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This is a historical/archived web page.  For current budget information go to:  2011sitearchive.lanecc.edu/budget

Budget Assumptions
General Fund & Fund IX

Budget Projection Assumptions for FY05 and Beyond

Executive Summary 

I. REVENUES

A.  State Sources

•  State revenues for FY05 are set by the current funding distribution formula. At least four scenarios will be run through the formula to project Lane's state revenues for the 2005-2007 Biennium:

1. a. 7% reduction in state funding for community colleges
b. no increase in Lane's enrollment

2. a. no increase in state funding
b. no increase in enrollment

3. a. no increase in state funding
b. 4% increase in enrollment

4. a. $10 million increase in total state funding for community colleges
b. no increase in enrollment

•  State Revenue for FY08 is projected using a 2% increase over FY07 projected revenues.

B.  Local Property Taxes

  1. Because 100% of property tax revenues are a component in the state funding distribution formula, Legislative Fiscal Office (LFO) estimates for Lane's property tax revenues are used for the projections.

C.  Tuition

  1. Tuition revenues are projected based on enrollment projections developed by Institutional Research, Assessment & Planning and additional enrollment scenarios used during the budget development process.
  2. Tuition revenue projections are based on total tuition assessed. Tuition waivers and uncollected tuition are reported as expenditures.
  3. Tuition revenues include tuition generated by Fund IX instructional units.
  4. Projection of FY06 tuition revenue uses rates adjusted for inflation using the Higher Education Price Index (HEPI) for 2004 (per Board Policy D.110).
  5. $424,000 is the FY05 budget for differential pricing and this figure is used in the projections. Revenues from differential pricing are increased by the same percentage as tuition increases for FY06 and beyond.
  6. For FY07 and beyond, future inflationary adjustments use the average annual percentage increase in the HEPI since FY97

D.  Instructional Fees

  1. Projections for instructional fees use predicted expenditures based on historical trend analysis.
  2. Projections assume that all fees are collected at 100%. Uncollected fees are reported as expenditures.
  3. All instructional fees are administratively restricted revenue. That is, fees are tied to specific expenditures.
  4. Technology Fee revenue is a restricted revenue in Fund IX.

E.  Investment Income

  1. Rates are estimated based on historical returns and current economic indicators. The average amount invested is estimated using historical trends and changes in the Ending Fund Balance. The rate and average investment amount will be adjusted as appropriate during the year according to changing conditions.

F. Sale of Goods and Services, Administrative Recovery, all other sources of revenue:

  1. These revenues are projected based on historical trend analysis within each category.
II. EXPENDITURES
A.  Personal Services
  1. Personal Services expenditures for FY05 are based on actual position lists.
  2. Budgeted figures are used for part-time compensation projections in FY05.
  3. Negotiated compensation settlements are used in the projections where applicable. Projection scenarios will vary COLA rates to determine the effects of different possible compensation increases. For years in which an employee group does not have a negotiated compensation agreement, Personal Services projections use ìstepsî plus estimated COLA increases each year.
  4. OPE rate is recalculated every year using projected actual costs of benefits. Calculated rate for FY05 is 53.0% for full-time and 39.6% for part-time employees. The calculated rate for FY06 will vary with different scenarios for PERS rates and health insurance increases. Benefit calculations for FY07 and beyond include an estimated annual increase in health premium costs of 10%.
  5. A negative ending fund balance in the OPE account for FY04 will be covered in its entirety and will show as a Personal Services expenditure in FY05.

B.  Materials & Services

  1. Projections use historical trend analysis to predict M&S expenditures for FY05 and beyond.

C.  Capital Outlay

  1. Projections use historical trend analysis as the starting point for projections. Projected expenditures for Capital Outlay are then adjusted for budgeted increases for the general-use Capital Outlay fund.
  2. In FY05, $200,000 recurring was added to Capital Outlay for equipment replacement. For FY06, FY07 and FY08 an additional $200,000 recurring each year is added to the projection based on an approved 7-year plan to fully fund general Capital Outlay needs as documented by the Capital Assets Replacement Forecast and department/division unit plans.

D.  Contingency

  1. Unappropriated Ending Fund Balance:
    • By Board Policy, the Unappropriated Ending Fund Balance UEFB is set at 3% of budgeted General Fund expenditures.
    • According to Local Budget Law, the UEFB budgeted for the current year may not be spent except under extraordinary circumstances and therefore will be part of the total Ending Fund Balance and a resource for the ensuing year (Net Working Capital Unrestricted and part of the Beginning Fund Balance).
    • On the projection spreadsheets, the UEFB amount is added back to the projected Ending Fund Balance as ìMinimum Fund Balance (not available for appropriation).î
  2. Reserves:
    • The Board approved establishment of a Financial Stabilization Reserve of $500,000 in the FY05 budget. This reserve shows as a separate line not available for appropriation.
  3. Other Contingency:
    • Expenditures of current year Board and Administrative Contingency are included in trend analysis for Personal Services, Materials & Services and Capital Outlay expenditures.

