Spring 2013 All College Meeting Remarks
Good morning, everyone, and thank you all for being here. I realize that it is highly unusual for me to cancel classes for this meeting. Before I start, please help me welcome back our colleague Bob Racette.
As I was growing up, my mom used to use the phrase “Between a rock and a hard place.” I know that she was talking about either paying the bills or feeding the kids. But I understand what she meant better today than ever before. During these remarks I will explain.
It’s extremely important that all employees hear of the significant challenges we face as a college and the actions we’ve taken to address those issues so far. I will also ask for your support as we continue to navigate an extremely difficult period in our college’s history.
Before I do that, I want to thank members of the college’s Board of Trustees for attending this meeting.
- The Honorable Conrad H. Lang, Jr., Chairman of the Board
- Bill Fagan
- Adam Sanzone, our student trustee
- Jim Walsh
- George Raneri, Secretary to the Board
Please take a moment to review the program for today’s meeting. It includes a good deal of information on our agreement with CDTA to provide access to free busing for our students starting this fall, as well as an update on capital projects in progress at the college.
Also, you’ll notice there are a number of charts and related facts in the program. Since I will be sharing a lot of technical information with you this morning, they may serve as a reference. I will make my remarks available after the meeting as well.
First, to provide context, I’d like to briefly explain how the 30 community colleges in New York State are funded and then discuss threats we face to each revenue stream.
Community colleges were created in 1948 with a straightforward funding plan for day-to-day operations: the state, the local sponsor county (or counties) and students would pay one-third each.
In 1953, county chargebacks, as they are called, were initiated to collect revenue from the “home county” of students living outside of the local sponsor county. Today, these four sources comprise the majority of community college operating budgets.
Keep in mind that I am talking about “operating support.” Recently, someone in the community asked, “Why are you building a Science Center at the same time that you are laying off staff?” I had to explain to him that “Capital funding” is very different from “Operating funding.” Capital funds cannot be used for operations. The Science Center construction is entirely separate from the issues I am discussing this morning.
So, here’s how our funding picture comes together.
- The New York State Legislature determines the State’s contribution.
- Student tuition and fees are approved by the college’s Board of Trustees, Rensselaer County (our sponsor) and SUNY.
- Rensselaer County (our sponsor) sets its own funding contribution to the college.
- And, the chargeback funding formula for all other counties is administered by SUNY guidelines.
Let me repeat—the county chargeback funding formula is administered by SUNY, and SUNY has the authority to change the formula’s calculation.
There is one major flaw in the funding system, however. There is no standard to determine the community college sponsor county contribution, yet it plays a major role in determining the OTHER counties’ chargeback rate.
I’ll explain more in just a moment. For Hudson Valley, Rensselaer County is our sponsoring county. All other counties in New York State pay a chargeback rate per full-time equivalent student, and the State provides base aid per full-time equivalent student.
First, it’s important to note that there have been significant reductions in state aid, and sponsor support from Rensselaer County has essentially remained flat during the past decade. While enrollment was robust, the college was still able to balance its budget. But the lagging economic recession has contributed to an enrollment decline that, combined with the funding factors, has made it impossible to balance our budget while continuing the college’s wide breadth of offerings and services.
As you know, the college has taken a variety of cost-cutting and revenue generating measures in recent years, and we have done so without impacting academic programs or critical services to students. Yet, operating budget shortfalls persist.
And, as a result, this month the college completed an employee retrenchment and work schedule reduction plan affecting 29 non-faculty employees (20 full- and part-time employees were retrenched; and 9 were reduced in hours).
This extraordinarily difficult decision is the hardest I have made during my eight years at Hudson Valley, and one that was carefully considered. I want to assure you that it is not taken lightly by me, the college’s Board of Trustees or senior management. As I always say, the college’s caring and dedicated employees are what make Hudson Valley an incredibly special place. However, our action was necessary to protect access to the critical academic programs our students and our communities need.
The retrenchment and workforce reduction plan will generate more than 1 million dollars in cost savings. And as you know, we have not filled the majority of positions that have become vacant in recent years. Just this year, 26 positions remain unfilled, and we have 37 fewer adjunct faculty, saving our budget nearly 1.5 million dollars. We currently have a total of 89 unfilled positions at a cost savings of 2.5 million dollars.
