MARICOPA COUNTY COMMUNITY COLLEGE DISTRICT
SEPTEMBER 9, 2008
A work session was scheduled to be held at 5:00 p.m. in the Rio Conference Center at Rio Salado College in Tempe, Arizona, pursuant to A.R.S. §38-431.02, notice having been duly given.
Don Campbell, President
Colleen Clark, Secretary
Linda Rosenthal, Member
Scott Crowley, Member
Jerry Walker, Member
Joyce Elsner for Ken Atwater
Attendance: 84 people
RETREAT (4:15 p.m. through 7:00 p.m.)
Welcome & Introductions
Governing Board President Dr. Donald R. Campbell convened the work session and welcomed everyone to this session focused on the budget for the Maricopa Community College District. He introduced Ms. Debra Thompson who would be serving as session’s facilitator.
Welcome & Session Overview
Vice Chancellor for Business Services Debra Thompson welcomed everyone present to the evening’s Work Session entitled “Got Money – Where’s It Going?” Ms. Thompson provided the following comments:
“I also welcome and thank everyone for participating in tonight’s work session. I sincerely appreciate the opportunity to share information with all of you and engage in a dialogue about this district’s resources and finances.
I believe that a budget is one of the most significant policies that a board or governing body will adopt or enact…and it does so annually, a remarkable feat in many ways. A budget sets resources and creates programs and services by committing resources to these efforts. At the same time, it does so in the context of relevant laws, regulations and standards, many of which are little known or understood by those involved in budget development or ultimately program administration. The result of this interplay is that any institution’s budget is, at the same time and sometimes for the same person, both transparently clear and mysterious. It is also the subject of keen interest by many stakeholders.
Enrollment is a driver of our budget, largely because of the statutes that govern us. While we remain a extremely large district, with more than 100,000 students more than the 3 public universities combined, we’ve experienced enrollment losses in the past 3 years…not large at 1-2% each year, but of concern, from a service perspective and a financial perspective. Additionally, looking over our 45-year history, we experience declines in 2-3 consecutive years about every 10 to 12 years. The reasons may be the same or different from period to period but there is some cyclicality in enrollment changes, although it is hard to keep this perspective after a long period of growth.
Enrollment declines are not the only concern.
One of our key initiatives and one of the key components of our budget is our 2004 capital program.
The voters of Maricopa County have entrusted our district three times in the past twenty years to initiate capital development programs funded by General Obligation bonds; with this approval, the voters also allowed us to increase property taxes to pay that debt. The bond funds enable large scale development district wide that is not feasible with the capital aid community colleges typically have received from the State.
In our third program of $951 million we were expecting to acquire land for long term development and projected we might add 1 million square feet of classrooms and support space to the existing 5+million square feet. But with construction inflation at high levels, many projects have been and will be continue to be scaled back. Because the State is experiencing budget shortfalls due to economic conditions, our capital state aid was fully suspended in FY08-9, compounding our ability to make necessary repairs, library acquisitions and to complete projects.
My last comments about areas of concern are about are operational budget.
We have some diversity in the revenue sources that fund our operational budget…property taxes, state aid and tuition and fees. But there are limits on all three, a fact that we’ll discuss in more detail later in our program.
And overall the realities of our economy impact these resources. So, for example, the State of Arizona put in place a cut of nearly 4% of our operational aid.
We’ve scaled back with budget cuts and have limited new allocations.
As we look to the future, we predict more challenging times. Not a crisis to be sure; however, no one should assume that what we have moved beyond the difficulties we have personally experienced or observed about the overall economy and the losses sustained our district. As to the future, we all need to assume sluggish revenue growth or even declines, made more challenging by inflationary pressures. In tonight’s program, we hope to give you a clearer picture of this and what it means to our system.
Again, I would like to thank all of you for participating tonight and without further ado; I would like to introduce Dr. Rufus Glasper, Chancellor of the Maricopa Community Colleges.”
