Impuesto sobre estancias turísticas

This section provides a highly summarized version of the FY2014-15 budget. Following this analysis, balance sheets, statements and schedules provide fund-by-fund numerical detail, as required by the Wisconsin Technical College System Board Financial Accounting Manual. Over 91% of Madison Area Technical College’s revenues and expenditures are accounted for in governmental fund types (General, Special Revenue Aidable and Non-Aidable, Capital Projects and Debt Service funds). Governmental fund type revenues and expenditures on a budgetary basis for FY2013-14 and FY2014-15 are presented in the table below, and graphically in Figure 3 on page 34 and Figure 8 on page 38.

Adjusted Budget FY2013-14 Budget FY2014-15 Increase (Decrease) in Dollars and Percentages

Revenues:

Local Government $123,909,932 $66,251,237 ($57,658,695) -46.53% Intergovernmental:

Federal (excluding Fin. Aid) 5,325,578 4,399,000 (926,578) (17.40) State 15,151,605 74,819,000 59,667,395 393.80 Tuition and Fees 41,664,161 42,321,000 656,839 1.58 Institutional/Other 4,043,229 3,792,000 (251,229) (6.21) Financial Aid Revenues 62,609,833 58,642,000 (3,967,833) (6.34)

TOTAL REVENUES $252,704,338 $250,224,237 ($2,480,101) (0.98%) Expenditures: Operational: Instruction $113,848,545 $114,055,000 $206,455 0.18% Instructional Resources 3,473,504 3,671,000 197,496 5.69 Student Services 16,785,853 17,084,000 298,147 1.78 General Institutional 11,350,321 12,210,000 859,679 7.57 Physical Plant 15,882,314 15,390,000 (492,314) (3.10) Public Service 330,409 332,000 1,591 0.48 Capital Outlay 46,965,822 48,001,000 1,035,178 2.20 Debt Service 32,860,370 29,808,140 (3,052,230) (9.29) Financial Aid Expenditures 62,609,833 58,642,000 (3,967,833) (6.34)

TOTAL EXPENDITURES $304,106,971 $299,193,140 ($4,913,831) (1.62)%

Other Sources (Uses):

Operating Transfers In $2,940,000 $1,189,000 ($1,751,000) (59.56)% Operating Transfers Out (732,004) 0 732,004 (100.00) Debt Proceeds 21,000,000 31,070,000 10,070,000 47.95

REVENUES

For FY2014-15, governmental fund revenues are budgeted to decrease by $2,480,101 or 0.98%.

Figure 3 shows total governmental fund revenues, which increased from $230.4 million in

FY2010-11 to $250.2 million in FY2014-15. This growth in revenues is a result of enrollment and tuition changes and the Smart Future Building Plan initiative to expand and upgrade the District facilities.

The growth of government fund revenue sources, for the past four years plus the FY2014-15 budget, has averaged 3.78%. In comparison, the average increase for the preceding five year period was 7.81%. The decrease in the local government fund revenue sources is attributable to legislation enacted into law in the spring of 2014, which reduces district property taxes by shifting a portion of operational funding to the State effective July 1, 2014. Tuition and fee revenue has been fairly steady; this is due to increases in tuition rates as enrollments have declined recently as the District’s employers continue to recover from the “Great Recession”. The FY2014-15 budget assumes enrollment is level compared to FY2013-14 projected actual. The decrease in the FY2014-15 institutional revenue is due to a decrease in rebate earnings. Factors affecting specific revenue categories represented in the graph above include:

Local Government Revenue

Local Government revenue provides 26.55% of all governmental funds revenue. Compared to the FY2013-14 actual tax levy, the FY2014-15 property tax levy is budgeted to decrease by $57,641,695. This decrease reflects a shift of $60,446,405 to state funding and a projected $2.8 million in available operating levy from net new construction value in the District. Figure 4 shows Madison Area Technical College’s tax levy compared to the WTCS state average levy.

Prior to FY2014-15 the District was permitted to levy property taxes up to a statutorily allowed operational mill rate of 1.5 mills; the District consistently remained below the limit. For the FY2014-15 budget, this operational mill rate limit is eliminated and an estimated .89 mills are removed from property taxes and transferred to state funding. See Figure 5 for a graphic representation of the District’s mill rate history.

Note: The mill rate limitation was eliminated with 2013 Wisconsin Act 20 and replaced with a revenue limit.

The decline in the mill rate through FY2007-08 occurred due to the District’s relatively healthy economy coupled with Madison Area Technical College’s commitment to maintaining a mill rate below the then statutorily allowed mill rate. The increases in mill rate from FY2008-09 through FY2010-11 represent increased base operating expenditures to accommodate enrollment growth due to the “Great Recession” and strategic initiatives coupled with assessed valuation changes. The changes in the mill rate in FY2011-12 and FY2012-13 reflect declines in assessed value, but represent no increase in operating levy, as state law did not permit the levy to increase. The increase in FY2013-14 represents an allowable increase due to net new construction within the Figure 5 Figure 4

operations to state funding, assumes no growth in the District’s equalized valuation, and includes an estimated increase of 2.98% in operating revenues due to net new construction.

State Revenue

State revenue, budgeted to be 30.78% of total governmental funds revenue, includes the following major components: general state aid, performance-based aid, new state operational aid in lieu of property taxes, grants, WI GI Bill Remissions, student aid, inter-district supplemental aid, state aid in lieu of personal property tax on computers and state aid in lieu of property taxes on DNR exempt land.

