Budget Message to the College Community
An update on the College of the Redwoods budget.
In my August 30, 2016 message to the District I wrote that the Governor’s Office signaled that there will be difficulties balancing the State budget by 2019-20. I also shared that our budget is impacted by salary step increases, health and welfare costs, pension payments to PERS and STRS and the commitment to increase the fund reserve. Those budget pressures coupled with slow enrollment growth would cause the District’s future budgets to be out of balance.
I also pointed out that with so many expense and revenue variables (enrollment numbers, health insurance rates, energy costs, possible sluggish economy, or late unanticipated budget allocations from the State) influencing the District’s budget, it is difficult to know exactly how big of a budget problem we will have in future years. Given our small fund reserve and the uncertainty of the State budget, I decided to take a conservative approach to assuming how large a deficit we may face and take proactive steps to maintain the fiscal strength of the District.
I believe that doing our best to anticipate future budget challenges and then take proactive steps to address the challenges will give time for the college community to reflect and then give feedback and suggestions. Starting this conversation well before the budget moves into a crisis mode allows us to consider more options and allows us more time to plan and then implement decisions.
Over the past several weeks, the Cabinet and I developed contingency plans and thoroughly reassessed our operations to identify ways to contain costs to match the revenue sources. Our decisions were guided by the following principles:
• Maintain the academic strength of the District.
• Engage early in thoughtful, collaborative dialogue with the campus community relative to the potential for a budget shortfall and to solicit feedback on addressing the issues.
• Be sensitive to the needs of all members of our community, but particularly of those who may be the most financially at risk in an economically unstable climate.
• Improve efficiencies in our general and categorically funded areas.
• Work diligently to make the most of every position vacancy.
• Look for opportunities to improve revenues and expand access, as we have with dual enrollment, Pelican Bay, online course expansion and outreach.
• Work with local legislators and leaders in Sacramento to address mandated cost payments and low funding levels for small, rural community colleges.
• Safeguard the fiscal soundness of our categorical and self-support programs.
• Position the District to deal with our structural budget problem.
• Maintain our commitment to strengthen our fund reserves whether the budget is robust or lean.
• Work with all constituent groups to identify cost reduction actions and revenue-generating ideas.
• Commit to addressing our budget challenges early, in an open, honest and transparent manner.
I want to state again that the budget reality we face is not a crisis. Instead, we are methodically planning for potential events one to two years ahead and further. This is what healthy colleges do relative to budget planning. We want to take a variety of steps to boost the outlook of our budget in a well-intentioned desire to anticipate the challenges we will face in 2017 and beyond.
Over the past several months, the Cabinet and I worked with the CRFO, CSEA and Academic Senate leadership as well as the Management Council and Confidential Staff groups to identify potential actionable cost reduction ideas. After much discussion, I approved the implementation of several cost reduction actions that will affect the 2017-18 budget:
• Replace the current Del Norte data lines with higher capacity CENIC-funded lines.
• Use student technology fee for wifi and software and hardware upgrades for students.
• Move a portion of the salary and benefits for the Director of Facilities and Executive Director of College Advancement from the general fund to non-general funds in recognition of their work in those areas.
• Fund Public Safety staff positions from parking fees to the greatest degree possible in recognition of their work maintaining safe parking areas.
• Capture savings from staff resignations, faculty retirements, and faculty pre-retirement workload reductions.
• Reduce the number of associate deans from four to two.
• Rehire the Public Safety staff vacancy at 10 months.
• Implement four-day work weeks during summer and winter break subject to union negotiations as appropriate.
• Implement peak day utility price actions.
• Increase the use of telepresence and WebEx meeting for communication between sites to reduce car/gas and travel expenses.
• Shut down the boilers each weekend starting at 10:30 PM Friday through Monday at 4:00 AM, except for showers.
• Consolidate summer classes into fewer buildings to reduce energy usage.
• Turn off computers every evening.
• Reroute lawn/turf watering to a well system.
• Install LED lights in the dorms.
• Replace old boilers in the Forum and Creative Arts buildings.
Although the above mentioned actions will result in some savings, they will not be enough to position the District to deal with budget problems over the next couple of years nor enable us to identify funds to reallocate to mission critical and FTES generating areas. Therefore, the administration will implement a reorganization of Human Resources, Student Development and the Business Office for additional net payroll savings. We will also implement a limited release of management and confidential staff. In doing so, I will try to ensure that individuals who are in positions to be released are given time to find employment outside the College, are able to be placed elsewhere in the College in a vacant position that must be filled or are given the opportunity to take advantage of the early retirement incentive.
In addition to the several cost containment action ideas previously mentioned, we are also going to use State funded projects to help us improve our physical plant operations. Our UIR project is now positioned to upgrade inefficient building equipment and replace old electrical transformers with high efficiency units. We are negotiating with the State to increase the funding above the current $36 million limit to allow us to complete more work on our infrastructure. The Fieldhouse is on a fast track process that may allow it to be replaced soon as part of the UIR project. This action alone could save the District from needing to pay several hundred thousand dollars for a costly complete roof replacement. We are working on new State project requests both at the Eureka and Del Norte campuses, including a request for State funding to pay to remove our old vacant buildings. These upgrades will ultimately save us utility costs and the extra maintenance costs associated with outdated facilities over the next several years.
The constituent groups also identified several ideas that we could not easily quantify in terms of budget savings or revenue generation; but will be pursued. Those ideas include:
• Offering classes at a cost effective classroom site in the Arcata or McKinleyville area.
• Evaluating the efficacy of our ADTs.
• Re-evaluating the centralization of operations and the effect on Del Norte.
• Evaluating the non-credit program and course offerings.
• Reducing the number of consultations to those who are deemed mission critical.
• Migrating to Gmail.
• Reducing reliance on printing.
• Improving efficiency of custodial staff, pick up office trash every other day/have departments.
• Moving documents to online/fillable forms to reduce paper.
• Promoting rental space during weekends and the theater to the community.
• Attempting to hold more conferences and meetings on campus.
• Creating a bicycle rental for students and staff to use to get around campus.
• Using bulk purchasing from warehouse for consumables.
• Moving to all electronic checks (EFT).
• Exploring alternative benefit partnerships for cost savings.
• Developing alumni fundraising with alumni student mentorship.
• Prioritizing energy efficient equipment in CTE programs.
• Adding more vans to fleet and centralize management and check out reservations.
• Relocating servers to new location and virtualizing servers.
• Evaluating general fund stipends.
• Expanding the use of 10 month personnel contracts.
I want to say again how important it is that we continue to work together to implement cost controls, to build enrollment, to strengthen reserves and to continue proactively planning for potential budget challenges. Please continue to ask questions and provide ideas on how we can increase revenue, improve our efficiencies and reduce expenditures.