It’s important that you know the decision to reduce our workforce comes after two years of other cost reducing actions totaling 3.7 million dollars. They include, among other things:
- Significant reductions to educational, office and department supplies and equipment
- Eliminating non-essential travel and “Innovation, Tuition Waiver and Training Funds”
- Reducing the college marketing budget and personnel advertising costs
- Cutting funding for scheduled maintenance projects by more than one million dollars
This fall, I proposed to the four bargaining units a discontinuance of salary adjustments and a furlough program that would have saved the college more than 2 million dollars, but each unit declined to forego their negotiated raises or participate in a furlough program. The college could not guarantee a quid pro quo, i.e., assuring no additional personnel reductions or retrenchments, but the 2 million dollar shared sacrifice would have gone a long way toward balancing the budget this year.
Looking forward, we need to continue to work with our union leadership and membership to arrive at solutions that are mutually beneficial, and support this college and our students at this critical time.
With all we have done already, our current fiscal year budget remains 2.5 million dollars out of balance, with limited options for closing the gap. We will need to fully utilize the college’s reserve funding, reallocate retirement reserve funds or consider further staff and faculty reductions.
As always, enrollment is our biggest priority from a budgeting perspective. I want to take a moment to thank all of you who have gone above and beyond to make enrollment a priority. However, every one of us has a role. Please work in your departments, with the Enrollment Committee, and do everything you can to positively impact enrollment. Minimizing and reversing the enrollment decline is critical to our fiscal health.
The reduction in college enrollment is a statewide and national trend.
- Throughout New York, enrollment dropped 2.4 percent last fall at the 30 SUNY community colleges.
- At SUNY’s four-year colleges, enrollment declined as well.
- And, nationally, college enrollment fell last year by 1.8 % for the first time in a long time.
Like I said, we are not alone in the challenges we face. As a sector, higher education was recently downgraded by Moody’s Investors Service and given a “negative outlook.” They noted that every traditional revenue stream to colleges is facing some sort of pressure. Their analysts caution that those revenue streams will never flow as robustly as they did before 2008, and that the change requires a fundamental shift in how colleges operate.
I told you two years ago that we face a “New Reality.” Well, THIS IS our new reality and we must adapt to it.
Moody’s details larger changes in the economic landscape, including lower household incomes, an uncertain economic and federal government picture, a decline in the number of high school graduates, the emergence of new technologies and a growing interest in getting the most value out of a college education – particularly as it pertains to employment after graduation.
Moody’s highlights two other related challenges facing higher education: growing student debt and default rates, as well as pressure on politicians and accreditation agencies to ensure the value of degrees.
The report states, “While employment and earnings data continue to support the long-term value of a college education, there is real concern about the diminishing affordability of higher education.”
Here at Hudson Valley, we must continue to recruit heavily from the high school marketplace. While we were able to increase our enrollment of traditional age students last fall, high school graduate projections show a decline of 7.5 percent, or 697 students, in counties that typically feed Hudson Valley from fall 2012 to fall of 2019. And, I am sure you are aware, there is increased regional competition for students. As our high school population shrinks, we’ll need to do better to maintain our market share.
Our Enrollment Committee is now setting its strategic priorities and goals for the next few years. In addition to the traditional student population, I know we will seek to improve our yield of accepted students, grow enrollment in our online learning courses and degrees, and take steps to simplify the enrollment process and enhance our marketing outside of New York State.
Recruiting non-traditional students, particularly from the Hispanic and African American communities, must remain a priority for us.
As I said, New York State support for students attending community colleges is another major component of our fiscal picture. And the Executive Budget released last week delivered mixed news. While state aid is not facing a reduction, it still remains far behind where it was a decade ago. It no longer approaches the 33% total college operating support it should be according to statute.
The Executive Budget also includes language which would ensure that additional funds related to workforce and vocational programs are provided only when those programs are offered in partnership with employers or focus on high-demand jobs required by the state economy.
3 million dollars is proposed for community colleges to implement a new Performance-based Funding system which will allocate funds based on measures such as completion, preparation for job placement, and degree or certificate alignment with the State’s workforce needs.
Governor Cuomo’s Executive Budget recognizes that community colleges are critical to his economic development agenda. Higher education can and should be tied to regional workforce needs and opportunities for our graduates in current and emerging careers.
In addition to performance funding, I and the other community college presidents will continue to work with the Governor and members of the State Legislature to advocate for restoring base state funding for community colleges to its statutory one-third level.
