Budget concerns arise as new biennium looms
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Reports about the budget for the upcoming school year are starting to circulate with messages of both optimism and concern. The school, its staff and its programs are facing hurdles.
Recent concerns have crafted rumors of program cuts and faculty termination. As well, anxiety over whether federal issued grants will be renewed and the school’s current debt have raised eyebrows over the newly proposed budget.
UCC President Joe Olson, in an address on page 14 of the previous 2014-15 budget, professed optimism for UCC’s financial future. “This year’s budget reflects imagination and reality,” Olson said. “We have faced declining enrollment and budgetary adjustments that have left positions vacant and academic budgets reduced by more than 15 percent. At the same time, we’ve kept our tuition low.” That optimism may have run out.
Tuition costs are among the largest concerns for UCC students. Student tuition was recently raised to $85 per credit, a measure employed to maintain UCC’s high standards. Tuition often becomes repurposed back to students in their classes, supplies, building costs, health care and other necessities.
Partly because of this tuition raise, the precise amount of revenue brought in from tuition in the 2014-15 school year was $5,734,750, an increase of $66,374 from the previous year. Tuition estimates, however, for the next biennium (two year budget cycle) are calculated at only around $5.6 million.
The decreased enrollment rates have skewed the lowered tuition revenue. The recession of 2009 saw a spike in UCC enrollment, as the cheaper alternative to universities enticed more students to community college campuses. With the recent economic upswing, UCC’s enrollment numbers have dipped slightly. That lower enrollment affects revenue both from tuition and from state support.
UCC commonly sees a one percent increase in enrollment each year, but the current lower estimates compare more to the year before the recession, 2007-08.
The new budget comes on the eve of such dire news. A new biennium is scheduled to start soon. Every two years, UCC and all major Oregon community college negotiates a new budget based on state support projections. Currently, estimates expect 10 million will be given by the state for UCC’s upcoming biennium, which compares less favorably to the previous biennium’s worth of 10.4 million.
Rebecca Redell, UCC’s chief financial officer, gives an equation for how these estimates are produced, partly based on FTE or Full Time Enrollment equivalency, a factor in how the state determines the support they provide a college. “The way the funding formula works is . . . in October, updates come with all the FTE’s to all the community colleges, followed by a property tax,” Redell said. “It can be affected by enrollment at other colleges, too. If a large college like, say, Lane goes down in FTE, we get a boost in funding. But we’re budgeting for 10 million.”
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Overall, the state is looking to give out $535 million total to community colleges across Oregon in the next biennium, a number down from the expected $550 million initially reported. The state also supports UCC at a per student rate less than it has in previous years. All this equates to a loss of funding for the college.
“Over the last seven years, especially during the recession, they cut our funding greatly,” Redell said. “They didn’t have money to allocate. This is the first time since 2007, however, that the number has reached $500 million.” The inflated costs of necessary items such as insurance or electricity has taken strength from that number, though.
UCC’s funds for revenue come from state support, tuition and taxes. The reduced state support and reduced tuition numbers have created concern among both students and employees. Rumors have whispered the possibility of anywhere from six to 15 UCC staff or faculty being cut in the coming year due to budgetary concerns. Part of those cuts could come if the Trio TOP grant is not renewed. The grant was up for renewal and Caroline Hopkins, the TOP director, worked over 200 hours to compile the grant.
“The board has approved the development of a reduction in force plan,” Redell said. Every possible cut has been examined and based around the “recommendations” of the school’s board.
Organizations such as the cafeteria and the River Rush Bistro are among programs rumored to be cut, though both these rumors remain unconfirmed. At this point, Redell and all staff were advised against revealing such information.
Of course, all concerns waged in UCC’s board meetings focus on the betterment of one group: the students. According to Redell, the criteria for program cuts are based off of student need, and these decisions actively influence any potential staff cuts.
“What has the least impact on students,” Redell said. “Recommendations were made by a group of folks, by a leadership team. They met, and multiple times, to determine what would have the least effect on students. It’s difficult, because you are dealing with people’s lives.”
Alternatives have been given which would prevent or reduce staff or programs from being cut. UCC originally planned to begin an international program for the 2015-16 school year, but this was benched to a later date due to potential costs. Cuts in materials and supplies were also made to assist in the budget.
Costs across UCC range farther than materials and supplies, however. In the past few years, new buildings and plans for construction have been erected. The Bonney J. Ford Health, Nursing and Science Center, which officially broke ground on May 15, is being partially funded by a state-issued capital bond as well as donations.
The recently built Southern Oregon Wine Institute building has drawn concerns, as well, for how it will be paid off. Previous rumors stated that a balloon payment of $400,000 was due this year. Redell was adamant in squashing that rumor. “There is no balloon payment for the Wine Institute,” Redell said. “It has a bond; we have structured payments over the life of the bond. So, full faith and credit obligation bonds. And they were American Recovery and Reimbursement bonds, so we get a subsidy from the federal government.” That amount of reimbursement is set to be $80,000. The bond’s life will reach its end in the year 2035.
Still, the remaining concern lies with how UCC will keep a balanced budget with withering state support. Oregon has given $494,273 less than it gave in the previous five years. The largest decrease in support has come from state funding and overall tuition totals.
“During the last legislative session, community colleges committed to maintaining 2013-14 tuition rates in order to negotiate a small increase in state funding,” Olson said. “This effort is being made again, and we are keeping tuition at current levels. UCC continues to maintain one of the lowest tuition rates out of the 17 community colleges in the state of Oregon,” Olson said.
UCC also has possessed one of the largest reserves among the community colleges of Oregon. Built up over time from the sale of bonds, budgets for how the reserves would be used were created based off initial estimates of higher state funding. “What we were discussing a year ago was more than $650 million for community colleges [in overall state support], and we were told that was a realistic number,” Redell said. “So, it made sense to go ahead and maintain services and wait for extra money from the state.”
For the 2014-15 budget, Olson said, “We will be utilizing over $2 million from our reserves, but will still maintain that reserve over 10 percent,” Olson also said. “Should the state increase community college funds during the next session, I feel we will have sufficient reserves to bring us through another budget cycle.”
Concerns have been raised over continuing to use UCC’s reserves to balance the budget. Anonymous sources have criticized the inclusion of using reserves to balance the college’s budget, calling the idea “shaky and unfounded. Unsound.”
Either way, the school will continue on. For now, layoffs and cuts have been somewhat delayed. However, anonymous sources are saying the cafeteria is closing or undergoing substantial change.
Although the cafeteria may or may not be closing, the 2015-16 revenue for the food service, bookstore, and catering is expected at nearly $1.5 million. The total resources for this fund, called the Enterprise fund, is over $3 million because money is being carried over in a beginning fund balance, according to Redell. In the past, the book store has helped support the general fund with $100,000.
A wine incubator program is set to begin in the summer, which will finally utilize part of the $1.2 million EDA grant given to the Viticulture program.
The final budget will be voted on by the Board of Trustees on June 11 and will become public knowledge shortly after.