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Budget Proposal

Lansing Community College - Board of Trustees
June 20, 2011

Agenda Item: Fiscal Year 2012 Budget Proposal

Presented For Action

PURPOSE

Per Lansing Community College Board of Trustees Policy, Executive Limitations: Budgeting and Forecasting, the President …"shall present a proposed budget which:

  • Contains sufficient information, in accordance with policy direction established by the Board of Trustees, to enable credible projection of revenue and expenses, separation of capital and operational items, cash flow and disclosure of planning assumptions.
  • Plans the expenditure in any fiscal year of no more funds than are to be conservatively received.
  • Presents a budget for the general operating fund which will project fund balance to fall below a reasonable level, with a goal of ten percent of the College's operating budget.
  • Presents a reasonable and prudent plan to assure the fiscal soundness of future years and provides for the building of organizational capacity sufficient to achieve ends in future years.
  • Includes consideration of multiple, long-range administrative plans.
  • Presents sufficient comparative financial and enrollment data to allow the Board and others to make accurate and ready comparisons of budget to actual data for prior fiscal years and to assess the reasonableness of projections for the proposed budget."

The Administration is recommending the adoption of the FY2012 Proposed Budget as attached in accordance with the above policy.

BACKGROUND

Please see Proposed Budget Narrative and Budget Detail.

IMPLICATIONS

Financial:
The College has $1,945,166 available in contingency for unanticipated expenses for the remainder of FY2011.

Strategic Plan:
LCC has a strategic goal of fiscal responsibility.

Human Resources:
The College has eliminated vacant positions and proposes an involuntary reduction in force.

RISKS

State Funding continues to be a risk. The College has contingency to adjust future financial plans, if necessary.

OTHER OPTIONS/ALTERNATIVES

Other options for FY2012 include additional involuntary staff reductions in force. The Administration does not recommend this alternative.

Other options and alternatives are constantly being studied and analyzed for the future.

RECOMMENDATIONS

Adoption of the Fiscal Year 2012 Budget as proposed.

Lansing Community College
Fiscal Year 2012 Proposed Budget Narrative

Lansing Community College’s Fiscal Year 2012 (FY12) proposed budget is presented to the Board of Trustees in summary form with supporting documentation. The Administration requests adoption as proposed.

Total revenues are projected to exceed $131 million (see Attachment A - Operating and Capital Budgets (FY2011 and FY2012)).

State Appropriations - The State’s FY12 appropriation to Lansing Community College is reduced by the formula cut of 4.2%. In addition, At-Risk program support of $141,900 has been moved from restricted to General Fund for a net reduction of 3.7%. (At-Risk program costs have been ADDED to LCC General Fund expenses and incorporated in this budget proposal.)

Property Taxes - For FY12, property tax revenue is estimated to decrease by 3.6%. The College has included a conservative assumption for uncollectible property taxes in both FY11 and FY12. This overall decrease of 3.6% compares to a decrease of 6.5% in FY11 and 1.1% in FY10 and increases of 1.0% in FY09 and 5.9% in FY08. The College’s millage rate will remain at 3.8072 mills.

Tuition and Fees - The budget of $61,887,722 in tuition and fees assumes increases in Extension Center enrollment and an increase in tuition rates for in-district, out-district, out-state and international students of $3, $18, $27 and $60, respectively. Fee increases as previously approved by the Board and fees related to Program Analysis are included.

In addition to course related revenue, registration fees, facility fees, On Line fees, BCI tuition-based contracts and Extension and Community Education (ECE) contribute to total tuition and fee revenue.

Uncollectable tuition in FY12 is projected at 2.4% compared to 2.6% in FY11, 2.6% in FY10, and 2.9% in FY09. This is an offset to Tuition and Fee Revenue.

Other Revenues - Other revenues include contracted training (non credit) from the Business and Community Institute (BCI), the College’s contracts with the Eaton Intermediate School District (EISD) and the Clinton County Regional Educational Services Agency (CCRESA), interest income, revenue from the Capital Quality Initiative (CQI), University Center income, rental income, sales of miscellaneous items and other miscellaneous revenues and fees (such as graduation fees, summer camps, fitness memberships, etc.). The College projects a total increase in Other Revenue of 6.1%.

