Impuesto sobre la renta de las personas físicas

The four areas impacting Madison College the most are: employment rate; inflation; property values and net new construction in the District; and the recently implemented revenue limit on the operating budget and associated state funding. Traditionally, greater unemployment rates typically result in increased enrollments. Inflation, especially in the areas of utility costs and health care benefits, has been a concern in recent years. Property values in the District impact the level of taxes for property owners and the ability of the District to support educational and training needs of residents and employers in the District.

The College’s fiscal year 2014-15 budget is affected by policy changes included in the State of Wisconsin’s 2013-15 biennial budget that begin to distribute a portion of general state aids via performance. Separate legislation passed in the spring of 2014 creates a new revenue limit for college districts and replaces a significant portion of its property tax funding with state aid. Both of these items are discussed in greater detail in the Legislative section of the document.

Employment

According to the National Bureau of Economic Research, the “Great Recession” ended in June 2009. For Wisconsin, and the nation, the recession resulted in the most job losses in the last 50 years. The Madison area continues to fare better than the national economy: the adjusted Madison metro area’s unemployment rate decreased from 5.2% in January 2013 to 4.4% in January 2014 compared to the Wisconsin adjusted rate of 6.2% and the U.S. adjusted rate of 6.6% for January 2014. (Bureau of Labor Statistics http://data.bls.gov adjusted rate for the Madison Metropolitan Statistical Area and CPS Summary).

The following is a snapshot of employment in the Madison region (http://data.bls.gov):

Year Period Labor

Force Employment Unemployment

Unemployed Rate (Unadj.) 2004 Annual 327,246 316,085 11,161 3.4 2005 Annual 332,979 321,840 11,139 3.3 2006 Annual 336,708 325,188 11,520 3.4 2007 Annual 339,116 327,032 12,084 3.6 2008 Annual 340,862 328,617 12,245 3.6 2009 Annual 345,812 324,368 21,444 6.2 2010 Annual 346,629 325,977 20,652 6.0 2011 Annual 346,985 328,428 18,557 5.3 2012 Annual 348,836 331,527 17,309 5.0 2013 Annual est. 352,645 335,639 17,006 4.8

Note: 2013 data is an estimate as BLS has not issued final figures for December 2013.

According to the most recent Wisconsin Economic Outlook report from the Wisconsin Department of Revenue from winter 2014, the Wisconsin economy grew, as evidenced by increased employment, but Wisconsin employment is not estimated to return to its 2008 peak level of 2.9 million jobs until mid-2015. Real personal income is expected to grow 2.9% in 2013 and 4.0% in 2014 (http://www.dor.state.wi.us/ra/econ/2014/winter2014_fullrpt.pdf).

During the recession, Wisconsin lost substantial jobs in its two largest sectors: Trade, Transportation and Utilities and Manufacturing. Trade, Transportation and Utilities job growth was projected at 2.1% for 2014. Manufacturing job growth was projected to increase by 1.3% in 2014 and 2.4% in 2015. The Education and Health Services sector added jobs throughout the “Great Recession” and is expected to increase employment by 1.7% in 2014 and 2015. Finally, the report predicts that overall job growth will increase by over 40,000 jobs in 2014 and 2015.

Inflation

According to the Bureau of Labor Statistics, energy costs (fuels and utilities) have increased by

8.5% from March of 2013 to March of 2014 in the Midwest Region

(http://www.bls.gov/ro5/ro5cpi08.pdf). Overall, the national energy index has seen an increase of 28.4% for natural gas while electricity, gasoline and fuel oil have declined by 0.2%, 2.6% and 2.3% respectively. The overall Midwest Region consumer price index is up 1.5% over the same period, compared to a national increase also of 1.5%. To manage energy costs, the College has committed that all new construction and remodel projects will be energy efficient. When new facilities and additions opened in the fall of 2013, total energy costs for the College increased. Medical inflation could be as high as 2.10% for the 12 month period ending January 2015 (http://forecast-chart.com/inflation-medical-care-cost.html).

Property Values

The Wisconsin REALTORS® Association reported in April 2014 that existing Wisconsin home sales dropped for the third straight month in March 2014 down 11.3% relative to March 2013

(https://www.wra.org/HSRMarch2014/). The decrease is attributed, in part, to the harsh winter weather. In the 12 county South Central Wisconsin region, existing home sales decreased 3.5% over the 12 months ending March 2014. During that time, the median sale price in the region increased $3,600 or 2.3%.

According to the Federal Housing Finance Agency, the house price index (HPI) purchase-only increased by 7.69% nationally and 5.46% in Wisconsin for the 12 month period ending with 2013 Q4 (http://www.fhfa.gov). Housing values are set for tax purposes in January of each year, and those values reported to taxing authorities the following fall are used for computing taxes, which are billed to property owners in December.

