Lawmakers have done their work on a budget for the state, but that doesn’t necessarily mean officials at Shoreline have a budget for the community college.
“I’d say we’re moving toward clarity; we know more now than we did before,” Shoreline Community College President Lee Lambert. “Now, we have to wait for Gov. Gregoire to sign the budget, and she can veto sections if she chooses, then the State Board must take action on the allocations to the colleges.”
According to staff at the State Board of Community and Technical Colleges, Gregoire has until June 16 to sign the legislation, the same day as the next scheduled state revenue forecast. She can also veto some items while approving others. The next meeting of the State Board is set for June 22-23, with the agenda expected to include budget-related items.
“We’re working now to better understand the timing so that we can get a college budget passed by our trustees before July 1, the start of the new fiscal year,” Lambert said.
Based on experience with previous allocations, Vice President for Administrative Services Daryl Campbell said the college looks to be losing about $2.7 million in direct allocation from the state for the coming year.
“It’s good news, bad news,” Campbell said. “We had previously planned for about $3.1 million in cuts, so the initial number is lower, but the budget bill also includes a number of other reductions that are difficult to gauge from our individual campus impact perspective.”
The caveats are many, Campbell said.
The bill includes salary reductions for state employees, but the language appears to be unclear relating to higher education and the budget impact for institutions. For example, compensation is reduced by 3 percent for the biennium, but higher education institutions are exempt. Exempt, except those represented community college classified staff making more than $2,500 a month, “must be reduced by 3 percent and temporary salary reduction leave of 5.2 hours per month for a full-time employee will be earned.“
The bill also says that represented classified employees funded from non-state funds must be treated the same as those funded with state funds. While other higher education employees are not included, the schools appear to be on the hook for reducing state-funded compensation costs by the same 3 percent.
In addition, the budget bill caps pension contributions at 6 percent, but doesn’t relieve colleges of the obligation to continue matching existing employee plans that are above that level. In comments to the Board of Trustees at their May 25, 2011 meeting, Campbell said that obligation could add up to $434,000 that had been coming from the state and now must come from the college. The kicker, Campbell said, is that the bill identifies the source of those funds: Tuition.
“The bill raises student tuition by 12 percent for each of the next two years,” Campbell said. “But, from that added tuition revenue must come the payment for pensions.”
Not only that, but 3 percent will be siphoned off for an “innovation fund” that is intended to buy a new technological backbone for the entire state community and technical college system, unifying back office and other functions. The total price tag for the system, dubbed “ERP” for Enterprise Resource Program, is projected by some to hit $100 million, with implementation to begin in the next several years.
The budget makes a reduction of $2 million in the coming year and an additional $3.5 million in following year for “efficiencies” in the system. Those savings could come from consolidation of college districts, consolidation of administrative and governance functions such as human resources, budget and accounting services and presidents’ offices; consolidation of student services functions and libraries; and other administrative efficiencies such as greater use of telephone and videoconferencing and reducing travel costs.
Campbell said there is no prior experience to fall back on for how plan for that reduction.
A separate bill gives the SBCTC free rein to implement what is called “differential tuition.” The issue is that some programs cost more than others to run, but the basic tuition is the same. What isn’t clear is how or when differential tuition could impact college budgets.
While there is still uncertainty remaining about final budget numbers, the trustees at the May 25 board meeting discussed how they might consider helping by putting some of the board reserves toward the problem.
“We’ve been talking for months about the idea of using board reserves, but we didn’t have a plan,” said Board Chairman Jerry Smith. The board reserves total approximately $1.2 million.
Campbell outlined a number of potential options for board consideration, including bridge funding for personnel during the current downturn, investing in strategic initiatives and keeping the reserves intact for unforeseen needs.
Trustee Shoubee Liaw asked somewhat rhetorically if the respected economist Paul Krugman would approve of using reserves for payroll needs. The answer came back from economics instructor and interim dean Bob Francis, who was sitting in the audience: “No.”
In the end, Smith polled his fellow trustees on their inclination to use board reserves in some fashion, getting positive, but nuanced, thumbs up all around. Trustee Phil Barrett closed the discussion by asking for further discussion at a future board study session or the annual retreat.