Be Ready for that Surveillance Call - PMA - Illinois Valley ...

Illinois Community College Chief
Financial Officers
2012 Fall Conference
Be Ready for That Surveillance Call
Tammie Beckwith Schallmo
Managing Director, Vice President
Greg Kubitz
Senior Financial Advisor
October 11, 2012
FOR INSTITUTIONAL PROFESSIONAL USE ONLY.

ICCCFO | What is a Surveillance Call?
• Provides a rating agency with an opportunity to make
sure your College’s credit rating is not “stale”
– Accountability to the investor community
• Frequency may vary, but they are happening much more
frequently than ever before
• The College will be provided with a list of questions
– It’s important to be responsive
– You are typically given a couple weeks to prepare for the call
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ICCCFO | Surveillance Call Considerations
• Has the College done everything it said it would
the last time it spoke to the rating agency?
– Review the College’s most recent rating report
• What circumstances have changed since the
College last spoke to the rating agency?
• Has anything made it difficult for the College to
achieve what was anticipated during the last
rating call?
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ICCCFO | Surveillance Calls for Community Colleges
• Key Discussion Topics
– Economy
– Enrollment
– Finances
– Facilities
– Contractual Obligations
– Pension Obligations
• State legislation
• OPEB
– Financial Management Assessment (S&P Only)
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ICCCFO | Finances
• Finances
– Past operating results
– Projected results for current fiscal year – budget vs.
actual
– Use of working cash
– Long-range projections
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ICCCFO | Long-term Financial Planning
• Financial Projections
– Typically Looking at Operating Funds
• Education and Operations & Maintenance (separately and
combined)
• Working Cash
– Major Assumptions
– State Aid History and Projections
– Projected Enrollment/Credit Hours
– Tuition Rate (Changes)
– Potential Pension Shifts
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ICCCFO | Long-term Financial Planning
REVENUE
Aggregate - Historical Summary
ACTUAL REVENUE / EXPENDITURES
BUDGET
FY 2008 % chg FY 2009 % chg FY 2010 % chg FY 2011 % chg FY 2012 % chg
Local $42,283,577 $44,233,329 4.61% $47,637,415 7.70% $49,825,297 4.59% $50,435,273 1.22%
State $8,221,040 $8,171,133 -0.61% $7,187,128 -12.04% $6,887,420 -4.17% $6,719,554 -2.44%
Federal $22,758 $32,596 43.23% $265,408 714.23% $32,754 -87.66% $23,000 -29.78%
Tuition & Fees $37,970,853 $41,567,869 9.47% $45,095,700 8.49% $48,881,773 8.40% $50,834,180 3.99%
Other $2,636,218 $1,317,821 -50.01% $587,451 -55.42% $336,863 -42.66% $955,000 183.50%
TOTAL REVENUE $91,134,446 $95,322,748 4.60% $100,773,102 5.72% $105,964,107 5.15% $108,967,007 2.83%
EXPENDITURES
Salary and Benefit Costs $62,783,508 $64,840,940 3.28% $68,776,316 6.07% $72,508,962 5.43% $77,721,337 7.19%
Other $33,119,137 $21,986,170 -33.61% $23,189,935 5.48% $21,472,413 -7.41% $26,765,228 24.65%
TOTAL EXPENDITURES $95,902,645 $86,827,110 -9.46% $91,966,251 5.92% $93,981,375 2.19% $104,486,565 11.18%
SURPLUS / DEFICIT ($4,768,199) $8,495,638 $8,806,851 $11,982,732 $4,480,442
INTERFUND TRANSFERS (NET) ($2,678,565) $3,884,174 ($6,610,967) ($9,936,936) ($3,193,085)
