Keeps FTE's Unchanged?
FTE's Qtr Assume 3 5-Qtr-hr courses Assume 5 3-Sem-hr Courses FTE's Sem
Summer 43,290 649,350 649,350 43,290 0%Fall 63,283 949,245 949,245 63,283 0%Winter 62,872 943,080 - - -100%Spring 63,240 948,600 948,600 63,240 0%
Annual 77,562 3,490,275 2,547,195 84,907 9%
Tuition @ $50/Qtr hr 174,513,750$ Tuition @ $75/Semester hr 191,039,625$ 9%
Change in Tuition with no change in FTE each term 16,525,875$ 9%
18Enrollment’s Impact on Fee
Revenue
What if Advisement does nothing?
Headcount QtrAssume Scenario C - Decrease of 9% under Semesters % Change
Summer 65,139 59,276 -9%Fall 90,246 82,124 -9%Winter 89,476 - -100%Spring 90,965 82,778 -9%
Annual (Duplicated) 335,826 224,179 -33%
Fees @ $85/ Qtr Student 28,545,210$ Fees @ $127/Sem Student 28,470,670$ 0%
(74,541)$
19 Hold on to Headcount
What if Advisement Keeps Headcount Unchanged?
Headcount Qtr Assume No Change in Headcount
Summer 65,139 65,139 0%Fall 90,246 90,246 0%Winter 89,476 - -100%Spring 90,965 90,965 0%
Annual (Duplicated) 335,826 246,350 -27%
Fees @ $85/ Qtr Student 28,545,210$ Fees @ $127/Sem Student 31,286,450$ 10%
Change in Fees with no change in Headcount each term 2,741,240$
20Summary of Advisement
Payback
Financial Risks and Rewards from Quality of Student Advisement
Tuition Recurring Fees Total Baseline 174,513,750 28,545,210 203,058,960 Poor Advisement 114,346,350 28,381,681 142,728,031 Excellent Advisement 190,577,250 31,188,660 221,765,910
Chge from Baseline to Poor (60,167,400) (163,529) (60,330,929) Chge from Poor to Excellent 76,230,900 2,806,979 79,037,879 Chge from Baseline to Excellent 16,063,500 2,643,450 18,706,950
% Chge from Baseline to Poor -34% -1% -30%% Chge from Poor to Excellent 67% 10% 55%% Chge from Baseline to Excellent 9% 9% 9%
21 Advisement is Critical
Poor advisement could result in a loss of $60M
Good advisement could result in a gain of $18M
System stake is $78M
Will you support the implementation of the student advisement plan at your college?
YES is the correct answer.
22How do we make it through the
first year?
Plan
Support student advisement
Salvage something out of the transitional half-quarter
Support year-round programs
Don’t panic
23 The Transitional Half-Quarter
Projecting Enrollment
Term Enrollment Credit Hrs FTE Projected Drop %
Summer FY10 79,069 822,015 54,801
Half-Summer FY12 39,535 411,008 27,401 50% is Baseline
Scenario B (-7, -13) 36,767 357,577 23,838 -7% Enrollment-13% FTE, Credit Hrs
24 The Transitional Half-Quarter
Projecting Revenue
Rev. Earned Rev. Earned Total Rate Used for Projection
Tuition 17,878,826 17,878,826 $50/ Qtr HrRecurring Fees 3,125,202 3,125,202 $85/ Qtr StudentFormula Funding 25,030,357 25,030,357 $70/ Qtr Hr
Half-Summer FY12 46,034,385
Compare to FY10Tuition 41,100,750 41,100,750 $50/ Qtr HrRecurring Fees 6,720,865 6,720,865 $85/ Qtr StudentFormula Funding 57,541,050 57,541,050 $70/ Qtr Hr
Summer Qtr FY10 105,362,665
Change in Revenue (59,328,280) % Change in Revenue -56%
25Fall Semester FY 12 -
Enrollment
Projecting Enrollment
Term Enrollment Credit Hrs FTE Projected Drop %
Fall FY10 110,940 1,209,105 80,607
Fall Semester FY12 110,940 1,209,105 80,607 100% is Baseline
Scenario B (-7, -13) 103,174 1,051,921 70,128 -7% Enrollment-13% FTE, Credit Hrs