Legislative

In June 2013, the legislature passed its two-year spending plan for 2013-2015. That plan provides in fiscal year 2014-15 a $5 million increase in general state aid to college districts and begins to distribute 10% of that total aid, or $8.85 million, via performance, rather than the existing distribution formula based on enrollment, expenditures and property values. The amount of general aid to be distributed in this manner increases by 10% per year until it reaches 30% in fiscal year 2016-17.

The legislature directed the Wisconsin Technical College System (WTCS) to develop a series of performance metrics, based upon nine factors that the legislature had identified, for distributing this portion of general state aid. The legislation requires each college district to select to be evaluated based upon seven of the nine factors. Based upon an analysis provided by the WTCS, had this new funding structure been in place in fiscal year 2013-14 Madison College would have received slightly more funding than it would with all the general state aid being distributed through the existing formula.

In January 2014, the non-partisan Legislative Fiscal Bureau reported that the State of Wisconsin would have a gross balance of $1.042 billion for the fiscal year ending June 30, 2015 when considering the opening balance of $619 million; this represents an increase of $896 million over what was projected in August 2013 after the 2013-15 biennial budget was signed into law. This projected growth in the balance estimate was stimulated by expected future increases in individual income tax receipts, general sales and use tax receipts, and corporate tax receipts. Based upon this information, the legislature and governor introduced a series of tax reduction proposals in January, including one related to the state’s 16 technical college districts.

In an effort to reduce the amount property owners pay in property taxes, beginning with Tax Year 2015 (property tax bills issued December 2014) the state will provide $406 million in new aid to decrease the property taxes levied by the 16 technical college districts. Specifically, the state will divide the equalized value of each college district by the total state-wide equalized value and take the resulting quotient and multiply it by $406 million to determine how much aid the college would receive.

As part of this legislation, the governor and legislature also eliminated the limit on operating levies and replaced it with a revenue limit. The basis of the initial revenue limit calculation begins with the amount that each college district levied for operations in the previous year. Beginning with Tax Year 2015 (college district fiscal year 2014-15), the revenue limit specifies

that the difference between the new state aid received by the college district and its revenue limit is the amount it can levy for operations.

The new law also provides for a growth factor in the revenue limit. The allowable growth factor is a percentage increase in the prior year’s revenue limit equal to the percent change in a district’s valuation due to net new private construction. The ability for college districts’ to levy for the purposes of debt service is not affected.

As a result of the new funding aid to college districts related to the property tax, the total funds available to college districts becomes the seventh largest state expenditure activity based on expenditures for fiscal year 2013-14. This means that in the future, as the state puts its biennial budget together, the funding of college districts will be subject to greater competition with other programs and interests.

Based upon the Legislative Fiscal Bureau’s January 2014 fiscal forecast, the legislature and governor also authorized spending $35 million in one-time funds on workforce development initiatives with approximately $31 million of this one-time money targeted to college districts to address academic programs with wait-lists in high-demand fields, identified by the state labor department. College districts will compete with one another for a portion of this funding.

As Madison College begins to receive more of its operating funds from the state, approximately 48% in fiscal year 2014-15, its future funding outlook is less predictable. State policy-makers will biennially determine how much funding to provide to college districts and that may vary with the state’s economic and fiscal condition and the policy preferences of elected officials. These changes to the college’s funding underscore the continued need to focus on long-term planning and fiscal responsibility.

In November 2014, all 99 seats of the state assembly, 17 seats of the state senate, and the governor will be on the ballot for (re-)election with election winners taking office in January 2015.

Process for Budget Adjustments

Continue the annual process of budget adjustment and revisions in the following steps: 1. All programs, services, and systems are expected to operate at capacity levels.

• Adjust overall budget parameters to reflect college needs, sound financial strategies, and updated assumptions.

• Reduce or eliminate expenditures that are not essential to operations and do not affect positions.

• Reduce or eliminate resources in areas not operating at full capacity as measured by students or staff members served.

• Reallocate resources until capacity is reached in programs and services. • Consider and implement budget savings strategies that cross college

2. If further budget adjustments are necessary, those adjustments shall be made by: • Reducing or eliminating non-core programs and services.

• Reducing or eliminating core programs and services.

Annual Budget Calendar

November 2013

through March 2014 Budget Planning Inputs and Assumptions

April 2, 2014 Budget Workshop with the District Board

April 9, 2014 Public Hearing Notice for District Board Review and Approval

April 29, 2014 Public Notice Published

May 14, 2014 Official Public Hearing

FINANCIAL