Although the District generates 13.87% of the statewide aidable FTEs, it is projected that the District will receive roughly 13.20% of the statewide general operating aid for FY2014-15. Each district’s share of the aid is based on an expenditure-driven formula equalized for tax-levying ability, expressed as taxable property per full time equivalent student for 90% of the general state aid with a total state appropriation of $79.68 million. Madison College expects to receive $10.876 million or 13.65%. The remaining 10% of general state aid appropriation or $8.85 million provides that a performance based formula be used based on the college’s performance with respect to performance criteria with 9.17% coming to Madison College or $812,000. Districts receive a percentage of the operational aid in lieu of property taxes based upon the equalized value of each district compared to the equalized value of the state. The District expects to receive 14.89% of this funding or $60.446 million in FY2014-15.

Madison Area Technical College’s state aid revenue had been declining as a percentage of total district revenue from FY2005-06 through FY2013-14. Figure 6 represents a 341.25% increase in state revenue as a percentage of total revenues for governmental funds for FY2014-15. This increase in state revenue as a percentage of total revenues is due to multiple factors including: the shift of a portion of operating revenues from property taxes to state funding; the shift of general state aid distribution between the existing formula and performance based funding; a

grants; an increase in computer aid, and reduced inter-district supplemental aid. These factors contribute to the change in state aid as a percentage of overall revenue in governmental funds.

Federal Revenue

Federal revenue is primarily derived from grants for services or projects and student financial aid. For FY2014-15, those revenues are expected to decrease by $4.99 million or 7.74%.

As depicted in Figure 7, the level of total federal revenue decreases for FY2014-15. It is anticipated that funding for federal student aid will decline by $4 million due to a decrease in federal dollars available to students. Federal funds from the National Science Foundation will be reduced by $572,000 from the FY2013-14 level. The District is also anticipating that funding from the Carl D. Perkins Career & Technical Education Improvement Act (Carl Perkins Act) and the Adult Education and Family Literacy Act will increase by $237,000 compared to FY2013- 14. The federal grants from the Department of Labor will also increase the federal revenues by $308,000.

Tuition and Fees

Tuition and Fees, which make up approximately 16.91% percent of total governmental fund revenues, are estimated to increase $657 thousand or 1.58%, reflecting an increase in tuition rates with enrollment holding steady compared to FY2013-14. Tuition and material fee rates are set annually by the WTCS Board based upon estimated total operational expenditures of all Wisconsin technical college districts. This revenue category also includes miscellaneous student fees, including out-of-state tuition, community service course fees, group dynamics course fees, testing fees, application and graduation fees.

Institutional and Other Revenue

Institutional revenues include contracts for instruction with business and industry and high schools; interest and investment income; gifts, grants and bequests; equipment sales and Other Institutional Revenues. Institutional and Other Revenue represent about 1.98% of total governmental funds revenues.

EXPENDITURES

For FY2014-15, governmental fund expenditures are budgeted to decrease by $4,913,831 or 1.62%. The majority of the change is due to net expenditure decreases in the Special Revenue Non-Aidable for student financial assistance and Debt Payment Fund compared to FY2013-14 levels. Operating expenditures increase over FY2013-14 by .66%. Figure 8 shows total governmental fund expenditures, which increased from $253 million in FY2010-11 to $299.2 million in FY2014-15. Instruction is the largest category for FY2014-15 expenditures, representing approximately 38.12% of total expenditures.

Following the requirements of the Wisconsin Technical College System, the expenditure functions are defined within the expense expenditure categories of Operational, Debt Service and Capital Outlay as follows:

Operational Expenditures

• Instruction. This function includes teaching; academic administration, including clerical support; other activities related directly to the teaching of students; guiding the students in the educational program; and coordination and improvement of teaching.

• Instructional Resources. This function includes all learning resource activities such as: the library, learning resource center, instructional resources administration and clerical support.

• Student Services. This function includes those non-instructional services provided for the student body, such as: student services administration and clerical support; student recruitment; admissions; registration; counseling, including testing and evaluation; health services; financial aid; placement; and follow-up.

• General Institutional. This function includes all services benefiting the entire District, exclusive of those chargeable directly to other functional categories. Examples of this type of expenditure are legal fees, external audit fees, general liability insurance, data processing, personnel, employment relations, and affirmative action. This function includes the cost of: the District Board, the Office of the President, the District Finance Office, and general supporting administrative offices serving all functions of the District. • Physical Plant. This function includes all services required for the operation and

maintenance of the physical facilities. General utilities such as heat, light and power are included in this function.

• Public Service. This function records the cost of offering noncredit courses for public betterment.

Figure 9 depicts the components of total operating budget expenditures for FY2014-15. The

amounts expended on personnel-related costs represent 79.66% of the budget, a decrease of 1.56% compared to the prior year adjusted budget.

Debt Service

This classification includes principal and interest payments on outstanding debt. Debt Service is budgeted to decrease by $3.0 million or a reduction of approximately 9.29%. The debt service fund is decreasing due to the retirement of higher interest debt. Due to the District’s financial health, the District’s debt continues to be received favorably in the debt markets. District issuances are sold at low interest rates, which also help minimize annual increases in the debt service tax levy.

Capital Outlay

These expenditures are for the acquisition of fixed assets or additions to fixed assets that are presumed to have benefits for more than two years. It includes expenditures for land or existing buildings, improvements or grounds; construction, addition or remodeling of buildings; and purchase of moveable equipment and furniture costing more than $500 per unit or set. Capital outlay is budgeted to increase by roughly $1 million, or 2.20%, over last year’s adjusted budget. The increase is due to the completion of portions of the new construction for the Smart Future Building Plan projects. For detailed information on this portion of the District’s budget, please see pages 41-43.