26Fall Semester FY 12 -
Revenue
Projecting Revenue
Rev. Earned Rev. Earned Total Rate Used for Projection
Tuition 78,894,101 78,894,101 $75/ Sem HrRecurring Fees 13,103,123 13,103,123 $127/ Sem StudentFormula Funding 110,451,742 110,451,742 $105/ Sem Hr
Fall Semester FY12 202,448,966
Compare to FY10
Tuition 60,455,250 60,455,250 $50/ Qtr HrRecurring Fees 9,429,900 9,429,900 $85/ Qtr StudentFormula Funding 84,637,350 84,637,350 $70/ Qtr Hr
Fall Qtr FY10 154,522,500
Change in Revenue 47,926,466 % Change in Revenue 31%
27Spring Semester FY 12 -
Enrollment
Projecting Enrollment
Term Enrollment Credit Hrs FTE Projected Drop %
Spring FY10 107,269 1,155,570 77,038
Spring Semester FY12 107,269 1,155,570 77,038 100% is Baseline
Scenario B (-7, -13) 99,760 1,005,346 67,023 -7% Enrollment-13% FTE, Credit Hrs
28Spring Semester FY 12 -
Revenue
Projecting Revenue
Rev. Earned Rev. Earned Total Rate Used for Projection
Tuition 75,400,943 75,400,943 $75/ Sem HrRecurring Fees 12,669,542 12,669,542 $127/ Sem StudentFormula Funding 105,561,320 105,561,320 $105/ Sem Hr
Spring Semester FY12 193,631,804
Compare to FY10
Tuition 57,778,500 57,778,500 $50/ Qtr HrRecurring Fees 9,117,865 9,117,865 $85/ Qtr StudentFormula Funding 80,889,900 80,889,900 $70/ Qtr Hr
Spring Qtr FY10 147,786,265
Change in Revenue 45,845,539 % Change in Revenue 31%
29Summer Semester FY 12 -
Enrollment
Projecting Enrollment
Term Enrollment Credit Hrs FTE Projected Drop %
Summer Qtr FY10 79,069 822,015 54,801
Summer Semester FY12 79,069 822,015 54,801 100% is Baseline
Scenario B (-7, -13) 73,534 715,153 47,677 -7% Enrollment-13% FTE, Credit Hrs
30Summer Semester FY 12 -
Revenue
Projecting Revenue
Rev. Earned Rev. Earned Total Rate Used for Projection
Tuition 53,636,479 53,636,479 $75/ Sem HrRecurring Fees 9,338,840 9,338,840 $127/ Sem StudentFormula Funding 75,091,070 75,091,070 $105/ Sem Hr
Summer Semester FY12 138,066,389 Deferred Revenue @ 50% (69,033,194) FY12 Summer Sem Rev 69,033,194
Compare to FY10
Tuition 41,100,750 41,100,750 $50/ Qtr HrRecurring Fees 6,720,865 6,720,865 $85/ Qtr StudentFormula Funding 57,541,050 57,541,050 $70/ Qtr Hr
Summer Qtr FY10 105,362,665
Change in Revenue (36,329,471) % Change in Revenue -34%
31Summary of FY12 Revenue
Model
Projecting Revenue FY12
Term Tuition Fees Formula Funding Total
Transitional Half-Qtr 17,878,826 3,125,202 25,030,357 46,034,385 Fall Semester 78,894,101 13,103,123 110,451,742 202,448,966 Spring Semester 75,400,943 12,669,542 105,561,320 193,631,804 Summer Semester 26,818,239 4,669,420 37,545,535 69,033,194 Total 198,992,109 33,567,287 278,588,953 511,148,350
Compare to FY10Tuition Fees Formula Funding Total
Summer Qtr 41,100,750 6,641,796 57,541,050 105,283,596 Fall Qtr 60,455,250 9,318,960 84,637,350 154,411,560 Winter Qtr 60,047,250 9,229,920 84,066,150 153,343,320 Spring Qtr 57,778,500 9,010,596 80,889,900 147,678,996
219,381,750 34,201,272 307,134,450 560,717,472
Change in Revenue (49,569,122)
32 After the First Year
No transitional half-quarter
Credit hours recover from conversion drop
Carryover statute in place
Higher tuition
Less dependent on state funding
Financial situation stabilizes
33Mission Accomplished
Conversion has been good for the students.
It hasn’t been all that bad for the business office