III. OTHER FINANCING SOURCES

A.  Transfers In and Out are projected using historical trend analysis.

  1. In FY05, $270,000 additional recurring is budgeted for the major maintenance allocation. An additional $270,000 recurring is added for each year from FY06 through FY08. These numbers are in accordance with an approved plan to phase-in adequate annual allocations for facilities maintenance and improvement.
  2. Intrafund Transfers are projected each year as a result of rebalancing the M&S portion of the Restricted Ending Fund Balance.   

IV. BEGINNING/ENDING FUND BALANCES (Net Working Capital)

A. For the purposes of projecting future ending fund balances, it is assumed that restricted resources, including Net Working Capital Restricted, are expended according to historical patterns.

B. Board policies E.020 and E.030 set parameters for the General Fund Ending Fund Balance and require a total unrestricted Ending Fund Balance target of approximately 5% (including the Unappropriated Ending Fund Balance).

C. FY06, FY07 and FY08 show $250,000 each year for maintenance catch-up. $810,000 of catch-up money was budgeted for FY05. These amounts are non-recurring and will be used to fund a backlog of approximately $2 million. Since these are non-recurring expenditures, they are shown as an offset to the ending fund balance. In practice, these funds would be budgeted as a transfer out to Capital Projects Fund 4.

C. Projections for FY06, FY07 and FY08 include $250,000 each year to establish a Facilities Capital Reserve Fund. These are shown as an offset to the ending fund balance (see explanation above).

 

Fund IX-Administratively Restricted

Fund IX was created in the FY03 budget to separate from the General Fund those units that rely entirely or primarily on resources other than state revenues, local property taxes and other general use revenues. For the purposes of maintaining historical trends and in order to properly monitor these units, Fund IX revenues and expenditures are included in budget projections spreadsheets under the ìRestrictedî column.

Revenue Assumptions

State Revenue

The accompanying spreadsheet and chart (Revenue Chart 1) show budget and actual revenues from the State of Oregon and from Federal Sources for the fiscal years 1995 through 2004. (Note: Federal Sources are a very small portion of this revenue.)

Since the passage of Ballot Measure 5 in 1991, Oregon community colleges have relied more and more on funding from the State. Economic conditions in Oregon have resulted in a significant shortfall in income tax receipts for the state in each of the last two biennia.

Since 2005 is a legislative year, state funding for the 2005-2007 Biennium is very uncertain as of November 2004. The State Board of Education has formally requested that the governor increase community college funding by $110 million for the next biennium. Lane's ìshareî of the requested allocation would be approximately $13 million or $6.5 million each fiscal year. However, state revenue forecasts do not show increases sufficient to warrant large increases to any state funded institution. Estimates from OCCWD show that a total $10 million increase to community college funding over the biennium would be a more realistic maximum funding level. It would also be realistic to expect the possibility of a decrease in state funding for community colleges. The budget projections will reflect a variety of scenarios for revenue from the state including the expected range of state allocations and a range of enrollment projections for Lane.

The current interim funding formula (ìfrozenî for FY04) maintains a ìcapî on enrollment for the purposes of allocating state funds. The funding distribution formula will be unfrozen beginning with the 2005-06 distribution. The exact formula has not been determined, but one component of distribution will be 100% of property tax revenues for each district. (All property tax revenues for community college districts are included in the distribution formula by Oregon Administrative Rules.) Enrollment will be a component but will be ìmanagedî in some way to avoid past problems of high enrollment increases that resulted in less state revenue per FTE because of unmanaged growth. The new distribution formula will also have a ìhold harmlessî provision such that no college will receive less state funds-per-FTE during the transition to the new formula.

Projection Assumptions for FY05 and Beyond

  1. 7% reduction in state funding for community colleges
    no increase in Lane's enrollment
  2. no increase in state funding
    no increase in enrollment
  3. no increase in state funding
    4% increase in enrollment in FY06
  4. $10 million increase in total state funding for community colleges
    no increase in enrollment

Revenue Assumptions

Local Property Taxes

The accompanying spreadsheet and chart (Revenue Chart 2) show budget and actual revenues from Local Property Taxes for the fiscal years 1995 through 2004.

Since the passage of Ballot Measure 5 in 1991, Oregon community colleges have relied less on local property tax revenues. Since the passage of Ballot Measure 47/50, revenues from property taxes have stabilized and are much more predictable than before FY 99.

Because 100% of district property tax revenues are included as a component in the state funding distribution formula, the projections will use revenue estimates published by the Legislative Fiscal Office (i.e., the same figures used by OCCWD in the funding distribution formula).

Projection Assumptions for FY05 and Beyond

•  Because 100% of property tax revenues are a component in the state funding distribution formula, Legislative Fiscal Office (LFO) estimates for Lane's property tax revenues are used for the projections.

Revenue Assumptions

Tuition

The accompanying spreadsheet and chart (Revenue Chart 3) show budget and actual revenues from tuition for the fiscal years 1995 through 2004.