And NOW for the biggest threat to the college and the main reason why I asked you all to be here for this meeting.
The most significant threat to Hudson Valley right now involves county chargebacks. As I mentioned earlier, counties outside of Rensselaer, our sponsor, must provide chargeback funding for each resident student choosing to attend Hudson Valley.
While SUNY’s guidelines on county chargebacks have been in place for more than 40 years, the fairness of the county chargeback system has been challenged by counties throughout the state.
Albany County has complained for years about the disparity between the chargeback rate and the sponsor contribution.
Remember, I told you that SUNY has full authority to change the chargeback formula.
Well, I don’t have to tell you that the chargeback issue is now a statewide issue, and to the point, last year the State Legislature charged SUNY and CUNY to provide recommendations to them by September 2012.
Quoting from their report released in September, “the variation in chargeback rates between different community colleges is due to the ability and willingness of the local sponsor to provide funding.”
Remember that SUNY has no authority over the sponsor contribution, yet the sponsor contribution influences the chargeback rate.
This fall, we began to hear that SUNY was considering a change in the chargeback calculation. The likely scenario would be that the chargeback rate across the state would be equal to the sponsor contribution per Full Time Equivalent student.
If this were to occur, 23 of the 30 colleges would benefit and 7 colleges would be negatively impacted. Because our sponsor contribution is less than half of the chargeback rate, Hudson Valley is impacted much more than the other colleges………to the tune of $7.9 million.
SUNY, and in particular the Chancellor, is very supportive of the college and does not want to harm Hudson Valley. However, there is significant pressure to address the chargeback issue.
SUNY is “between a rock and a hard place.”
This scenario makes sense from a System perspective and would benefit the majority of community colleges. However, it would be extremely detrimental to Hudson Valley’s ability to serve the community and offer our current breadth of programs. We are in serious discussions with SUNY to convey the devastating impact this proposal would have on Hudson Valley.
The reduction in chargeback revenue we face is far greater than the reductions faced by the other six community colleges impacted, due to the difference between Rensselaer County’s current sponsor contribution of $1,228 per FTE student compared to the State average sponsor contribution of $2,355 per FTE.
So, what would a $7.9 million reduction mean to Hudson Valley, on top of all of the actions that we have already taken?
- What is the personnel impact?
$7.9 million equates to between 180 - 190 faculty and staff positions.
That is approximately 30% of the 650 seated in this room.
- Now, how does this reduction impact academic programs?
Well, we simply cannot absorb this kind of cut without the elimination of many academic programs.
Whether you are in the Allied Health Division, the Technologies Division, the Business Division, or the Liberal Arts division, you will be impacted. Every person on this campus will be impacted if we have to make such a drastic cut.
My point TO YOU is NOT subtle. This is not someone else’s problem. This is OUR problem, and WE need to come together to address it. While this issue affects everyone at the college, most importantly, it impacts the students who count on this institution to be here for them every day.
I need everyone to be aware of this serious issue. If you questioned why I cancelled classes for this meeting, you now have your answer.
We CANNOT allow this to happen.
To offset the potential chargeback revenue decline, we are urging Rensselaer County to support Hudson Valley at the average rate of all other community college sponsors within the State of New York.
The Trustees, Vice President Fatato and I met with the County representatives on Monday night to advocate for increased county support. We emphasized that this change to the chargeback calculation will result in a devastating impact on Hudson Valley, on Rensselaer County, on business and industry, and on their constituents.
The legislators and the County Executive indicated that they want to see Hudson Valley share the pain the County has had to endure as they work with a budget where nearly 90% is committed to unfunded mandates.
I shared with them that there is a possibility that by March 1st, we may have to designate academic divisions as well as programs in service departments for elimination; institute reductions in non-degree granting service programs such as math, English, social sciences, and natural sciences; and consider closure of departments that provide academic support and critical services to students. Everything is on the table, from retrenchment of faculty and staff to reviewing our off-campus lease arrangements and our support of local high schools.
Last night I attended the State of the City of Albany address by Jerry Jennings, who is a supporter of Hudson Valley Community College. The mayor recognizes the great value that Hudson Valley provides to his constituents. However, his major issue is that Albany County plans to pass on the chargeback bill to the municipalities.
As you can see, everyone is squeezed financially and is looking for relief.
