The members of Harford Community College's Board of Trustees voted 5-0 Tuesday evening in favor of a $48.1 million operating budget and a $2.1 million capital budget and capital improvement plan for the 2014-2015 fiscal year.
The budget is the beginning of a major effort by college administration officials to erase what the board chairman recently called a "structural deficit" in the budget and balance it by the 2016-2017 fiscal year.
"We feel like this budget is getting us closer to a balanced budget in 2017," Rick Johnson, vice president of finance and operations, told the trustees.
Five of the board's nine members were present Tuesday, including Chair James Valdes and members Doris Carey, John Haggerty, the Rev. Cordell Hunter and Jan Stinchcomb.
Vice Chair Richard Norling, plus members April Fritts, Bryan Kelly and Bradley Stover were absent.
The operating revenues include a $12 increase in tuition "per credit hour" and a 2.57 percent student fee increase, flat county funding of $14.9 million, a nearly $700,000 increase in state funding to $11.03 million, a $2.4 million "transfer in" from the college's fund balance, plus $680,764 in "other" revenue, according to HCC budget documents.
Valdes blasted the concept of taking out such a large sum of money to balance the budget during a meeting in mid-May – the $2.4 million transfer is about $400,000 less than the $2.8 million fund balance transfer for the 2014 fiscal year, which ends June 30.
The FY2015 transfer is still about $535,000 more than the $1.9 million transfer for FY2013; the college transferred $1.6 million for FY2012, according to budget documents.
The board chairman said Tuesday that college leaders have "a plan in place" to balance the budget by the 2017 fiscal year, which begins July 1, 2016.
"We will be building fund balances up after that," he said.
Valdes said the plan includes reviewing "every aspect of expenses and income," limiting expenses wherever possible, generating additional sources of revenue and building support among the college's "partners" in local and state governments.
He noted during the committee report section of the meeting that the college is facing financial hurdles such as a drop in enrollment of about 3.2 percent, increasing health care and fuel costs and low interest rates, which means less income from the college's investments.
Valdes stressed college staffers are working to hold down expenses, however, and he noted a drop of about 2.3 percent in expenses during the past year.
The board president also responded to criticism from members of the public who hear about HCC's financial struggles, yet see multiple capital projects at HCC worth millions of dollars, including the APG Federal Credit Union Arena, which opened in 2013, and ongoing projects such as the Towson Building and Darlington Hall, the future home of all of the college's nursing and allied health programs.
Valdes stressed that operating and capital budgets must remain separate, and the revenue designated for each must be spent accordingly – funds designated for capital projects cannot, "by law," be spent on operating costs such as employee salaries.
"If we get money to build an arena, or a building, or a parking lot or a ball field, it has to be spent on that," he explained.
Valdes said a government entity such as the college must adhere to that separation, unlike a homeowner or business owner who must cover both types of expenses from one income stream.
Haggerty asked Greg Pizzuto, general manager of the arena, how regularly the arena is used; Pizzuto told him that more than 50 events, in addition to the roughly 40 athletic events, have been scheduled for the upcoming fiscal year.
Haggerty said later in Tuesday's meeting, when he and his fellow board members were reviewing the budget before they voted, that he was planning to vote against the budget, but felt "a bit more comfortable" supporting it after conversations with top officials such as Valdes and college President Dennis Golladay about how it will be "developed in the future."
With the $12 tuition increase, students who live in Harford County will pay $104 for each credit hour; students outside of Harford County will pay $191, and out-of-state students will pay $278 per credit, according to budget documents.