ICC Austin Budget Presentation FY 2019-2023 Agenda Boards role in - - PowerPoint PPT Presentation

ICC Austin Budget Presentation FY 2019-2023

Agenda

• Board’s role in budget review and acceptance
• High-level / governance overview of the budget plan

○ Major planning assumptions ○ Alignment with the strategic plan ○ Compliance with Board policies

• Budget Specifics

○ Overview of major line items ○ Member rent and fee schedule

• Q & A

Objectives

• Understand the assumptions and trends used in

budget development

• Understand how the budget supports the goals set-forth

in the strategic plan (progress towards our Ends)

• Understand the why and necessity of rent increases
• Accept the budget and approve member rents and fees

(by April 25th)

Financial Oversight

• Legal duties of nonprofit boards (recap from Feb 21st mtg)

○ Texas Nonprofit Corporation Act

■ Duty of loyalty ■ Duty of care ■ Duty of obedience

• Basic financial oversight duties

○ Evaluate ICC Austin’s financial health ○ Ensure ICC Austin is on a financially stable path ○ Ensure compliance with proper financial systems and controls Resource: ICC Austin Board Financial Training

Board’s Role in Budget Review

• Look at the big picture and focus on results

○ Don’t get bogged down in any one number

• Key questions to ask and consider:

○ Does the budget align with the strategic plan and meet the goals established by the Board? ○ Are the projected expenses and income comprehensive and realistic? ○ Are the key ratios (profit margin, liquidity, solvency) in favorable ranges so that ICC Austin maintains and improves its financial health for the future? ○ Does the budget plan align with the board policies?

Resource: The Role of the Board in Financial Oversight

Keep in mind that we need to...

• Balance current member needs;
• Be stewards of the houses for future members;
• Provide affordable housing (now and in the future);
• Achieve goals set forth in the strategic plan;
• Make progress towards our Ends.

Organizational Alignment

(How it all comes together) Strategic Plan

(annual progress towards Ends)

Budget

(maintain a healthy business & accomplish strategic plan)

Ends

(provide affordable, cooperative housing for students w/ need)

Key Assumptions

• Ruth Schulze opens on time and on budget
• Inflation is currently ~2%

○

Remains between 2-3% for budget period

• Summer 2019 improvements are modest ($25k)
• Staff salaries for 2019-20 increase only by 2% for inflation

○

No increase to staff benefits

• $250k invested annually into capital improvement fund beginning in 2020-21
• Board has discussion about NASCO investment in 2019-20

Board Policies & The Budget

• Ends Policy
• B1 - Financial Conditions & Activities
• B2 - Business Planning & Financial Budgeting
• B3 - Asset Protection
• B5 - Staff Treatment & Compensation

Policy B2 – Business Planning & Financial Budgeting

The staff shall not cause or allow business planning and budgeting to:

• Deviate materially from the Boards Ends;
• Fail to be derived from a multi-year plan;
• Violate the other relevant B policies; or

○ B1, B3, B5

• Risk financial jeopardy.

Strategic Plan Goals (2018-2021)

• Foster and maintain healthy communities
• Invest in and maintain facilities
• Develop collaborative campus and community relationships
• Improve organizational stability
• Maintain operational excellence

Strategic Initiatives

Policy B2 – Business Planning & Financial Budgeting

The staff shall not cause or allow business planning and budgeting to:

• Deviate materially from the Boards Ends;
• Fail to be derived from a multi-year plan;
• Violate the other relevant B policies; or

○ B1, B3, B5

• Risk financial jeopardy.

Policy B2 – Business Planning & Financial Budgeting

The staff shall not cause or allow business planning and budgeting to:

• Deviate materially from the Boards Ends;
• Fail to be derived from a multi-year plan;
• Violate the other relevant B policies; or

○ B1, B3, B5

• Risk financial jeopardy.

B1 - Financial Conditions & Activities

“Staff shall not”

• Allow operations to generate inadequate net income (B1.1)
• Allow liquidity to be insufficient (B1.2)

○ Liquidity = current ratio

• Allow solvency to be insufficient (B1.3)

○ Solvency = debt-to-equity ratio

• Operate without an adequate reserve fund (B1.10)

Net Income, Liquidity, Solvency,

Adequate Reserve Funds

Policy B2 – Business Planning & Financial Budgeting

The staff shall not cause or allow business planning and budgeting to:

• Deviate materially from the Boards Ends;
• Fail to be derived from a multi-year plan;
• Violate the other relevant B policies; or

○ B1, B3, B5

• Risk financial jeopardy.

B3 - Asset Protection

Adequate Insurance

• ○

○ ○ ○

Policy B2 – Business Planning & Financial Budgeting

The staff shall not cause or allow business planning and budgeting to:

• Deviate materially from the Boards Ends;
• Fail to be derived from a multiyear plan;
• Violate the other relevant B policies; or

○ B1, B3, B5

• Risk financial jeopardy.

B5 - Staff Treatment & Compensation

Staff Salaries & Benefits

Staff benefits = $1016/person/month Includes insurance (health, dental, eye) and retirement savings

Policy B2 – Business Planning & Financial Budgeting

The staff shall not cause or allow business planning and budgeting to:

• Deviate materially from the Boards Ends;
• Fail to be derived from a multi-year plan;
• Violate the other relevant B policies; or

○ B1, B3, B5

• Risk financial jeopardy.

Rates Through 2022-23

Rent Rates & Inflation

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Inflation Adjusted / Constant Dollars

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College Houses vs ICC Austin

Affordable Housing

In Today’s News

• Steel House, the women’s cooperative residence at the University of Idaho which was

established in 1953, will be closing after graduation in May. At the last meeting of the Steel House Board of Directors, it was clear that with the continuing decline in the number

• f residents, it is not financially possible to continue operations. Many factors contributed

to this decision, including the increasing number of attractive apartment options located near campus.

• The closing of university housing cooperatives is happening elsewhere. In the Pacific

Northwest, Oregon State University closed its four co-op houses in 2014, mainly due to lack of funding for needed renovation.

Resource: University of Idaho Student News

ICC Austin and College Houses are soon to be all that is left of old west campus housing stock. ICC Austin must save money and invest in our facilities in order to continue providing affordable housing for future generations.

The Future & ICC Austin

How to grow and stabilize for the next 50 years

• External funding (fundraising, grants, alumni)
• Increase need-based financial aid membership
• Continue to examine and transform internal policies,

processes, and systems with a racial equity lens

• Create equitable, student-oriented measures
• f affordability

9 Houses ~ 188 Members ~ 4 Staff Forward Together