State of Maricopa Overview
Chancellor Dr. Rufus Glasper expressed appreciation to everyone present and provided the following comments:
“Back in the early 1990s, the economy was in very bad shape. The state cut appropriations to community colleges, there were even declines in property taxes. Enrollment was down.
By the mid-1990s, enrollment was up and the State started to fund the statutory formula and even gave some additional appropriations in a couple of years. Property tax growth returned.
But then back in 2001-2003, the State experienced budget problems resulting in cuts of about 5% to our state appropriation and then flat funding. At that time, our enrollment was growing at a significant pace; property values and growth were up.
This cycle, too, ended for a time.
But today we find ourselves with an economy that is having significant negative impacts on individuals and institutions.
$4 per gallon gas prices change how we spend our money and how we live. Rising joblessness and the issues in the mortgage industry have meant that many people have lost their homes or can’t afford to buy a home.
The State of Arizona is again having budget problems. So is local government. Maricopa County cut agency budgets by an average of 5.6%. The City of Phoenix cut budgets by more than 10% and is exploring what additional cuts of 30% may mean.
Our district lost 100% of capital aid in FY08-9, which will mean the delay if not outright cancelation of the purchase of library books, equipment and system repairs. We cut operational budgets by $3 million and lost $2 million in our operational appropriation from the State.
These are tough times.
But we will end this year and every year strong…operationally and financially. Our mission is teaching and learning. To do that we offer thousands of courses taken by 270,000 students every year. That teaching and learning is supported by a cadre of employees who admit students, tutor them, get them financial aid, who buy supplies and materials, facilitate hiring, plan and manage budgets. There is no one activity or process that alone allows us to serve the community. All combined, as One Maricopa, we serve.
One Maricopa is one of the three pillars of my vision for our district:
My vision is that Student Success is ensured when we act as One Maricopa and when we each act as stewards of the highest order.
We face this financial challenge with a solid and strong financial condition including a structurally balanced budget—our revenues equal expenditures and expenditures are not supported by one-time resources. We monitor our resources carefully and regularly. We scale back where and when needed. We plan and focus. We are realistic.
We are very attentively assessing the resources that may be available to us. We will have a balanced budget. But it may be different than budgets in recent years.
Financial –or other-- challenges necessitate change. Sometimes rapid change. There often is resistance to change. Proposals may be put forth that are controversial or at least are different. Some may be divisive. These challenges may sorely test us.
I challenge each and every one of us to take the challenges ahead seriously but with the confidence that we have worked through prior downturns, we have solid systems in place and we will work through the issues of the day successfully. As One Maricopa, we will work together to maintain focus on teaching and learning and student success and our stewardship will advance that and the trust placed in us by the community
Thank you all for taking the time to participate in tonight’s session and what is the first of many discussions as we prepare the FY09-10 budget.”
State of Arizona Overview
The Governor’s Chief of Staff Jim Apperson commented that he wished he could be the bearer of good news and that revenues would be going through the roof, however, that was not the case. He stated that he had drawn a chart for someone and that the first arrow was down, the next arrow was slightly up and the last went a little higher. He said he didn’t know where things were going but everyone was sharing the challenge and paid. On the national and local economic levels, a tough housing market existed. It was a difficult session at the state legislature last year; universities were cut by $50 million and the cuts have caused many hardships for education. School children are having to go without vaccinations and medical insurance cannot be obtain by many. Budget recommendations will be made to the Governor in about two months and the budget will be published in January. Revenues for 2010 are not looking good. There is immediate concern for 2009 as there may be a need do more cuts. In tracking all economic indicators, it is very clear that the Arizona economy has been very difficult. California is also having a difficult time, so we are not alone. On the other hand, Alaska is doing very well. Real estate will turn around. Times get better when revenues increase (sales taxes, individual income taxes, etc.) Consumer confidence is not good (people are not buying big ticket items such as cars).
