Harford Community College Board of Trustees recently approved a $51.6 million preliminary general operating budget for the next fiscal year, which is lower than the current operating budget by more than $737,000.
Tuition could rise next year by 2%, pushing the cost for Harford County residents up to nearly $135 per credit hour, according to the budget presentation.
The proposed budget for fiscal year 2022, which begins July 1, will be finalized and presented to the trustees for adoption in June once state and Harford County budgets are adopted. It reflects the significant effects the coronavirus pandemic and the economic fallout has had on the college’s finances over the past year.
“We anticipated great challenges at the beginning of this fiscal year as we began the budget planning process ... primarily due to the impact, directly and indirectly, of COVID-19 as well as the economy,” Trevor Jackson, HCC’s vice president for finance and administration, said while presenting the proposed operating budget and capital improvement program to the trustees Jan. 12.
The board approved the operating budget proposal, as well as the $56.6 million capital improvement plan, unanimously that evening.
The college has experienced a decline of more than $3.8 million in revenues during the current fiscal year, which ends June 30. That includes a reduction of about $1.7 million in the state’s allocation as well as “tuition deficits” and a decline in investment income, Trustee Dr. Richard Streett III said while delivering the regular report for the Board of Trustees’ finance and audit committee during the meeting.
The state cut $186 million in aid for higher education, including community colleges and four-year institutions, in July, part of an overall $413 million cut in the state budget approved by the Board of Public Works as Maryland reeled from the economic fallout caused by the pandemic.
Harford County did not reduce its fiscal 2021 allocation for the community college, though, according to Streett.
“I would like to thank [County] Executive [Barry] Glassman and the county for honoring their full financial commitment and support for the college this previous year,” Streett said.
The college has seen significant savings, however, to the tune of about $4.5 million so far this year as much of the HCC campus is closed for in-person classes and activities to help prevent the spread of COVID-19.
There have been savings in the salaries of adjunct faculty and part-time staff because of “reduced class loads,” as well as in “contracted services and supplies, travel, professional development, deferred maintenance and reduced utility costs,” according to Streett.
“Certainly, these numbers are likely to continue to change as the [fiscal] year progresses, and we will continue to update the board with any substantial further adjustments,” Streett said.
Fiscal 2022 budget
The largest amount of projected revenues next year, $18.9 million, come from tuition and fees, followed by $17.8 million from Harford County, $12.2 million from the state and $1.04 million from other sources. Officials also plan to transfer more than $1.5 million from the fund balance, or cash reserves, to balance the operating budget.
Officials anticipate a 2% increase in county funds, about $350,000, but declines in all other revenue sources. The largest projected decline would be in state revenue by 11.6%, from $13.8 million budgeted for the current fiscal year to about $12.2 million next year.
“We knew, with the state’s reduction at the beginning of July, we were going to have to overcome the lack of funding that took place in the current year and really figure out what we could project for FY22,” Jackson said.
The Board of Public Works cuts last July left HCC with about $12.1 million in state funding for FY21, and Jackson noted that a 1% increase in state funding this year is “the best projection we could make in terms of state revenue at this point in time,” based on consultations with the Maryland Association of Community Colleges.
Tuition was not increased going into the current fiscal year to spare students some hardship amid the pandemic, but officials are considering an 2% increase in tuition for next year.
“We are anticipating, at this point in time, another 4% decline in enrollment,” Jackson said — HCC officials have battled enrollment declines for years and increased tuition nearly every year for the past decade.
“Having said that, we are only at the mid-way point [of the year],” Jackson added. “We have a number of enrollment initiatives that we’re kicking off as we speak.”
The $56.6 million capital improvement program, which covers fiscal years 2022 through 2026, funds three major capital projects, including expanding the Chesapeake building and renovating it into the Chesapeake Welcome Center.
The welcome center “will serve as the front door to the college, and the start to new and prospective students kicking off what will be their Harford [Community College] experience,” said Jackson.
The design phase for the welcome center started earlier this month, and the project is expected to take at least three years. The other two projects, which would happen once the welcome center is complete, include renovating the library and student center, according to Jackson.
Budget planning, policies
Considering the multiple challenges ahead, HCC officials used a “zero-based” approach when crafting next year’s budget, according to Jackson.
“All budget managers started with, basically, a clean sheet of paper to begin building their budget, by reviewing the resources that will be needed in order to meet the strategic plan and meet the mission and vision of the college,” he said.
Next year’s budget is the first developed under the administration of new HCC President Theresa B. Felder, who started her tenure at the beginning of January. The process of crafting the budget was “well under way” before Felder took office, but she did speak with Jackson about it before coming on board and will be more involved as the budget is finalized, according to college spokesperson Nancy Dysard.
The proposed $1.5 million transfer from fund balance, the largest such transfer in a number of years, could change as more information comes about regarding funding for next year.
“We’re very confident, as we continue though the budget planning process, that we’ll be able to reduce our reliance on our current fund balance, and by the time we get to June we’ll be targeting a balanced budget to present for final approval,” Jackson told the trustees.
The board also approved, unanimously, a policy governing how HCC uses its fund balance, which Jackson said is recommended as a “sound fiscal practice for the institution.”
The policy calls for reserving for “undesignated” uses at least 15% of the current operating budget for that fiscal year.
“It sets a baseline to ensure that the college remains in good financial position both in the short term and more importantly, the long term,” Jackson said.
Any funds placed in reserve that exceed the 15% threshold should be “dedicated and designated” for a variety of liabilities and unforeseen or emergency situations. Such uses include unexpected shortfalls in revenue, such as those caused by fluctuations in enrollment, as well as facility maintenance and repairs, employee benefits, even taking advantage of “educational initiatives,” according to Jackson.
He noted that any transfer for such purposes would be presented to the Board of Trustees for approval.
Officials stressed that the budget for next year is still in its preliminary stage as they anticipate more information about state and local revenues.
“We’re looking forward to revisiting our current assumptions in terms of overall revenue, particularly enrollment, and figure out if we are comfortable with changing our assumptions in the other direction,” Jackson said.
CORRECTION: An earlier version of this article incorrectly stated the potential for a tuition increase next year.