HFCC hiring firm to review budget deficit

By BOB OLIVER
Times-Herald Newspapers

DEARBORN — The Henry Ford Community College Board of Trustees its bringing in additional help to sort out the college’s financial affairs.

In an April 16 meeting, the board voted and approved the hiring of accounting firm Grant Thornton LLP to go through the college’s student accounts receivable and collections activity to assess how much student uncollectible tuition and fees have accumulated and what the root causes of the increase were. The cost of the contract is $45,024 plus travel expenses.

In January, a report from HFCC’s auditor Plante Moran said that the total amount of uncollectible tuition and fees would be about $8.6 million. A more recent report from the firm said that the number may be as high as $12.1 million.

In addition to the $3.5 million increase in uncollectible fees HFCC Vice President/Controller of Business and Auxiliary Services Marge Swan said that a reduction of about $800,000 in tuition and fee revenue was being made because the school’s targeted number for enrollment had not been met.

She also said that it was anticipated that $2 million would be transferred from the college fund to balance the budget for the year. This would make a total of $6.3 being removed from the fund this year. It would decrease the fund balance from $7.9 to $1.6 million.

Swan told the board that the college had taken measures to lessen the amount of money taken from the fund balance.

“Several strategies have been implemented to reduce costs and a spending freeze has been put in place that limits spending to items that are critical to classrooms’ immediate needs,” Swan said. “Non-teaching assignments are being reduced to eliminate all non-essential expenditures. The spring schedule is being produced to combine sections with low enrollments.”

She also told the board that it was not the first time that the fund balance had been reduced so drastically. In both the 2002-03 and 2003-04 fiscal years the balance had dropped below $4 million. By 2006-07 it had grown to $12.3 million.

“The college has overcome these difficulties and we are confident that we can do it again with everyone’s cooperation,” Swan said.

It was also reported at the meeting that changes were being made to the enrollment procedure and timeline for when tuitions and fees were due from students.

Swan said that by the Fall 2013 semester “every student in a seat will have either paid up front for their classes, signed up for a payment plan, can guarantee financial aid or that they’re being sponsored by a third party.”

She said that students will be blocked from registering unless means of paying for classes is in place.

Trustee Aimee Schoelles questioned the upcoming enrollment changes.

“I’m concerned about access to the college for students,” Schoelles said. “I understand the need to limit our bad debt, but I also want to make sure that we temper that with the needs of our students and their cash flow situations.

“I would hate to see us lose students simply because they can’t afford to pay their tuition three months before their classes start and if they wait until they have the cash they can’t get into the classes because there are no more spots available.”

Swan said that the changes in the policy will cause the number of enrollments to go down because students who may have been allowed to enroll in the past will now be prevented from registering. The changes, in combination with the natural attrition of student enrollment due to an improving economy, may cause the tuition and fee revenue to drop by as much as $2.3 million. All other expenditures and revenues are expected to stay the same.

The $7 per credit hour tuition increase that was decided upon earlier this year and is being implemented for the Spring 2013 semester is expected to generate approximately $2.1 million, which will almost cover the money lost due to loss of students, Swan said.

Trustee James Schoolmaster told the board that it would probably be necessary for a finance committee meeting on May 8 to discuss the 2013-14 budget since a preliminary plan should be done before the final plan is delivered in June.

He said that decisions needing to be made are what cuts will be made and whether or not a millage renewal would be pursued in November.

Trustee Joseph Guido said that if a renewal is to be brought up, the board must put serious consideration into exactly where all of the college’s money is being spent.

“We have to scrutinize every expenditure right now,” Guido said. “We have to question and re-question every expense that we make to make sure that it’s the best decision.”

Current budget projections given by HFCC show that the 2012-13 fiscal year have expenditures of $84.5 million with the $6.3 million shortfall.

Preliminary figures for next year given by Swan have expenditures rising to $87.8 million with a possible $9 million shortfall.

Swan said that a large factor in next year’s budget will be college personnel, who make up about 85 percent of it. Instructional costs will increase as 19 faculty will be hired to replace vacancies from a voluntary employee severance plan. The current budget projections also do not have increases for health benefits, but Swan said that that may change after discussions finish with the college’s consultants.

The current contract with faculty calls for a 2 percent reduction in salary, but the contract with administrators will expire June 30 and will need to be re-negotiated at that time.

Swan said this will save the college money, but additional steps were needed to combat next year’s projected shortfall.

“The college is reviewing several cost reduction strategies to align expenditures with revenues. Programs and services are being reviewed to identify those that are core to the mission of teaching and learning,” Swan said “Programs may be grown where there’s an opportunity for revenue or they may be reduced or eliminated.”

Swan said that all services also will be evaluated by their impact on students and “labor contracts will be addressed to identify opportunities to reduce costs.”

Board President Pamela Adams said that it was understandable to be concerned about the budget but that it was important to have the most accurate information before making decisions.

“It’s not good news, but we need to know where we stand,” Adams said. “There are big decisions to be made and we need accurate information to make them.”

“Everyone is trying to get a handle on this,” Schoolmaster said. “If Plante Moran is right we could be in a lot of trouble and we need to take steps to alleviate that trouble.”

(Bob Oliver can be reached at boliver@bewickpublications.com.)

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