Associate Vice Chancellor for Business Services Gaye Murphy provided a powerpoint presentation showing what drives the budget process at the Maricopa Community Colleges. She stated that everything Maricopa does is guided by the Vision, Mission, and Values. We serve students and even though enrollment has declined we still serve many students. Some students are on their way to four-year degrees. Courses serve to provide firm foundation in general educations, both academically and occupationally, as well as workforce development activities. The budget process spans many months and there are many people involved in the process. The budget consists of a general fund, an auxiliary fund, a restrict4ed fund, and a plant fund. There are three primary fund sources: property taxes, state aid, and tuition and fees. Ms. Murphy provided information on the following categories:
- FY2008 Tuition Comparison of Maricopa, Public 2 year, ASU
- FY2008 Expenditures by Object
- FY2008 Expenditures by Function
- FY2009 Expenditure Priorities
- Budget cuts
- FY2009 Plant Fund Dilemma
- Inflation Impact on Construction
- Inflation Impact on Bond Projects
Vice Chancellor Debbie Thompson came forward to discuss the future which must be analyzed by looking at the past. She reviewed the following:
- State Aid scenarios
- General Fund Revenue by Source
- Impact of Revenue on Tuition and Fees
- Property Tax Revenues
- The need for new ideas pertaining to financial planning
- Future Funding Needs
Those present were asked to participate in table discussions on the following assumptions and questions:
Assumption: Suppose our budget did not grow or even declined . . . yet the district has traditionally funded salary increases, benefit increases, operational costs for open and non bond funded facilities, made allocations for enrollment growth and new faculty. If these or other needs are so critical that funding increases are required, how would you accomplish this?
1. What priorities for new dollars do you think exist and why?
2. What strategies would you use to fund these priorities and why?
3. What strategies would you avoid and why?
- Would protect employees.
- Avoid layoffs.
- Making capital investments and temporary suspension of procedures that limit you.
- Look at tuition alternatives
- Enrollment management
- Leaseback program.
- No sacred cows
- No secrecy
- Be forthright
- Protect front line
- Encourage training of employees for new opportunities
- Efficiency of processes
- Avoid layoffs and tuition increases
- Sustainability of existing colleges
- Focus on Student Centered Activities
- Streamline operations – One Maricopa
- Job sourcing
- Cost effectiveness of teaching and learning Look at impacts
- Main priority has to be student centered focus
- Vision, courage and will to do tough stuff
- Do serious scenario planning
- Cannot be all things to everyone
- Avoid business as usual
- Avoid tuition increases
- Look at corollary growth
- Look at duplicate services
- Look at curriculum; consolidate programs
- Suspend policy manuals during this tough time
- Some things should sunset.
- Need to add and add
- Analyze those things that are nice to have but don’t need to have
- State aid fund for students like universities
- Reallocation of resources to colleges
- Bring in more students. Have a real conversation about working somewhere else.
- Offer retraining for faculty who want to do something different.
- Don’t tell the budget office what to do.
- Focus on workforce development and training.
- Retrain staffs
- Look at cohort programs.
- Look at offering classes when they can come
- Need to be more efficient and not compete with each other Need to fix SIS
- Respect values
- Establish chairs
- Small merit-based compensation pool.
- Encourage innovation
- Capital for equipment replacement
- Optional to sustain buildings
- Reduce travel budget, official functions, and 49% program
- Use attrition to reduce payroll costs
- Consolidate programs.
- Avoid raising tuition
- Identify revenue streams
- Look at programs that are self-sustaining
- Focus of enrollment growth should be to get students into workforce
- Look at alternative delivery methods
- Avoid reliance on tuition as a source.
Chancellor Glasper recognized employee group leaders in attendance (PSA, MAT, and FEC). He commented that employee groups need to become ambassadors to employees. We are a sound institution and need to remain that way. We need to focus on student success. Many others are not as well off as many around the country. We are well funded and solid. Employees were given flex benefits and salary increases. We may need to ask employees to retrain. We need to let everyone know what needs to happen. Need to prepare for new board members. How do we need to proceed? Need to be cooperative. Need to think about what we can provide that will allow us to fulfill our mission.
The meeting concluded at 7:00 p.m.
Governing Board Secretary