Budget Development

Lane Home Search Lane

This year, the college completed an update of its strategic plan including identification of eight critical strategic directions under three major headings. The Executive Team focused on the strategic directions during the budget development process; within the existing financial limits the proposed budget includes changes tied explicitly to the new strategic directions of the college.

Transforming Students’ Lives

• Foster the personal, professional, and intellectual growth of learners by providing exemplary and innovative teaching and learning experiences and student support services.
• Commit to a culture of assessment of programs, services and learning.
• Position Lane as a vital community partner by empowering a learning workforce in a changing economy.

Transforming the Learning Environment

• Create a diverse and inclusive learning college: develop institutional capacity to respond effectively and respectfully to students, staff, and community members of all cultures, languages, classes, races, genders, ethnic backgrounds, religions, sexual orientations, and abilities.
• Create, enhance, and maintain inviting and welcoming facilities that are safe, accessible, functional, well-equipped, aesthetically appealing and environmentally sound.

Transforming the College Organization

• Achieve and sustain fiscal stability.
• Build organizational capacity and systems to support student success and effective operations.
• Promote professional growth and provide increased development opportunities for staff both within and outside the college.

Issues and Strategies for Fiscal Year 2004-2005

After two years of sharp tuition increases and deep expenditure reductions Lane Community College is in a more stable financial position going into Fiscal Year 2004-2005. However, it is very important to recognize that the next biennium will bring revenue shortfalls once again unless the 2005 Oregon State Legislature significantly increases its allocation to community colleges.

In addition, the tuition increases and expenditure reductions of the past two years have brought problems of their own that must be addressed by the end of the next biennium. These problems include erosion of affordability and accessibility for many students and potential students, decline in the capacity of the college to serve students both in the number of classes offered and in direct student services, and significant increases in workload for college staff. The college must address these issues in order to sustain financial stability and meet community needs.

The proposed Fiscal Year 2004-2005 budget for Lane Community College reflects a three-pronged strategy for meeting the challenges through the next biennium:

• Additional allocation of recurring funds only to the most critical strategic needs;
• Investments” in one-time resources from Ending Fund Balance (a) to strategically strengthen some programs and services or (b) to fund projects that will save money on a recurring basis;
• Establishment of a “financial stabilization reserve” as a buffer for expected revenue shortfalls.

  Proposed General Fund Budget for Fiscal Year 2004-2005

General Fund expenditures have exceeded revenues in each of the last four years, although the difference in Fiscal Year 2002-2003 (FY03) was very small. In the current year, revenues are expected to exceed expenditures by approximately $650,000. The proposed Fiscal Year 2004-2005 (FY05) budget is in marked contrast to the budgets for FY03 and FY04. Those two years showed a sharp decline in state revenue and steep increases in tuition rates. In both previous years, budgets for some programs and services were reduced or eliminated. In the proposed FY05 Budget, the administration is recommending no major expenditure reductions and only a $1.50 per credit inflationary adjustment in tuition as called for by Board Policy D.110 (Tuition).

Resources

The total General Fund budget for Fiscal Year 2004-2005 is $79,232,500, an 11.6% increase over the 2003-2004 adopted budget. The largest contributors to the increase (accounting for 9.6%) on the revenue side, are as follows:

• $2.7 million larger than expected Beginning Fund Balance carried over from Fiscal Year 2003-2004 (3.8% of increase)
• $3.2 million more in Tuition Revenue partly because of a $1.50 per credit inflation adjustment but primarily because tuition-based classes are moved to the General Fund from Fund IX (4.5% of increase)
• $900,000 more in Other Revenue that is an increase in budget authority for anticipated restricted revenues (1.3% of increase)

The college’s largest sources of general tax revenue show modest budget increases over FY04. The budget for State revenue increased by $467,000 (1.8%). However the 2003 Legislature had not considered the appropriation for community colleges by the time Lane adopted its FY04 Budget in June 2003, so the estimate of State revenue for FY04 was approximately $467,000 under the final appropriation. In fact, there is no increase in State revenue in the FY05 budget over the final revenue for the current year.

The proposed budget for Property Taxes is approximately 4.0% higher than the current year. Lane’s property tax revenues have been increasing by approximately 4.0% annually since the passage of BM47/50 in 1996.

