Linn-Benton Community Linn-Benton Community CollegeCollege

September 7, 2010September 7, 2010

Financial OverviewFinancial Overview

Questions?Questions?

Ask any timeAsk any time The information in this presentation The information in this presentation

is for your understanding, (I get most is for your understanding, (I get most of it).of it).

The following information is subject The following information is subject to change.to change.

Financial ChallengeFinancial Challenge

National and Oregon economies National and Oregon economies projected slow recovery = A new projected slow recovery = A new normalnormal

Hitting HomeHitting Home State Revenue DeclinesState Revenue Declines Across the Board ReductionAcross the Board Reduction

$577 million$577 million Additional $377 millionAdditional $377 million

Waiting for the next shoe to dropWaiting for the next shoe to drop 2011-13 CCSF 2011-13 CCSF

Why the “New Normal”Why the “New Normal” National unemployment National unemployment

Reported Reported 9.6%9.6% Estimated when adding discouraged Estimated when adding discouraged 16%16%

Labor ForceLabor Force Grows Grows 120,000120,000 per month-demographics per month-demographics Private Sector adding Private Sector adding 140,000140,000 jobs a month jobs a month Gap between peak and today Gap between peak and today 11,000,00011,000,000 If If 200,000200,000 jobs added per month- jobs added per month- 12 year 12 year

recoveryrecovery If jobs were added at pace of 1990’s- If jobs were added at pace of 1990’s- 4 years4 years

Why the “New Normal”Why the “New Normal”

Labor ForceLabor Force August numbers just outAugust numbers just out

Private sector grows Private sector grows 67,00067,000 for month for month ““Bright Spot” Bright Spot”

Unemployment up Unemployment up 9.5% to 9.6%9.5% to 9.6% discouraged workers getting back into the job discouraged workers getting back into the job

search.search.

This is not our first rodeoThis is not our first rodeo

We have been here beforeWe have been here before 2002-2003 reductions2002-2003 reductions 2006 reductions2006 reductions 2009 reductions2009 reductions

But this time is differentBut this time is different We expect much slower reboundWe expect much slower rebound Restructure for “new normal”Restructure for “new normal” Design for the long term, rather than Design for the long term, rather than

“holding our breath”“holding our breath”

State Expenses vs. RevenueState Expenses vs. RevenueBillions (before latest revenue forecast)Billions (before latest revenue forecast)

State RevenueState RevenueCommunity College Support FundCommunity College Support Fund

<$20 million>

August 2008 PlanningAugust 2008 PlanningBefore the effects of the big “R” RecessionBefore the effects of the big “R” Recession

Revenues (Excluding Beginning Balance) and ExpendituresENDING FUND BALANCE

0

4,000,000

8,000,000

12,000,000

16,000,000

20,000,000

24,000,000

28,000,000

32,000,000

36,000,000

40,000,000

44,000,000

48,000,000

52,000,000

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

REVENUE

EXPENDITURES

ENDING FUND BALANCE

January 2009 projectionJanuary 2009 projectionCCSF reduction M66 &67 passCCSF reduction M66 &67 pass

Revenues (Excluding Beginning Balance) and ExpendituresENDING FUND BALANCE

0

4,000,000

8,000,000

12,000,000

16,000,000

20,000,000

24,000,000

28,000,000

32,000,000

36,000,000

40,000,000

44,000,000

48,000,000

52,000,000

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

REVENUE

EXPENDITURES

ENDING FUND BALANCE

Subliminal MessageSubliminal Message

TumsTums

TumsTums

Hannah and Grandma Hannah and Grandma

Not in Kansas anymore!Not in Kansas anymore!

Oh My!

August 2010 projectionAugust 2010 projectionCCSF reduced from $450.5 to $430 millionCCSF reduced from $450.5 to $430 million

2011-13 Biennium CCSF 405 million2011-13 Biennium CCSF 405 millionAccount for delayed paymentAccount for delayed payment

September 2010 projectionSeptember 2010 projectionCCSF reduced from $450.5 to $416 millionCCSF reduced from $450.5 to $416 million

2011-13 Biennium CCSF 387 million2011-13 Biennium CCSF 387 million

Importance of Ending/Beginning Importance of Ending/Beginning Fund BalanceFund Balance

Can be an indicator of resources Can be an indicator of resources available for operationsavailable for operations FY2010 EFB FY2010 EFB $9.2 million$9.2 million.. FY09 EFB was $8.4 million, but FY09 EFB was $8.4 million, but 4 million IOU4 million IOU Can be used for one-time expensesCan be used for one-time expenses

Temporary cushion if actual revenue Temporary cushion if actual revenue comes in less than projection.comes in less than projection.

Provides cash for grants & contracts Provides cash for grants & contracts prior to reimbursement prior to reimbursement

Importance of Ending/Beginning Importance of Ending/Beginning Fund BalanceFund Balance

3.5 million 3.5 million = 30 days FY11 expenses= 30 days FY11 expenses Reveals timeframe to balance Reveals timeframe to balance

revenues and expendituresrevenues and expenditures FY11 one-time change to revenue to FY11 one-time change to revenue to

eliminate accrual of deferred state eliminate accrual of deferred state payment.payment.

Current projection of EFB for FY11 is Current projection of EFB for FY11 is $2,367,950 or 20 days operating cash.$2,367,950 or 20 days operating cash.

Macro Finance-The Macro Finance-The CommonsCommons

Oregon Community Colleges Oregon Community Colleges TPR per FTETPR per FTE

TPR per FTE-Inflation adjustedTPR per FTE-Inflation adjusted

Distribution formulaDistribution formulaThe CCSF “Commons”The CCSF “Commons”

Back to the FarmBack to the Farm

New assumptions-New assumptions-growth has over growth has over utilized the commonsutilized the commons

Not enough grass to feed everyone's Not enough grass to feed everyone's herdsherds

What was once thought to be a What was once thought to be a drought is now predicted to be drought is now predicted to be ““climate changeclimate change””

Response must changeResponse must change

Macro FinanceMacro Finance

Two sides of the coinTwo sides of the coin

Public good – Private GoodPublic good – Private Good

Continuing Service LevelContinuing Service Level2009-11 General Fund appropriation $ 450,500,000 2009-11 Phase-ins, phase-outs, one-time expenditures -

2009-11 Timber tax estimate 25,308

2009-11 Property tax estimate 264,300,000

2009-11 General Operating Revenues $ 714,825,308

Percent of budget Growth

PERS 2.9% 79.1% 16,448,355

Health insurance 9.4% 14.5% 9,728,585

Pension obligation bonds 4.2% 10.3% 3,099,697

Remainder Personal Services 67.0% 3.1% 14,835,842

Remainder Services and Supplies 16.5% 2.4% 2,834,139

Increase in General Operating Revenues 6.6% $ 46,946,618

2011-13 General Operating Revenues 761,771,926

2011-13 Timber tax revenues (25,308)

2011-13 Property tax estimate (284,200,000)

2011-13 Current Service Level $ 477,546,618 Increase in General Fund from 2009-11

LAB 6.0%

Start here!

End here.

What budget?What budget?

Continuing Service LevelContinuing Service Level $477 $477 million as calculated to maintain.million as calculated to maintain. Ignores growth Ignores growth in FTEin FTE

Current Projection of Community Current Projection of Community College Support FundCollege Support Fund $387 $387 millionmillion 81% of CSL81% of CSL More revenue forecasts to come….More revenue forecasts to come….

LBCC ResourcesLBCC Resources

ANSWERS?ANSWERS?

Questions?Questions?