Coronavirus-related costs, lower enrollment, and state funding cuts could leave Austin Community College with a budget gap of $15.6 million in fiscal year 2022, according to estimates presented at a recent board meeting.
That’s a number that doesn’t take into account the possibility of a decline in property valuations during an economic downturn. “This isn’t intended to show a worst-case scenario,” said Neil Vickers, ACC’s Chief Financial Officer, on a conference call with trustees.
“What this scenario shows is what happens if there is no growth in property values for fiscal year 2022. Now obviously, there’s a risk that we actually have declines in values. We’ve had that happen once, but only once, since I’ve been doing the budget here for over 20 years.”
Nearly two-thirds of ACC’s revenue comes from taxes on properties in the City of Austin and the school districts of Leander, Manor, Del Valle, Round Rock, Elgin, and Hays.
COVID-19 budget impacts are expected to be worse in FY 2022 than in FY 2021 because property valuations are already locked in for the upcoming fiscal year on the basis of pre-pandemic appraisals. Homeowners could challenge the valuations during an upcoming appeals process, “but there doesn’t seem to be a significant risk to the appraised values for the upcoming budget year,” said Vickers.
But ACC relies on state funding in addition to local property taxes, and that could take a hit very soon, as state leaders have signaled belt-tightening in the months ahead. Vickers’ scenario accounts for a $4.5 million cut in state funding in FY 2021 and beyond. “We went from having a balanced budget to a negative $4.5 million budget,” he said of the fiscal 2021 budget, which covers the period from September 2021 through August 2022. That deficit would then widen to $15.6 million in the following year.
Trustees Pass on Tuition Increase
Trustees of the community college district aren’t interested in passing on a greater share of costs to students. At a meeting held remotely May 4, the board voted not to raise tuition or fees for the 2020-2021 school year.
Though there was no discussion of the vote on the call, one member, Nicole Eversmann, voted against the decision. She told Honest Austin that she voted the way she did because she actually wanted to lower out-of-district tuition and fees, not keep them the same.
“I recognize that with everything going on, it was unlikely for us to lower tuition this year, which is why I did not argue on the dais. However, I am not in favor of making no progress towards compliance (with our tuition policy). The board officers know I want the tuition policy to be revisited and discussed by the full board, but until that happens I will not support leaving tuition rates flat. This is certainly not the time to raise tuition,” she said.
Austin Community College tuition has been flat for seven years. The cost for 30 credits at ACC (one year of college) is $2,550, compared to $10,562 at Texas A&M and $11,240 at Texas State.
So how is ACC going to balance its budget? One option is cost-cutting. Administrators have already imposed a hiring freeze, and Vickers told the trustees, “If we start preparing for this now we can actually do some things that will be relatively less painful and kind of mitigate these possible impacts over the next two years.”
But per-student costs actually could increase, not decrease, during the coming academic year, because fewer students will be able to fit inside a classroom under new social distancing guidelines, and because of the need for new online learning resources. The Chief Financial Officer noted, “If we have to put in place smaller class sizes or if we have to augment faculty for other support for what otherwise just would have been a traditional class that didn’t need that, those absolutely are going to create additional budget implications.”
Trustees haven’t discussed yet a budget scenario in which enrollment declines. Instead, the budget scenario presented to them May 4 assumed a 1% increase in enrollment. “Of course, that’s a big question mark going forward,” said Vickers. Tuition and fees account for about $87 million of next year’s projected $420 million revenue, or roughly 20%.
Revenue from tuition is also being impacted by ACC’s transition to online learning. Out-of-district students, who normally pay a higher tuition rate, are now paying in-distinct tuition because all classes have moved online. That policy will continue at least through the summer, as ACC offers distance-learning options only.
Fall enrollments starts June 15, so it could be months before the college has data on enrollment trends.
If ACC isn’t able to find another way to cover its budget gap, then the difference could end up being passed on to property owners. ACC President Richard Rhodes commented, “This budget is predicated on the fact that we keep 9 cents per $100 valuation as our tax rate. So if there’s any change away from the 9 cents per $100 valuation then that’s going to impact the budget too.”