Summary of Fiscal Year 2012 General Fund Revenues

General Fund Revenues

Total Revenues

2009 Actual

2010 Actual

2011 Budget as Amended

2012 Proposed

Percent change 2011 to 2012

State Appropriations

$ 29,762,500

$ 29,762,500

$ 29,762,500

$ 28,651,900

 -3.7%

Property Taxes

$ 42,147,127

$ 41,681,598

$ 38,939,500

$ 37,557,148

-3.6%

Tuition and Fees

$ 49,568,717

$ 53,341,935

$ 57,112,282

$ 61,887,722

8.4%

Other Revenue

$  2,986,480

$  2,952,461

$  2,900,000

$  3,077,000

 6.1%

 Total

 $124,464,824

 $127,738,494

 $128,714,282

 $131,173,770

 1.9%

Operating Budgets

Salaries, Wages, and Benefits - Salaries and benefits will comprise 67.7% of all general fund expenditures in FY12. This is compared to 68.0% in the FY11 amended budget. The College’s contribution to the Michigan Public School Employees Retirement System (MPSERS) will be 24.46% of salaries and wages effective October 2011 compared to 20.66% in October 2010. Only those full-time administrators and faculty who have chosen the College’s optional retirement program (ORP) do not participate in MPSERS. The College pays 12% of salaries for those individuals selecting the ORP. Health care costs are projected to increase by 8%, per the Health Care Task Force agreement. Other benefit costs include dental, vision, social security payroll taxes, tuition benefits, life and disability insurance, and workers’ compensation.

Services and Supplies - Services and supplies are increased 5.1% from FY11 amended budget. This includes the projected financial improvement initiatives (see Attachment B - Operating Detail Budgets (FY2011 and FY2012)).

Contingency - The proposed Contingency budget for FY12 is $1,311,738 or 1% of the proposed expenses.

Transfers

Child Care Scholarships - It is anticipated that $254,142 will be sufficient for FY12. This is the same level as FY11.

Institutional Scholarships - It is proposed that the budget for institutional scholarships be increased 3.9% from FY11 to $1,376,537 to duplicate the increase in in-district tuition. This budget funds departmental, honors, athletic, and Board of Trustees scholarships.

Capital Budgets

Major Equipment - The FY12 budget is $1,134,500. The portion allocated for classroom media replacement of $280,000 has been transferred to technology replacement.

Debt Service - $7,642,446 is budgeted here for principal and interest payments and includes the two recent bond issues.

Plant Improvement - The FY12 budget is proposed at the same level as FY11, for a total of $3,075,000. The College currently owns and maintains approximately 1.5 million square feet of space.

Technology Infrastructure - The FY12 budget is proposed at $3,250,000. This includes the transfer of $280,000 from major equipment and an increase of $470,000 for classroom media replacement.

Division Renovations - The FY12 budget maintains this budget at the FY11 level of $87,125.

Facilities Auxiliary Fund - The FY12 budget is proposed at the same level as FY11, for a total of $400,000.

Capital Projects - 2011 - The FY12 budget continues funding for projects approved by the Board of Trustees. These are the Capital Outlay Project Request for renovation of the Arts & Science (A&S) Building (assuming matching funds from the State of Michigan) and renovations to the Gannon Building that are necessary to complete the renovations to A&S.

Tuition Increase Considerations

The College’s current in-district tuition rate of $76 is below the current year state-wide average. Attachment K titled “MCCBOA Tuition Increase Survey - Spring 2011” shows current and projected tuition for Fall 2011 for the state’s 28 community colleges.

The following table shows a comparison of tuition to state averages (assuming proposed increases for FY12).

Tuition Rate Comparison

LCC
Current


LCC
Proposed

State Average
Projected
FY2012

In-District

$76.00

$79.00

$86.00

Out-of-District

$140.00

$158.00

$139.00

Out-of-State

$210.00

$237.00

$191.00

International

$216.00

$276.00

$191.00

Lansing Community College

Welcome Center
Gannon Bldg, Room 221
Phone: 1-800-644-4522
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