At a Board of Trustees meeting earlier this week Erie Community College President Jack Quinn sounded the alarm and asked for more money from the state. For the current year, community colleges in the state receive $2,597 per full-time-equivalent student.
It looks like the Assembly and Senate will compromise somewhere between a $50 and $100 per student increase in state aid for the next fiscal year. SUNY Trustees had proposed $285. Governor Cuomo proposed $0. ECC officials, according to the Buffalo News, need an increase of $125 to match the dollars the school received from the state in 2015-16.
“We’re going to find ourselves in a position of having to make some difficult decisions, which include every aspect of the college,” ECC President Jack Quinn Jr. said in a meeting with trustees at ECC’s South Campus in Hamburg. “This is going to take three or four or five different ways to tackle this. We can’t just go to fund balance or to a tuition increase.”
…Quinn said ECC will study whether to eliminate 30 vacant jobs in its budget for 2016-17. That could save the college as much as $2 million. The college’s pursuit of a new consolidated school of nursing in downtown Buffalo also will likely be put on hold.
“Clearly this is a reality check,” he said. “This will be a bare-bones budget for us.”
The college is presently working on its 2016-17 budget. Reserves have been diminishing and county government has provided only very small increases in its annual subsidies.
That leaves only one option on the revenue side of the budget, which is to increase student tuition again. The thing is, students are already carrying more than fifty percent of the costs of running the school. The original deal for school revenues was that costs would be divided equally between the state, the county and the students. That formula has not been honored in many years.
There has been occasional talk about students suing the college/state/county to follow the law on the division of revenues among the state, county and students. The student body has lots of things on their individual plates. The availability of state Tuition Assistance Program (TAP) aid to students and federal Pell aid soften the blow of tuition costs for many students. These factors likely tamp down the urge for legal action.
The college is dealing with a double whammy concerning state aid. The aid per student hasn’t gone up as fast as costs, and because the state aid payments are related to a rolling calculation of enrollment, the school’s declining enrollment has depressed the enrollment part of the state aid formula for ECC.
The community college needs for its operating revenues to match its operating expenses – a structurally balanced budget. There has not been a structurally balanced budget in a while. Financial reserves have been used to close budget gaps, but reserves are not recurring revenues; they are basically one-shot revenues.
The expense side of the budget
The school would need less revenue if it had lower expenses. But that is a problem.
The State Comptroller’s audit of the school, issued in January, drew a disturbing picture of ECC’s finances. The audit detailed numerous examples of growth in spending, particularly with new jobs, as well as raises that had not been authorized by the Board of Trustees. Among the lowlights of the state report were:
The Board has established a lax control environment and has allowed management to assume Board responsibilities and make key financial decisions with little or no Board oversight.
We found numerous control weaknesses over payroll processing and the maintenance of leave records. From September 9, 2010 through February 20, 2015, the President created 10 senior executive positions with salaries totaling $756,000 annually.
The President directed the Payroll Supervisor by email to make questionable compensation payments to two executives totaling $77,000 and increase the base salaries of all senior executives by 2 percent, totaling $27,000, without Board approval.
The Board also did not always ensure professional services were procured in a competitive manner. We reviewed payments totaling approximately $1.2 million made to 16 service providers during 2013-14 and 2014-15. The College paid 11 professionals a total of $440,000 for services without using proposals. Further, the Board did not enter into written contracts with eight professionals for services totaling $342,000.
I am still waiting for a response to my January inquiry to the college about copies of board minutes and who the school’s Freedom of Information Officer is.
The college’s 2015-16 budget includes approximately 22 senior executive staff (SES) positions – the people who run the school. The aggregated salaries of those employees total more than $2 million. There are also approximately 19 other employees making more than $100,000 annually. That would probably be a good place to start the budget trimming, in addition to eliminating currently vacant positions.
The school must also contend with increases in operating expenses including two recently settled union contracts, growing medical insurance costs, utility costs and other business expenses.
The College Board has created a committee that includes Dennis Murphy and deputy county budget director Tim Callan to prepare its “corrective action plan” in response to the state audit. The plan is due by April 15th. The board originally thought about hiring a temporary legal counsel and a temporary administrator to assist with the response, but instead chose to do the work themselves.
Looking at the big picture
County Executive Mark Poloncarz, in his state of the county address earlier this month, proposed a ten member “Operations and Strategic Planning Committee” composed of five of his appointees and five from the college. The purpose of the Committee would be “to assist ECC and the County to better address the needs of the college and the greater community… It would jointly examine issues related to the current operating and future direction of the college, especially as it pertains to long-term campus infrastructure needs, as well as examining operational issues detrimental to the county, such as community college chargebacks, location of classes to better address student needs, transportation, and other factors.”
Here is what the committee will report when they begin to function and eventually conclude their work: send money, lots and lots of money.
But the money cannot and should not be sent unless and until there are major structural changes made.
The financial problems of ECC did not just pop up overnight. I ended my work as a member of the Erie County Fiscal Stability Authority more than five years ago, but while I served on that agency our Finance Committee raised questions while reviewing the college’s annual budget about revenues not matching expenses. The response back then, as it is today, was to sweep issues under the rug and to hope for state-aid or enrollment-growth miracles.
The miracles will not be coming, so it is time get serious about the options that could offer some hope for stabilizing and developing the vital community institution that is ECC. It’s time to:
- Revamp the administration of the school with quality leadership who have higher education management experience.
- Get serious about reviewing the question about how many campuses the school can sustain. Three campuses are not sustainable.
- With the active encouragement and support of SUNY, begin the process of merging ECC with Niagara County Community College and Genesee Community College to create economies of scale and to right-size these collective institutions for the realities of Western New York in the 21st century.
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