General Fund Revenues
State Appropriation
Just prior to the adoption of last year’s budget, the legislature decided to allocate $410 million for community colleges for the 2011-2013 biennium. However, the Legislature maintained the option of holding in reserve just over $14 million of the appropriation if tax collections in the state continued to decline. The reserve gave the Legislature the option to withhold that allocation if tax revenues fell short or to redistribute those funds to other purposes. The February 2012 economic forecast showed that tax revenues did continue to decline. The community college appropriation was reduced to $395.7 million. The state payments in 2011-12 were at the $410 million funding level. For 2012-13, they will be at the $395.7 million level. This means that colleges were essentially overpaid during 2011-12 and those amounts will come out of the 2012-13 payments. Chemeketa did not budget at the $410 million level in 2011-12. Last year’s budget assumed the funding would be at $400 million. Also, the budget for 2012-13 has been adjusted to reflect the reduction to $395.7 million. Chemeketa took a conservative approach to state funding and budgeted the larger payments of 2011-12 into the unappropriated ending fund balance to be able to carry over into 2012-13 and smooth the reduced funding. At this time, state funding is still not certain. It can still be reduced further based on future economic forecasts.
Tuition and Fees
- Increased the tuition rate by $3/credit hour from $77 to $80. This is estimated to generate $750,000.
- The one million dollar increase to tuition that was implemented during fiscal year 2010-11 and driven by higher enrollment was maintained. These funds are dedicated to fund adjunct faculty positions. The associated expense budget for adjunct and fringes is located in the Campus President-Yamhill Valley/Chief Academic Officer area.
Property Taxes
Property taxes were estimated using the same methodology as in past years except the assumed rate of growth was reduced to 1%. There are three reasons for this reduction in the assumed rate of growth:
- Assessed and real market values are rapidly approaching one another. Prior to the recession and the decline in housing values, the ratio of assessed value to market value was about 50%. However, property values have significantly declined and assessed values have continued to increase by about 2-3% per year. There are many individual properties where the assessed and market value are now equal. If this trend continues, tax appeals by individual homeowners are likely to increase significantly.
- An increase in the rate of default on taxes paid. The rate of default has been higher than the long-term average for the past three years.
- The possibility of large tax appeals by area businesses. Comcast has filed a significant appeal for the 2010-11 tax year. Marion County has set up a reserve fund and withheld taxes distributed to districts in case they are successful and are due a refund. The reserve fund will remain until the tax appeal is decided.
Miscellaneous Revenue
- Miscellaneous revenue was budgeted conservatively since the amount generated from indirect rates is projected to be less than in past years.
- It is also anticipated that interest rates will remain at historic lows limiting the amount of interest revenue received.
Fund Balance
The college has been slowly growing the ending fund balance for the past several years with the goal of withstanding another large economic shock. The target is to save between ten to fifteen percent of expenditures. A few days prior to the end of the 2009-2011 biennium, the state provided a supplemental infusion of $15 million to community colleges. The $15 million was distributed because during the 2009-11 biennium the state fell below the agreed upon Maintenance of Effort (MOE) levels established by the federal government to help colleges maintain a stable level of funding. Chemeketa’s share of the MOE funds is about $1.6 million, and was used toward June 2011 payroll costs. Any additional carryover as a result of this revenue was included in the unappropriated fund balance and carried over into fiscal year 2012-13. This will help balance the level of funding between fiscal years 2011-12 and 2012-13.
Historical information about the ending fund balance:
In 2003, the legislature deferred in perpetuity the final state payment of the biennium into the next biennium. This resulted in the college receiving 7 payments for the 2001-03 biennium and 8 payments for each biennium thereafter.
Prior to this, each individual year's difference between revenues and expenditures would either add to or subtract from the carryover. Now, both years of the biennium need to be looked at together, otherwise the carryover for the first year will look artificially high. Yet, the payments do need to be accounted for when they are actually received and the alternating high and low carryover is correct for the audited financial statements.
For budgeting purposes, the board has adopted a policy of reserving the fifth payment of the first year to carry forward into the second year, which receives only 3 payments, to smooth the revenues to more closely match expenditures. The smoothed revenues give a truer picture of the actual ending fund balance.