Highlights of FY 2024-25 Final Budget and Multi-Year Projections

FY 2024-25 Final Budget and Multi-Year Projections FY 2024-25 thru FY 2028-29 Graciano Mendoza Vice President of Administrative Services David Techaira Executive Director of Fiscal and Auxiliary Services September 3, 2024 GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

AGENDA 1) Final Budget Summary 2) Multi-Year Projections 3) Future Considerations, Recommendations and Reminders GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

1) FINAL BUDGET SUMMARY GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

CALIFORNIA STATE BUDGET HIGHLIGHTS - Multi-year budget deficits - $45 billion in 2024-25 - $30 billion in 2025-26 - Significant cuts to government operations, reductions to programs and pauses new investments. - Includes an across-the-board reduction to Chancellor s Office operations by approximately 7.95%. Permanently eliminates 10,000 state positions that are currently vacant, beginning in 2025-26. - Includes no major core reductions to community college programs or services - Draws on reserves and operational savings to ensure fiscal GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu stability

COMMUNITY COLLEGE SYSTEM HIGHLIGHTS District Revenue Protections Continue: The 2022 Budget Act extended the revenue protections in a modified form beginning in 2025-26, with a district s 2024-25 funding representing its new floor. Starting in 2025-26, districts will be funded at their SCFF generated amount that year or their "floor (2024-25 funding amount), whichever is higher. CA Community College Funding Increases: The enacted budget includes about $143 million in ongoing adjustments to the Student Centered Funding Formula (SCFF), of which $100 million is for 1.07% cost-of-living adjustments (COLA). Another $13 million is provided for the same COLA for selected categorical programs along with $28 million for 0.5% enrollment growth. Withdraws $8.4 billion from the Proposition 98 Rainy Day Fund, but deposits $1.1 billion after 2024-25 to begin rebuilding a cushion GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

FY 2024-25 FINAL BUDGET - No General Unrestricted Fund (GUF) On-Going augmentations for Learning Sites, or PPA/Resource Requests - Utilizes OPEB Trust Funds - Achieves Budgetary Savings through Refinement of Budget Practice to More Closely Mirror Actual Usage GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

EXECUTIVE SUMMARY General Fund Budget is balanced at $73.1M. Includes proposed COLA revenue and revenue deficit factor of 3.11% Salary and benefits account for 81% of total expenditures. Estimated year-end Fund Balance (reserve) is 22% or $16.3M. All identified requirements have been funded, including adjustments to employee benefits. Step and column increases. STRS rate remains at 19.10 percent (same as 2023-24). PERS rate increase to 27.05 percent (up from 26.68%). Worker s compensation rate decrease to 1.7557% (down from 1.8685%) Health and welfare benefits increase by an estimated 12.47%. All District Funds are projected to have a positive balance at the end of 2024-25. GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

CHANGES FROM TENTATIVE BUDGET GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

PROPOSED GENERAL FUND EXPENDITURE BUDGET 2024-25 GENERAL FUND EXPENSE BUDGET Capital Outlay - $0.2M, 0.2% Other Outgo - $0.1M, 0.0% Operating - $12.1M, 16.6% Academic Salaries - $23.5M, 32.2% Supplies - $1.4M, 1.9% Benefits - $21.0M, 28.7% Classified Salaries - $14.8M, 20.3% GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

BUDGET SUMMARY BY FUND GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

2) MULTI-YEAR PROJECTIONS GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

REVENUE ASSUMPTIONS FY 24-25 => 1.07 Percent Funded COLA (approx. => $713K) FY 24-25 => Includes Deficit Factor of 3.11% FY 25-26 thru FY 27-28 => 2.93%, 3.08% and 3.30% (School Services of California Inc., as of May 21, 2024) FY 24-25 thru FY 27-28 => 0.5% Growth GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

Multi-Year Projections for FY 2024-25 thru FY 2028-29

HARTNELL COMMUNITY COLLEGE DISTRICT FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 1. Assumptions COLA Growth Potential Labor Agreements -salary increase (as a percent) 1.07 0.005 1.00 2.93 0.005 - 3.08 0.005 - 3.30 0.005 - 3.10 0.005 - 2. Difference between ongoing Revenues & Expenses [Structural Surplus/(Deficit)] (0) 0 952,711 2,022,468 3,203,907 3. Total Estimated Revenue Increase (COLA @1.07%,2.93%,3.08%, 3.30% and 3.1%) 1,281,164 2,227,208 2,327,196 2,473,846 2,340,528 4.A. Salary and Benefit Allocation Step, Column, Longevity, compensation study Increases, etc. Medical Plan Rate Increase (estimated @ 15.93%, 7.12%, 7.12%, 7.12% and 7.12%) PERS Rate Increase (.37%, 0%, 0%, 0% and 0%) STRS Rate Increase ( 0%, 0%, 0%, 0% and 0%) Worker's Comp Rate Increase ( 0.1128%, 0%, 0%, 0% and 0%) Labor agreements 700,919 664,231 50,000 656,246 355,762 606,246 381,092 606,246 408,226 606,246 437,291 - - - - - - - - - - - - - - - - - - 478,184 4.B. Total Salary and Benefit Allocation 1,893,334 1,012,007 987,338 1,014,471 1,043,537 Operating Allocation Fixed Costs (Utilities/Net Operating Increases (@ five year average of 2.9%)) Learning Sites: King City, Soledad, Alisal and Castroville Sites Program Planning and Resource Allocation (Includes new positions and new initiatives.) Operational Adjustments/Efficiencies 4.C. Total Operating Allocation 255,092 262,490 270,102 277,935 285,995 - - - - - - - - - - - - - - (867,262) (612,170) 262,490 270,102 277,935 285,995 4. Total Estimated Expenditure Increase 1,281,164 1,274,497 1,257,439 1,292,406 1,329,532 5. Ongoing Surplus/(Shortfall) 0 952,711 2,022,468 3,203,907 4,214,903 *Estimates based on FY 2024-25 Tentative Budget **Includes Reduction in Revenue of $2,073,351 for 3.11% Deficit Factor Cost of 1% for all employees = $421,410 0 2 5

ENROLLMENT TRENDS GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

3) FUTURE CONSIDERATIONS, RECOMMENDATIONS and REMINDERS GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

FUTURE CONSIDERATIONS 1) Vulnerable to State Economic Fluctuations 2) Escalating Compensation and Operating Expenses Requires Additional Annual Funding Just to Cover Existing Commitments 3) FY 24-25 Designates the End of Hold Harmless , Emphasizing Importance of Future Managed Enrollment Efforts 4) Limited Availability of Growth Funding will Require Careful Management of Enrollment 5) Deficit Factor GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu 6) Other?

RECOMMENDATIONS AND REMINDERS Recommendations: Approve proposed Final Budget by September 15th. Reminders: Approval of the Final Budget authorizes spending for FY 2024-25. The Final Budget is a projection of revenues and expenditures based on the adopted State Budget and adjusted according to the District s own operations. GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu

Thank you! GROWING LEADERS Opportunity. Engagement. Achievement. www.hartnell.edu