Campus News February 2008- continued

Kinsella, continued:

In the next couple of months we may be forced to carve out some expenditures to keep our budget balanced for the year.This is not a new concept to us. This time around, however, there is something very different happening that may really work to our advantage. Gavilan’s enrollment is up rather substantially again this year. The last time we went through this enrollment was flat. As you know enrollment generates state revenue for us. If other colleges are not earning their enrollment allocations, money beyond Gavilan’s specified allocation can be allocated to Gavilan and other colleges that are growing. This is a significant variable that can have dramatic and favorable impact on us. Recognizing that this option is possible I want to describe two possible approaches for you.

Option # 1 Earn enough new revenue to avoid reducing expenditures

This is my favored option. Gavilan has not been able to consider this option in the past because our enrollment had been so minor that growth revenue never amounted to a lot of money. Last year that all changed. The increases in enrollment have continued into the FY 07/08 fiscal year. The amount of unbudgeted growth is what will make the difference for us. Right now there is $480,000 allocated to Gavilan that is not included in the budget. It is too early to tell if we will be paid that amount or not. The second part of this option is the excess enrollment that we are generating. If other colleges are not earning their enrollment allocations then Gavilan will be funded for additional growth. In combination this growth revenue could be high enough to solve all of the reduction in existing base revenue allocations or it could solve at least the mid year reduction.

Option # 2 Expenditure Reduction Task Force – The Sequel

The second option is to reduce permanent base expenditures. We have so much experience with these things that I have developed a list of one liners and guiding principles that I want to share with you.

Some thoughts to keep in mind as we address any budget changes that may be necessary:

• Every employee is a person. All employees need to be treated with appropriate care and consideration. Do not, even in jest, refer to the elimination of an employee’s position regardless of their employment category (part-time, full time, faculty or administrator). The Board has always been clear that employee positions are not to be touched. Vacant positions are fair game but if an employee is on staff they need to be protected. This change in the state’s budget situation is not a surprise. Only the magnitude of the change is unknown. Gavilan has been positioning itself to handle this kind of change.

• Every fiscal crisis creates opportunities. However, you must look for them as the fear factor frequently leads people to dwell on the worst that could happen. Acting to take advantage of opportunities always avoids the worst case scenario.  

• Generating revenue is a lot more fun than educing expenditures. If there is enrollment money to be earned we will go after it and avoid as many reductions in expenditures as possible. This really depends on enrollment across the state.

• There is no one single solution. Expenditures are made to support of all parts of the college’s perations. An integrated and complex series of actions will be needed to a) support students, b) support employees and c) retain the capacity to pursue new opportunities.  

• Expenditures, over a period of time must be below on-going revenues. Deficits can occur if there is a plan to bring expenditures down to vailable revenues in a following year. A series of deficit years has to be avoided.

• A reduction in revenue requires adjustments in expenditures. If we face this reality early on and address it we can move on to other more important activities.

• Retaining the capacity to rapidly expand ervices to students is the best way to take advantage of the economic turn around once it occurs. Plan for retaining capacity and lay the foundation for expansion into new areas.

• When making reductions cut narrow but deep. Remove all nonessential activities, trying to reduce only parts of a function will only delay he pain until another day. Move people to the essential services. This worked especially well for us in 2003.

• There is generally enough natural employee turn over to lower expenditures over a period of time without pushing anyone out who does not want to leave.Small incremental reductions in expenditures each year are much easier to make than one large reduction all at once.

• Time is a precious commodity. Keeping expenditures aligned with revenues will get you through a crisis one fiscal year at a time. The key is to balance the budget each year or atleast have enough time to absorb changes in expenditures in the following fiscal year.

• Reserves are nothing more than a one time savings account. You cannot support on-going expenditures with reverses for any significant period of time.   

For those of you who were at Gavilan in 2003 you will recall that if retain our capacity to capacity to serve students it will give us a competitive advantage over our nearby college districts once the economy improves and resources start to improve. You should be aware that the college has reserves that are close to 10% of the budget. This is a very healthy level. Additionally, the college can remove 4% of expenditures by adjusting the amount of general fund that is used to pay for retired employee health benefits and by foregoing annual contributions to our irrevocable trust fund for existing employees who will eventually retire. These last two expenditures can be added back into the budget once the state revenue starts to increase.

One final piece of advice that I want to offer is that you keep in mind that we cannot predict when the state’s revenues are going to increase again. This could be a one year problem or a four year problem. In other words we never know for sure how long we have to hold out. Delaying reductions in cost can only work when you know exactly when new resources are going to come in. Of course, we will never know for sure when the turn around will happen. In the meantime we will make regular adjustments and retain our capacity to serve our students.

Please feel free to contact me at any time with questions.

Coyote Valley Campus

The due diligence process for the purchase of the Coyote Valley property includes completion of an Environmental Impact Report (EIR). The EIR is expected to be ready for certification by the Board of Trustees around April. The college may proceed to complete the purchase of the land prior to the certification of the EIR. Under either situation, it appears that Gavilan will complete its first major land purchase during the current academic year.

In addition to certification of the EIR in order to proceed with establishment of facilities on the site the college will need a habitat permit. The permit process can take another 18 months. This timeline is very tentative and change quickly if a suitable habitat replacement site is acquired. The habitat permit requirement for Coyote Valley and the San Benito property are being consolidated in order to satisfy the requirements for both sites at the same time.

San Benito Campus

The college has hosted two community information sessions so far. The property under study is known as Fairview Corners and is across the street from Ridgemark Golf Course. The third and final information session will be held on January 31, 2008 at Veteran’s Hall in Hollister. The meeting starts at 6 PM and will conclude around 8 PM. There is no timeline established yet for closing on this property. From all indications, the site looks good and the general agreement among consultants is that the site will be useable for a college campus.

Gavilan Renovations

The renovation projects are moving along on schedule. The parking lot A make over resulted in an obvious contrast in our other parking lots. I guess this is like any home remodel, you complete one project and that then makes the rest of the place look run down so you are forced into remodeling other parts of the house. At Gavilan we plan to renovate the lighting and landscaping in Parking Lot C and create parking down by the tennis courts and road leading to the baseball field. Other than that all other projects will continue as planned.