The Harford Community College Board of Trustees unanimously approved a $1.3 million funds transfer Tuesday to balance the budget for the fiscal year that ends June 30. It's the first time in several years the college hasn't had to transfer funds out of its cash reserves to balance the budget.
Although they then celebrated that the Tuesday transfer was not required to close the structural deficits that have bedeviled HCC budgets in recent years, some of the money involved in the transfer is to cover operating losses at the Harford Sports Complex and APGFCU Arena, among other supposedly self-supporting college activities.
"We used to euphemistically use the word 'transfer,' " board member Bradley Stover said, referring to an annual practice of using a "transfer in" from the college's fund balance to balance the operating budget.
"This isn't the old way," Stover continued.
Another tuition increase is being considered that will raise the per credit hour cost by $12 to $116 per hour for in-county students.
The fiscal 2015 operating budget was balanced with a $2.4 million transfer from the fund balance, as well as a tuition increase, when the board adopted it last May.
Board Chair James Valdes blasted the practice as the FY2015 budget was being finalized, and he called the gap between revenues and expenses a "structural deficit."
Rick Johnson, vice president for finance and operations, stressed Tuesday that the $48.1 million operating budget for the 2015 fiscal year – which ends June 30 – remains balanced, and the transfer involves shifting existing funds around.
"It's no additional funds," he told board members. "It's the budget that you passed last year."
While FY2015 is expected to be the last fiscal year with a structural deficit – HCC officials are developing a budget for fiscal 2016 that is balanced without a transfer from cash reserves – the transfer approved Tuesday continues a practice of using operating funds to balance auxiliary accounts that are meant to be self-supporting.
The money will be transferred to help cover $850,000 in auxiliary fund expenses, along with $135,100 in snow removal expenses, $120,000 for the search for a new college president, as President Dennis Golladay plans to retire in 2016, $158,000 to upgrade security cameras and radios, $80,000 to improve student services and "workforce efficiency," according a supporting document provided during the meeting.
Auxiliary accounts cover campus enterprises such as the college bookstore, performing arts entities, the Harford Sports Complex and the APG Federal Credit Union Arena.
"Our goal is to break even on all our auxiliary accounts, but that's not always the case, and monies to have to be moved around to support them," Brenda Morrison, vice president for marketing, development and community relations, said in a follow-up interview after the board meeting.
Morrison said the $850,000 is being used to offset auxiliary account losses that have accumulated "over several years."
She noted that the arena "may not be" profitable over time.
"We're comfortable with that, because it's such a tremendous resource for our community," she said.
The arena, which is typically used for HCC sporting events and concerts, will be open in the coming weeks for local high school graduations. The facility was also used for the inauguration of County Executive Barry Glassman last December.
Morrison said the college covers arena operating costs when it is open for events such as high school graduations, and it only charges the users for any additional "out-of-pocket" expenses such as additional security personnel.
"It's here as a resource, so the college absorbs the operating costs," she said.
'Salary savings'
The money for the $1.3 million transfer comes from "salary savings" in instructional and academic support areas, according documents.
Board member John Haggerty called Johnson's presentation "terrific," but he was concerned about what "seems to be a big hit on our instructional offerings here."
"I like to keep coming back to the concept that our job is teaching and learning here," Haggerty said. "To see instruction take the biggest hit, I've got to be convinced that it is all savings from personnel in the instructional program that we don't need."
Golladay told Haggerty that the savings are "exactly that; it is salary that we don't need."
Golladay said college officials put in more money than what was needed for instructional salaries this year. He gave the example of anticipated adjunct faculty members who were ultimately not needed.
"We didn't have to use them, because we lost a little bit of enrollment and some classes didn't make it, but our instructional program does not suffer," Golladay said.
He stressed that "no classes are cut, no programs are diminished."
According to an enrollment report presented at the trustees meeting, 2,161.7 full-time equivalent students were enrolled for the Fall 2014 semester, compared with 2,104 full-time equivalents for Fall 2015, a 2.7 percent decrease.
The head count for Fall 2014 was 3,281, compared with 3,168 so far for Fall 2015, a 3.4 percent decrease.
Board member Bryan Kelly asked if the board approves such transfers each year.
Johnson said the board approved a similar transfer last spring, and "part of this is getting the budget back to Square One."
"I would anticipate that this is something that should be done every year, especially if you have a balanced budget where you're going to try to keep things as close to zero as possible," he told Kelly.
Stover said the board is "using 'transfer' correctly now."
Golladay and his top aides have pledged to develop an operating budget that is balanced without transfers from cash reserves, and they put forth a proposed $46.6 million operating budget for fiscal 2016 with no transfer from the fund balance.
Another $12 per-credit-hour tuition increase, however, is proposed in the next budget. If the board approves the increase, students who live in Harford County will pay $116 per credit hour. The Harford Community College web site is already showing $116 per credit hour for in-county residents effective for the fall. The summer tuition rate is still listed at $104 per credit hour.
Students who live in Maryland, but outside of Harford County, will pay $203 per credit, and out-of-state students will pay $290.
"Even with that increase, we have made substantial reductions in our expenses," Morrison said.
The college also saved some money in FY2015 by charging maintenance expenses for the University Center in Aberdeen to the state grant used to fund operations, rather than eating the cost itself.
Johnson said the Harford County government owns the University Center, formerly known as the HEAT Center, and HCC maintains it. The facility is used for master's degree programs for four-year colleges in the region such as the University of Maryland at College Park and the University of Delaware.
He said HCC maintenance crews will visit the University Center campus for jobs such as snow removal, landscaping and telephone system needs. Johnson said later that equipment and materials are being charged to the grant, but the college still covers labor expenses.