SURPLUS / DEFICIT INCL. INTERFUND TRANSFERS ($7,446,764) $12,379,812 $2,195,884 $2,045,796 $1,287,357
BEGINNING FUND BALANCE $0 $49,078,001 $61,457,813 $63,653,697 $65,699,493
YEAR-END FUND BALANCE $49,078,001 $61,457,813 $63,653,697 $65,699,493 $66,986,850
FUND BALANCE AS % OF EXPENDITURES 51.17% 70.78% 69.21% 69.91% 64.11%
FUND BALANCE AS # OF MONTHS OF EXPEND. 6.14 8.49 8.31 8.39 7.69
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REVENUE
BUDGET
Aggregate - Projection Summary
ICCCFO | Long-term Financial Planning
REVENUE / EXPENDITURE PROJECTIONS
FY 2012 FY 2013 % chg FY 2014 % chg FY 2015 % chg FY 2016 % chg FY 2017 % chg
Local $50,435,273 $53,362,690 5.80% $54,355,444 1.86% $55,461,258 2.03% $57,118,376 2.99% $57,518,292 0.70%
State $6,719,554 $6,719,554 0.00% $6,719,554 0.00% $6,719,554 0.00% $6,719,554 0.00% $6,719,554 0.00%
Federal $23,000 $23,690 3.00% $24,045 1.50% $24,430 1.60% $24,821 1.60% $25,218 1.60%
Tuition & Fees $50,834,180 $50,347,900 -0.96% $52,054,194 3.39% $53,805,601 3.36% $55,166,233 2.53% $56,548,698 2.51%
Other $955,000 $841,283 -11.91% $1,016,683 20.85% $1,025,902 0.91% $1,032,309 0.62% $1,031,919 -0.04%
TOTAL REVENUE $108,967,007 $111,295,118 2.14% $114,169,920 2.58% $117,036,745 2.51% $120,061,293 2.58% $121,843,681 1.48%
EXPENDITURES
Salary and Benefit Costs $77,721,337 $80,005,827 2.94% $82,588,089 3.23% $85,324,816 3.31% $87,687,247 2.77% $90,199,305 2.86%
Other $26,765,228 $27,017,030 0.94% $25,788,661 -4.55% $26,311,742 2.03% $26,847,740 2.04% $27,397,041 2.05%
TOTAL EXPENDITURES $104,486,565 $107,022,857 2.43% $108,376,750 1.27% $111,636,559 3.01% $114,534,987 2.60% $117,596,347 2.67%
SURPLUS / DEFICIT $4,480,442 $4,272,261 $5,793,169 $5,400,187 $5,526,306 $4,247,334
INTERFUND TRANSFERS (NET) ($3,193,085) ($4,523,718) ($4,638,077) ($4,792,248) ($4,865,523) ($4,924,127)
SURPLUS / DEFICIT INCL. INTERFUND TRANSFERS $1,287,357 ($251,457) $1,155,092 $607,939 $660,783 ($676,793)
BEGINNING FUND BALANCE $65,699,493 $66,986,850 $66,735,393 $67,890,485 $68,498,424 $69,159,207
PROJECTED YEAR END BALANCE $66,986,850 $66,735,393 $67,890,485 $68,498,424 $69,159,207 $68,482,414
FUND BALANCE AS % OF EXPENDITURES 64.11% 62.36% 62.64% 61.36% 60.38% 58.24%
FUND BALANCE AS # OF MONTHS OF EXPEND. 7.69 7.48 7.52 7.36 7.25 6.99
Additional Tuition Increase Needed to Balance Budget* $0.64 $0.00 $0.00 $0.00 $1.63
*Amount is the "In-District" per Credit Hour increase. All other tuition rates are assumed to be adjusted at the same % change.
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ICCCFO | Long-term Financial Planning
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ICCCFO | Long-term Financial Planning
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ICCCFO | Long-term Financial Planning
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ICCCFO | Long-term Financial Planning
Scenario: Employer SURS Contribution increase of 2% per Year
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ICCCFO | Surveillance Call Best Practices
• Treat the surveillance call like a rating
presentation for a bond sale
• Take time to prepare detailed responses to each
question
• Talk the analyst through your written responses
• Consult with your financial advisor as soon as
you receive the email or phone call requesting the
surveillance call
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