BENTONVILLE—When fall semester classes begin Monday at NorthWest Arkansas Community College, the only numbers most students will probably have on their mind are their grades and tuition.
College officials will have much larger numbers to consider, namely the community college budget. The budget for fiscal year 2013 received NWACC Board of Trustee approval in June and went into effect July 1.
College officials are projecting a shortfall for the year and are working to find ways to decrease the gap between revenue and expenditures.
Steven Hinds, executive director of public relations and marketing, said the college projects more than $38.9 in revenue and about $41.1 million in expenditures, creating a deficit of more than $2.2 million. The Board must also keep a 7.5% reserve, to the tune of $2.9 million. That money is used if there is an emergency that suddenly halts the college’s funding and allows the college to continue operating for a short time.
The college has a $6 million reserve, which is carryover from previous budget years. A college’s reserves are used in situations such as a shortfall or sometimes to make large one-time purchases. That money will be used to make up the shortfall, however much it ends up being next summer when the books close on fiscal year 2013.
To further complicate matters, the college expects to have a $1.6 million shortfall for fiscal year 2012, which ended June 30. The final numbers will be known and submitted to the state in September for the standard state review. That money must also come from the $6 million. If all projections hold true, that will leave the college with almost $3.8 million in reserve.
Hinds said college officials planned the budget with the most conservative assumptions in mind and not all of the budgeted expenses are expected to be needed. It was a similar situation for fiscal year 2012 as the college had projected to be $2.2 million over budget but came out with the smaller deficit of $1.6 million due to cost-saving measures.
Hinds said that with the bad economy, 20 of the 22 two-year colleges in Arkansas have had at least one year of a negative operating budget in the last eight years.
For the new fiscal year, several factors are expected to decrease the amount of money spent compared to what is budgeted. For example, the budget plans for the college to be completely staffed the entire year. With turnover, retirements and some positions not being filled for the entire year, some of that budgeted money will not be spent. Another factor is that instructors do not start teaching until August, which means any money budgeted for those positions to be paid all year will also not be used entirely.
Hinds said that when positions are vacated for whatever reason, there will be heavy consideration before refilling the position.
“We’re going to be evaluating every vacant position at the Cabinet level (to determine if it’s necessary to immediately fill it),” Hinds said.
Other operating expenses will be heavily examined and reduced as possible throughout the year including travel, some professional development and other miscellaneous operating expenditures.
“We’re taking this situation very seriously and working to reduce expenditures,” Hinds said.
College officials decided this week to hold back on $250,000 in planned salary adjustments that were designed to make certain positions within the college both more marketable and comparable to their private sector equivalents. NWACC has worked several years with a salary consultant to improve its overall salary structure.
Last year, the college gave recommended raises to several groups of administrators based on the consultant’s study. Different positions are being studied for fiscal year 2013 and while that study will continue, the college will not act on those recommendations immediately, thus saving the money.
The college is moving forward with raises granted to several groups of employees including a 4% salary increase to full-time faculty (which includes the automatic increase gained for another year’s experience); an increase in the per-credit hour pay for adjunct instructors; a 3% salary increase to qualified non-classified staff; and a 3% increase to eligible classified staff.
The Arkansas Legislature must approve the raises to the classified staff and that won’t happen until the spring. The money is being budgeted in the event the raises are approved, and therefore required, at the state level.
THREE REVENUE SOURCES
The college receives general operating funds from three primary sources: millage, the state legislature and tuition.
There is a 2.6-mill levy for NWACC’s district, which includes the Bentonville and Rogers school districts. The millage rate has remained consistent, but the amount the college receives varies with property values.
The college continues to receive 49% of its budgeted need from the state, an issue that has long frustrated college officials and supporters. If the college would be funded at 75%, that would make a difference of about $5 million, Hinds said.
College officials and advocates continue to lobby the Legislature and higher education advocates for the college to receive more equitable funding.
The third component is more within the college’s control and that’s tuition. Students faced a tuition increase this year of 3.45% (from $72.50 to $75 per credit hour) for students living in the NWACC tax district; a 4.25% increase (from $117.50 to $122.50 per credit hour) for out-of-district students; and a 4.48% increase (from $167.50 to $175 per credit hour) for students living out of state.
The college does receive philanthropic money and grant money but those dollars are directed for specific purposes such as buildings, scholarships and specific programs and cannot be used for general operating expenses.