Projection Assumptions for FY05 and Beyond

Revenue Assumptions
 

Instructional Fees

The accompanying spreadsheet and chart (Revenue Chart 4) show budget and actual revenues from mandatory and non-mandatory instructional fees for the fiscal years 1995 through 2002.

Increases in fee revenue from year to year can be the result of (a) increases in enrollment or number of users, and/or (b) increases in fee rates.

Projection Assumptions for FY05 and Beyond


Revenue Assumptions

Miscellaneous Revenue Sources

Most Other (miscellaneous) Revenues are restricted. Exceptions are Administrative Recovery and Interest on Investments.

Projection Assumptions for FY05 and Beyond

Investment Income:

Sale of Goods and Services, Administrative Recovery, and all other sources of revenue:

Note on total miscellaneous sources of revenue:
In the projections, between 75% and 80% of the total miscellaneous sources of revenue each year is restricted for specific uses and not available for general allocation. This follows historical trends.

Note on investments:
While expenditure patterns for the college are relatively stable from month to month the receipt of revenues is not. The college receives large amounts of money at particular times of the year as noted below:

Quarterly payments from the state: August, October, January, April/July

Property tax revenues: December or January
Tuition and fee receipts: September, January, March

Quite large amounts of money may be invested in January, for example, awaiting expenditures over the remainder of the fiscal year.

Expenditure Assumptions

General Assumptions

Budget projections start with the assumption that the college will maintain ìcurrent service levelî expenditures; that is, the college will continue to offer the current mix and level of programs and services. (The budgeting model used by the college is a modified incremental model where current-year budgets are considered as the starting point for budget development for the following year.)

Projections for FY05 and beyond take into account reductions made in the FY03 and FY04 budget development processes. Other additions and reductions to Current Service Level are noted in specific expenditure categories.

Expenditure Assumptions

Personal Services

The accompanying spreadsheet and chart (Expenditure Chart 1) show budget and actual expenditures for Personal Services for the fiscal years 1995 through 2004.

Annual changes in Personal Services expenditures are due to (a) increases in employee compensation levels, (b) changes in the OPE (Other Personnel Expenses) rate, (c) changes in staffing levels, or a combination of these factors.

The Office of Instruction & Student Services annually allocates money to instructional divisions during the year for ìextraî class sections. This money is spent for faculty Personal Services however the funds are budgeted under ìReserve for Restricted Revenue Changesî on the Contingency/Projects & Provisions page of the budget.

Projection Assumptions for FY05 and Beyond

Note:
The figures for total salary base and compensation increases (Salary Provision) are based on the most current updated Position List, which is employee-specific and takes into account where each employee is placed on the appropriate salary schedules.

Expenditure Assumptions

Materials & Services

The accompanying spreadsheet and chart (Expenditure Chart 2) show budget and actual expenditures for Materials & Services for the fiscal years 1995 through 2004.

Projection Assumptions for FY05 and Beyond

Expenditure Assumptions

Capital Outlay

The accompanying spreadsheet and chart (Expenditure Chart 3) show budget and actual expenditures for Capital Outlay for the fiscal years 1995 through 2004.

Projection Assumptions for FY05 and Beyond

Expenditure Assumptions

Contingency

Projection Assumptions for FY05 and Beyond

Unappropriated Ending Fund Balance:

Reserves:

Other Contingency:

Other Financing Sources (Uses)

Funds are transferred out annually for a variety of purposes, including annual transfers to Capital Projects, Debt Service, Telephone Services, the Laundry, Financial Aid and Student Health Services.

Transfers Out in FY05 include transfers to Fund IX for Workforce Training, Specialized Employment Services, Athletics, The Torch and KLCC.

Projection Assumptions for FY05 and Beyond

Assumptions about Other Funds

Funds may not be transferred to the General Fund from several sources outside the General Fund, including:

Administrative Overhead for Bookstore and Foodservices is charged at half of the ending fund balance for those units. Overhead for the Center for Meeting and Learning will be charged starting in FY06. Overhead charges are transferred annually to the General Fund.

Beginning and Ending Fund Balances

The accompanying spreadsheets and charts show the history of fund balances from Fiscal Year 1995 through Fiscal Year 2004. The Beginning Fund Balance (the sum of Unrestricted Ending Fund Balance and Restricted from 6/30 the previous year) is shown in dollars and as a percentage of the annual budget. The Restricted Beginning Fund Balance includes ICP and M&S carryover in the General Fund and the entire previous year Ending Fund Balance from Fund IX.

The size of the Ending Fund Balance grew steadily during the first few years during which both ICP and department Materials & Services balances were carried over into the ensuing fiscal year (after Fiscal Year 1994). In Fiscal Year 1999, Restricted Ending Fund Balance was $5.3 million which dropped to $2.2 million in FY03.

Unrestricted Ending Fund Balance declined from a high of $6.0 million in FY99 to $2.9 million in FY03. Overall, the total Ending Fund Balance decreased from a high of $11.3 million in FY99 to $6.9 million in FY03.

Note: The FY04 Unrestricted and Restricted Ending Fund Balances will be available after final audit figures have been received and analyzed.

Projection Assumptions for FY05 and Beyond

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