By a 4-3 vote, the newly-elected McHenry County College Board members, plus the man they elected Board President, outvoted the longer term Trustees.
“If we don’t vote to approve [the lower] alternative budget, we have lost the chance to give a signal from the college,” Board President Ron Parrish said.
Chief Financial Officer Bob Tenuta carried water for those who sought to maximize property tax revenue for MCC.
He proposed taking the maximum amount allowed under the Tax Cap—1.7%–plus new construction, which he estimated will be measured at 1.1% during the calendar yer 2012.
Molly Walsh moved to accept the budget that would not increase real estate taxes.
“With no increase, flat?” holdover member Linda Liddell asked.
“Yes,” Walsh replied.
Then Tenuta explained a handout which was not shared with the audience either in hard copy or as a slide show.
He warned of the cumulative effect of not taking the maximum amount allowed by the Tax Cap.
“If we don’t look at cost cuts, we have to theoretically look at tuition [increases].
“Tuition cannot be more than one-third of per capita cost,” President Vicky Smith interjected.
Without considering cuts in expenses and assuming no growth in student enrollment, Tenuta estimated that tuition would have to rise to just below the maximum amount allowed by the state.
That is 33% of the cost of the education.
[Virtually no one knows that the promotional material for the 1968 referendum that authorized the college said that the student share would be one-third of the cost.]
Walsh pointed out that the level enrollment assumption was at odds with presentations that had been made to the Board.
Tenuta repeated the mantra of those wanting to maximize the college’s property tax revenue:
“We lose it forever.”
Tenuta pointed out that MCC has the 29th lowest property tax rate.
Discussion of the proper level of fund balances brought an explanation from Smith that other colleges were at 25-40%.
When asked, Tenuta told the Board that MCC’s fund balances were “about 40%.”
Cynthia Kisser pointed out that the vote concerned the budget, not the levy, which sets the amount of property taxes to be requested.
She and Tenuta explained that having a budget too high did not mean that the levy could not request less money than the budget authorized could be spent.
“It’s a lot easier to reduce the budget [than to raise it],” the man who would have to made the budget adjustments said.
Walsh contended that she preferred “truth in budgeting” that would reflect “we want to have a flat budget.”
“You have to be honest.
“You do a very conservative number on enrollment and you do a very liberal number on revenue,” she continued.
Parish asked the percentage of total expenditures the forgone revenue would represent.
“About 1%,” was the Chief Financial Officer’s reply.
Immediate Past Board President Mary Miller repeated the refrain that not taking the maximum allowed real estate tax revenue would result in its being lost forever.
“You will never get that…That is missed revenue. The next year you lose it again. It’s gone for eternity.
“My fiduciary responsibility is to make sure this college is [fiscally sound].”
Kisser pointed out that both budgets were identical with regard to day-to-day operations.
The difference was in the amount transferred from one fund to another, the CFO pointed out.
He explained that PMA Financial, a college consultant, estimated that increase Equalized Assessed Valuation would be 3%. PMA was hired after Smith became President.
When the vote was taken the coalition that put Parrish in office was unified.
Walsh, Chris Jenner, Tom Wilbeck and Parrish voted for the flat budget.
Cynthia Kisser, Linda Liddel and Mary Miller voted against putting that budget on display.