Budget Development

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The proposed total General Fund budget for 2003-2004 is $70,623,034. This is a 1.4% increase over the 2002-2003 adopted budget.  However, total budgeted operating revenues (total Resources minus the Beginning Fund Balance) for 2003-2004 are 1.5% less than operating revenues for the adopted 2002-2003 budget.

In 2002-2003, the college instituted a new fund (Special RevenueóAdmin Restricted Fund IX) in order to keep better track of programs and services whose revenues are administratively designated for specified uses.  Many of the programs in Fund IX had been in the General Fund before 2002-2003, resulting in a lack of clarity about the resources available for general allocation.  The adopted budget for Fund IX in 2002-2003 was $8,720,215.  The proposed Fund IX budget for 2003-2004 is $13,949,699 or an increase of $5.2 million.  The increase reflects the addition of two programs to Fund IX (the new Transportation Fee and Tuition-Based Classes), increases in tuition and other miscellaneous revenue increases.  Revenue and expenses for Tuition-Based Classes were estimated from the tuition-based pilot program implemented for the first time in the current year.

Lane Community College is facing an unprecedented financial challenge as a result of dramatic decreases in funds from the State of Oregon.  Current year state revenues were budgeted at $29.7 million, but three Special Sessions of the Legislature decreased the collegeís funding by $2.5 million in the current year. As the 2003 Legislature meets, we are certain of an additional decrease in state funding for the 2004-2006 Biennium of up to a total of $4.5 million (or $2.2 million for Fiscal Year 2004 alone).

In addition, the Oregon Public Employees Retirement System (PERS) has dramatically increased employer contribution rates for Fiscal Year 2004 in order to pay down the systemís unfunded actuarial liability. The new rates would increase the collegeís PERS costs by over $3 million. The Legislature is considering bills that would reduce that rate, however, at this time only one of those measures has passed both houses and been signed by the Governor.  The college participated in a taxable pension bond sale in April 2003, the proceeds of which has been deposited with PERS to fund Laneís unfunded liability; the annual savings over the 2004-2006 Biennium is estimated to be over $500,000 each year.

The challenges that Lane is facing are many:

• 80% of budget is personnel
• Rising costs of health care
• Increases in PERS system
• Needed investment in plant
• Needed budget for equipment replacement
• Needed budget to build in quality and innovation
• Limits on local funding
• Increasing demand for transfer classes
• Limits on infrastructure to respond to student needs
• Balance across the mission of the college

On April 28, 2003, the Board of Education approved a $14 per credit tuition increase for Fiscal Year 2004. In addition the Board approved a differential pricing pilot program for several Professional/Technical programs (Auto Body & Fender, Automotive Technology, Aviation Maintenance Technician, Electronics, Manufacturing Technologies, Dental Hygiene, Dental Assistant, EMT/Paramedic, Medical Office Assistant, Health Records Technology, Nursing, and Respiratory Care) and for most Physical Education classes.  The Board also approved a 10% (or $6 per credit) tuition surcharge for Summer Term classes.

The largest revenue source for the college General Fund is state appropriations.  The 2004 State Legislature is still in session at the time of the printing of this Budget Document.  For the purposes of preparing this budget, the administration has used projections from the Office of Community Colleges and Workforce Development based on the Governorís Second 2004-2006 Biennial Budget released in April of 2003.

• State revenues to Lane are projected to decrease by $4,035,327 or 13.6% from the current year budget to $25,664,502.
• Property tax revenues are projected to increase by approximately 3.0 percent or $345,229 over current year budget.
• Tuition revenues for General Fund and Fund IX are budgeted at $22.4 million, which is an increase of  approximately $4.8 million over the current projections for Fiscal Year 2003. Enrollment is projected to decrease by 2% for credit and 5% for credit-free because of reductions in instructional programs in 2002-03 and 2003-04, and some enrollment loss from the large tuition increase.

The Board has approved program modifications to Respiratory Care, the Adult Basic & Secondary Education program, the Business Development Center, the McKenzie Community Learning Center and the Churchill Learning Center, all of which will result in a total of $347,000 savings.  In addition, the Board approved elimination of credit Jewelry classes, and the phasing out of two intercollegiate athletics teams, menís baseball and womenís volleyball.  Other miscellaneous budget reductions recommended by the Executive Team include a reduction in ìextra sectionî funding, the elimination of two positions in Facilities Management & Planning, projected savings from retirements and vacancies, $350,000 in Materials & Services reductions to be allocated later and $150,000 in part-time classified employee reductions, also to be allocated later.

The Executive Team also recommends approximately $1,050,000 additions to the budget including:

ï Tutoring Program
ï Accreditation
ï Quality & Innovation
ï Investment in Streamlining Work Processes
ï Property/Liability Insurance Premium Increases
ï Health & Safety: Safety Compliance & Emergency Plan
ï Fiscal Accountability: Internal Controls

It is clear that at this moment in time the college cannot rely on the state to help.  While we should continue to work with the community and the legislature to make our needs known, we must take our future into our own hands.  We must recognize that Lane has moved from being tax supported to being tax assisted.  We have developed several strategies to respond but it will take time for them to pay off.  In the meantime, we must continue to work on aligning expenses with revenues and restoring financial stability.  In addition, we must take a long-term view and assure good stewardship of the public investment.  The budget being proposed attends to these challenges while staying focused on moving the college into the future and attaining our vision of transforming lives through learning.

Because budget laws require total resources (including the Beginning Fund Balance) and Expenditures to balance, the Budget Document includes budget expenditure authority for all anticipated resources in Fiscal Year 2004.

This budget document is consistent with the budget laws of the State of Oregon and other applicable policies.  The budget is prepared on a modified accrual basis of accounting (revenues reported when earned; expenditures reported when the liability is incurred; taxes accounted for on a cash basis).  The result is that carryovers of financial obligations from year-to-year are precluded and projections of anticipated revenue are not inflated.

The format and summarization are consistent with the Oregon Accounting Guidelines of Community Colleges.  This budget expresses the basic and essential fiscal requirements of Lane Community College as set forth by the Board of Education.  The 2003-2004 Budget Document is submitted herewith for your consideration and action.  The staff and I are ready to assist you in the important task of reviewing this document.

Respectfully,

Mary F. T. Spilde, College President and District Clerk