McHenry County College’s Committee of the Whole meeting was carefully orchestrated to lead at least one of the four members who said they wanted a flat property tax levy next year to change his or her mind.
First there was a five-year financial forecast presented by McHenry County College’s Chief Financial Officer Bob Tenuta based on the assumptions that
- the college would have a flat levy for five years
- state financial assistance would also remain constant
- salaries would increase by 3.36% each and every year
- tuition and student fee revenue were assumed to increase almost 40%
Tenuta continued to present a gloom and doom scenario.
A month ago a flat levy was signaled by the three new trustees, plus the Board President they elected
Using that assumption, Tenuta claimed that the tax district known as McHenry County College would lose $475,000 “forever.”
He asserted that having a flat levy this coming year “does have an impact that [would be] impossible to correct or change.”
Further, he pointed out that it would only save the average homeowner $12.50 next year. (And a savings every year, thereafter, using his chain of logic.)
Last year the college was authorized to collect $26,917,740.45. (You can find the extensions, that is the amounts tax districts were allowed to collect this year here.)
The Property Tax Cap would allow the college to collect 1.7% more than that next year.
Let’s do the math.
$26.9 million times 1.7% equals $457,601. (I’m assuming that the difference between the $475,000 figure Tenuta used in his presentation and the $457,601 just calculated represents his estimate of new growth, but Tenuta didn’t reveal his estimate of new construction.)
Regardless, $457,601 represents less than 3/4ths of one percent of MCC’s $61,195,241 budget for Fiscal Year 2014.
Any budget that can’t be cut less by 1% is truly a lean budget.
On the expense side, employee salaries were assumed to increase 3.36% each and every year for the next five years. (Inflation last year was 1.7%; this year it is estimated to be a bit less.)
Running out his numbers Tenuta estimated that five years from now MCC would be -$19,005,675.
A negative financial situation could lead to the threat of becoming “a failed institution” by outside agencies that accredit and otherwise look over the college.
Revenue now comes 54-55% from property taxes, 38% from tuition and fees and 5% from state support.
When state officials made the pitch to form a college district in 1966 or 1967, the representation was made that the state would pay 33% of the cost. Voters were told that, plus that students would pay one-third and taxpayers the other third.
Trustee Chris Jenner asked if there were a cost-benefit analysis for each program.
The reply was fuzzy.
“The institution is as cost effective as we can be [consistent with our mission of education],” MCC President Vicky Smith replied.
“Do we do a formal statistical business cost-benefit model?
“I don’t know if they do.”
She mentioned that such analyses are regularly submitted to the Illinois Community College Board, but, “We don’t send them to the Board.”
She added that the college does not “begin with an official zero-based budget.”
Tenuta said that he didn’t do a formal cost-benefit analysis of food service.
“The benefit kind of exceeds the cost [even though is it subsidized].
“Why assume a flat levy for five years?” asked new Board member Molly Walsh.
“There’s not a lot you could don on the cost cutting side of it,” Cynthia Kisser observed.
Walsh recalled “dire forecasts” from the last two years that didn’t occur.
“We made some major changes like outsourcing the grounds,” Tenuta replied.
“I don’t get that the house is on fire,” Walsh said.
“Is the house on fire?”
Jenner pointed out that legal fees were up 14% over last year.
Trustee Mary Miller pointed to litigation and employee negotiations.
“I want to leave the college in a good place when I’m off,” Miller said.
“If you stay status quo, you lose,” said Linda Liddell, who chairs the Committee of the Whole.
“Under the current economic climate…don’t you think we should adjust for the present?” asked Board President Ron Parrish.
He even wondered if growth in the health industry could be counted upon as copies of an article about hospital layoffs in USA Today was passed around.
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