We as a college community need to help everyone recognize how this college serves the students, business and industry, and the families of the Capital Region, and in particular, Rensselaer County.
How many of you reside in Rensselaer County? Please raise your hand. That’s about 50% of those here today.
How many of you have family, or friends, or students who reside in Rensselaer County?
You all have an opportunity to make the case for Hudson Valley. You all have the responsibility to communicate the value we provide your community. And I hope that you all are now motivated to do just that.
This is a very real threat, and you should know that we are doing everything we can to protect access to our critical programs and services. We are seeking increased support from Rensselaer County in 2014, and we want the Hudson Valley community to understand the facts as we make our case to county officials (and the residents of Rensselaer County).
- Rensselaer County’s annual sponsor contribution is 3.4%, the lowest of all SUNY community colleges. To put that in real numbers, the college’s operating budget is $113,974,437, and Rensselaer County provides just $3,338,900.
- Over the past 13 years, Rensselaer County’s sponsor contribution has essentially remained unchanged, having risen only $200,000. During that period, the county’s resident student population increased by 28%.
When measured on a per FTE basis, Rensselaer County’s sponsor contribution has actually declined by 16% during that same 13-year period because of the growing number of county students attending the college.
- Rensselaer County’s 2011-12 sponsorship rate per FTE is $1,228. The average sponsorship rate per FTE for all other community colleges is $2,355, nearly double Rensselaer County’s contribution.
- During the past 20 years, if Rensselaer County’s sponsor contribution was based on the
Community College average sponsor contribution per FTE in each year, Rensselaer County would have paid Hudson Valley an additional 50.8 million dollars.
Here is our proposal to Rensselaer County:
The college is requesting an increase in per FTE funding from $1,228 to $2,355, or 2.9 million dollars to the sponsor contribution for the 2014 county budget, the college’s 2013‐2014 fiscal year.
We are only asking Rensselaer County to bring its contribution in line with the average contribution for other community college county sponsors around the state. And this would prevent the 7.9 million dollar reduction proposed for the college’s chargeback revenue.
As you know, Hudson Valley benefits Rensselaer County in many ways.
- Each year 4,000 Rensselaer County residents enroll in Hudson Valley. More than 215 high school FTE students in Rensselaer County earn credit through the college’s nationally-accredited College in the High School Program.
- The college is an economic engine for the county. Consider that Hudson Valley purchased more than $5 million in goods and services from county business last year and employs 441 employees who reside in Rensselaer County.
- Hudson Valley has a $250 million annual economic impact on Rensselaer County due to college operations, student spending and educated alumni who live and work in the county, according to a Jan. 2011 analysis by Economic Modeling Specialists, Inc.
- And each year, more than 150,000 people visit the campus to attend community, athletic, cultural and educational events at Hudson Valley. The college’s extensive facilities are shared with an array of community partners and visitors to Rensselaer County.
The College is “between a rock and a hard place.”
The Board of Trustees and the administration are working on this issue and advocating for the college. I may need to ask for your support in our advocacy efforts. Right now, please continue to provide the outstanding education and service to our students that has made us such an asset to our community. Also, help us recruit and retain students by...going above and beyond to assist students in the enrollment process. We need all of us working together to address the challenges we face.
Hudson Valley Community College is one of the most respected and life-changing institutions in the Capital Region (and recognized throughout the state and nation). That is due to your hard work and sincere concern for our students’ success.
Still, we face an unprecedented fiscal crisis that could severely impact our ability to serve students.
As the Board and senior administrators continue discussions with SUNY and Rensselaer County, share your voice and educate your family, friends and students of the critical importance of adequate county funding. An increased sponsor contribution is the key to solving this fiscal issue.
During the next few months, I will be scheduling meetings to update you on our progress, receive feedback and answer your questions, and further explore the various challenges we face.
It is clear that higher education as a whole, and Hudson Valley as well, must change to adapt to the dynamic environment we face. As we continue the Middle State Self-Study and our strategic planning process, we need to continue an institutional discussion regarding the changing landscape of higher education and how Hudson Valley can position itself to take advantage of the opportunities that are presented.
Make no mistake, the threats we face are very serious. Several issues are unfolding right now, so the road ahead is not entirely clear. Today, I am asking every one of you to advocate for this great College.
Our students and our community depend upon it.
Thank you for everything that you do for the College and our students.