Budget Crisis! A Team Approach on How NOT to Become a Casualty

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Erin Curtis
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In Budget Crisis! A Team Approach on How NOT to Become a Casualty, Erin Curtis captures the comments offered at a Budget Workshop by a panel of trusted colleagues and experts on what colleges can do to address the current budget dilemma. This select group of CEOs and CBOs reach into their tool box to provide some concrete ideas on how to survive the current budget crisis. We want to thank Association of California Community College Administrators (ACCCA) for allowing us to share this article in the March edition of the iJournal.

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In the face of the worst state and federal economic crises in memory, community college administrators will be asked to submit to draconian budget cuts while continuing to achieve excellence and accommodate growing enrollments. To call the next few years “challenging” is to understate the issue dramatically.

To help administrators navigate the issues, this year’s Budget Workshop included a panel of trusted colleagues and experts with excellent advice drawn from experience on some of the best and worst things colleges can do. Administrators from large multi-college districts and smaller, rural districts addressed issues ranging from cash flow management to meeting the 50% law and full-time faculty obligations to offering early retirement incentives to containing construction costs, and how all of the above impact one another.

No Silver Bullet

While there is clearly no silver bullet strategy for managing the issues community colleges are facing, every panel member stressed the importance of communicating the issues widely to the college and the community.

“I spend a lot of time with our board sharing bad information,” said Eddie Hernandez, chancellor of Rancho Santiago Community College District.

Hernandez has also put a permanent budget update item on the board’s agenda, so that information is shared at every meeting.

“It demonstrates that the budget is a priority for us, and gives us the opportunity to show and communicate to the board what steps we are recommending be taken to address the budget crisis.”

Shared Budget Information

In addition, all budget information that the chancellor’s office receives is shared with the entire campus community – from the bargaining units to the senates to the board – and Hernandez also sends a weekly email blast to the campus community sharing budget updates and recommendations.

Hernandez has also held meetings and forums to discuss the budget situation both within the district and throughout the community.

“We started taking big belt-tightening measures last year when bracing for property tax shortfalls,” Hernandez said. “It takes time to communicate the scope and impact of the problem, so it’s important to start getting information out now and keep putting it out there.”

Avoiding Crisis Mentality

Doug Garrison, superintendent/president of Monterey Peninsula Community College District, also underscored the importance of communication. Garrison stressed that the message must be honest and transparent, with a perspective that this is going to end. The trick, he says, is avoiding the crisis mentality without having people feel that the crisis isn’t real.

“We’re still going to serve students, protect employees and keep a long-term view,” Garrison said. “As a small college, we’re always in a little bit of a fiscal crisis. But we will continue to focus on our long-term priorities.”

Garrison said that his district began preparing for the budget crisis two years ago, when they created a Fiscal Stability Report.

“Now we’re developing a long-term financial plan for the college, so that everyone at the college knows the college’s financial situation, but can focus on our tasks of teaching and serving students,” Garrison said. “I’m not a good public worrier. As a CEO, I need to keep my focus on our long-term priorities.”

Getting Input & Buy-In

Joe Bissell, vice president of administrative services at Monterey Peninsula CCD, stressed that while CBOs must take the lead in recommending solutions to budget problems, they must also go out to college constituents to get input and buy-in.

He also stressed the importance of avoiding gimmicks to solve this budget crisis.

“This is not a short-term problem,” he said. “This is at least a three-year problem.”

Cash Flow: The Biggest Issue

Finally, with the amount of deferrals that have been recommended for the next 18 months, Bissell said cash flow will become the biggest issue, and CBOs need to explore all their options regarding how to get cash.

Bissell said it is important that colleges match ongoing expenses with ongoing revenues. “Don’t put one-time money towards ongoing expenses,” he said. “And remember that especially in times of fiscal concern, it is important that the CEO and CBO act as a team. We’ve got to keep our heads, and remember we are running ongoing institutions. We need to keep a long-term view.”

Budget Crisis Survival Kit

Several panelists, including Sheila Vickers of School Services of California, offered tips for navigating the budget crisis and cash flow issues that are sure to arise. Below are some of Vickers’ tips:

  • Maintain monthly cash flow information (year-to-date actuals and projections into next year)
    • This will help you determine when you need to borrow, how much and from whom
  • Determine when borrowing may be needed and from where (keep in mind when loans need to be paid back)
    • Other internal funds
    • TRANs
    • County treasurer (must be paid back within a year at most)
  • When loans aren’t enough, stop spending!
    • Freeze open positions
    • Implement additional review of personnel and purchasing transactions
      • Is it mission critical? Does this have to be done NOW? If not yes to both, put off.
    • Apply to all funds – capital, categorical, etc. (any cash can help you make payroll)
    • Accelerate collection of revenues wherever possible
  • Review status of all facilities project
    • Will borrowing cash be less expensive than suspending the project
    • Review options with legal counsel (there may be legal ramifications if project is suspended)
  • Budget Management
    • If reduction in force is necessary, start now because of legal timelines
      • Consider an “early-tell” incentive for those considering retirement to fill out the paperwork now
      • Consider an early retirement incentive IF it pencils out
      • Identify reductions that can be made NOW (freeze current year spending, consider extending the freeze through next year, etc.)
      • Position yourself to take advantage of categorical funding flexibility
      • Consider zero-based budgeting for next year
      • Staff tightly for next year
        • Use maximum class size & case loads to determine minimal staffing

 

About the Author

Erin Curtis
Communications Director
Association of California Community College Administrators (ACCCA), Sacramento, California (Fort Collins, Colorado)

Erin Curtis is the communications director for the Association of
California Community College Administrators (ACCCA). She provides counsel to the Board of Directors and the Executive Director, as well as edits the monthly newsletter and manages the organization's website and marketing materials. From 2001 to 2007, Curtis served as the public affairs director and ultimately the associate vice chancellor for educational and external affairs at the Coast Community College District. During her time at Coast she also served as the interim dean of business & computing, as adjunct faculty teaching public relations, and as executive director for the district foundation.
erin@curtiscommunications.org