Tuition-based classes were budgeted in the Special Revenue-Administratively Restricted Fund IX for FY04. This method of accounting for general tuition-based classes was very cumbersome and costly to administer. The FY05 budget moves $4.0 million in revenues for tuition-based classes to the General Fund, but they will be tracked as restricted revenues. (Tuition-based expenditures are added to the Special Instructional Projects line under Expenditures-Instruction.)

Differential pricing was introduced in FY04 when the college began charging higher fees tied to class clock hours for some Professional/Technical programs and some Physical Education classes. Only first-year Professional/Technical students were charged differential fees in the current year; the proposed budget extends differential pricing to the second year of these programs resulting in an increase of $186,000 in Instructional Fees.

Expenditures

The Personal Services expenditure budget will increase by $7.3 million or 15.6%. Personal Services accounts for approximately 67% of the budgeted expenditures in FY05. Salary Provision (expected increases in employee compensation and benefits costs) is budgeted at $3.1 million. Included in Other Payroll Expenses (OPE) is $1.6 million to be held in reserve for possible changes to the Oregon Public Employees Retirement System (PERS) and its successor program, the Oregon Public Service Retirement Plan (OPSRP). Legislation passed in 2003 to reform PERS is before the Oregon Supreme Court. Should the court overturn some or all of the reform legislation, the college may need the reserve to pay higher PERS costs. The reserve is budgeted at approximately half of the savings realized by the college as a result of the reform legislation. OPE rates will rise in FY05 to 53.0% for full-time and 39.6% for part-time employees. The FY04 rates were 49.9% and 32.3% respectively.

The proposed FY05 Budget includes recurring strategic expenditure increases totaling $530,000 and one-time strategic investments totaling $2,173,000. All of these adjustments are directly related to the Strategic Directions of the college and all but two of the adjustments are driven by Board direction.

The following adjustments have been made to comply with Board Policy:

• Increase in the Unappropriated Ending Fund Balance from $2,080,000 to $2,130,000
• Increase in Board Contingency from $250,000 to $350,000 (approximately one-half percent (0.5%) of budgeted revenues).
• Increase in Administrative Contingency from $600,000 to $700,000 (approximately one percent (1.0%) of budgeted revenues).

In addition, adjustments – both increases and decreases – have been made for expenditures that are primarily beyond the control of the college. These “mandatory adjustments” include such items as facilities leases, utilities, property/liability insurance premiums, maintenance contracts, and essential professional services. The total increase in mandatory adjustments for FY05 is $69,700.

The line item titled “Other Expenditures” under College Support Services increased by slightly under $1.0 million. Approximately half of this increase is attributable to the Provision for Bad Debts; the rest of the difference is due to increases in property/liability insurance premiums and the recategorization of some expenditures.

More details on expenditure changes are available on the Lane Community College budget development website: (http://2011sitearchive.lanecc.edu) or by contacting the Budget Office.

Special Revenue-Administratively Restricted Fund (Fund IX)

Through the current year, Special Revenue Administratively Restricted Fund IX exclusively contained either new programs (e.g., Transportation Fee) or programs moved from the General Fund (e.g., Flight Technology). The latter were programs primarily dependent on restricted revenue sources and not general State allocations or property taxes. In the proposed budget, the Energy Management instructional program has been moved from the General Fund (Science Division) to Fund IX. The proposed budget moves three other programs to Fund IX from Enterprise Fund VI. Those programs are: ASLCC (student government), ASLCC Childcare Co-op, and Student Health Services.

Fund IX decreased by $268,000 or 2.2% from FY04. If Fund IX were adjusted for programs contained in other funds in FY04, the FY05 budget for Fund IX would be 11.4% less than the FY04 budget.

Additional Important Information

Because budget laws require total resources (including the Beginning Fund Balance) and Expenditures to balance, the Budget Document includes budget expenditure authority for all reasonably anticipated resources in Fiscal Year 2005. Some Revenues and Expenditures have been recategorized within funds for FY05. These changes are not specifically noted in the Budget Document.

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 2004-2005 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,

Marie Matsen
Budget Officer/Vice President for College Operations