MEETING OF THE
BUDGET COMMITTEE
OF THE BOARD OF TRUSTEES
HOUSTON COMMUNITY COLLEGE
July 26, 2011
Minutes
The Budget Committee of the Board of Trustees of Houston Community College held a
meeting on Tuesday, July 26, 2011, at the HCC Administration Building, 3100 Main, 2nd
Floor, Seminar Room A, Houston, Texas.
COMMITTEE MEMBERS PRESENT
Richard Schechter, Committee Chair
Mary Ann Perez, Committee Member
Bruce A. Austin, Alternate Committee Member
Eva Loredo
Neeta Sane
ADMINISTRATION
Mary S. Spangler, Chancellor
Art Tyler, Deputy Chancellor/COO
Destinee Waiters for Renee Byas, General Counsel
Doretha Eason, Executive Assistant to the Chancellor
William Carter, Vice Chancellor, Information Technology
Charles Cook, Vice Chancellor, Instruction
Daniel Seymour, Vice Chancellor, Planning and Institutional Effectiveness
Warren Hurd for Margaret Ford Fisher, President, Northeast College
Fena Garza, President, Southwest College
Zachary Hodges, President, Northwest College
Irene Porcarello, President, Southeast College
Willie Williams, Chief Human Resource Officer
Betty Young, President, Coleman College
Remmele Young, Executive Director Government Relations
OTHERS PRESENT
Jarvis Hollingsworth, System Counsel, Bracewell & Giuliani
Alan Ainsworth, President, Faculty Senate
Other administrators, citizens and representatives from the news media
CALL TO ORDER
Mr. Schechter called the meeting to order at 10:20 a.m. and declared the Committee
convened to consider matters pertaining to Houston Community College as listed on the
duly posted Meeting Notice.
Mr. Schechter informed that the budget must be approved by August 31, 2011. He noted
that the purpose of the meeting is to hear the presentation from administration and provide
the opportunity for the Board to ask questions regarding their budget concerns.
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Budget Committee – July 26, 2011 - Page 2
Operating Budgets (Unrestricted Funds) for 2011-2012 and 2012-2013
Dr. Tyler provided a budget presentation to include:
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Economic Conditions
Program Growth & Development
Continuing Reduction of State Allocation
Taxation
Local Tax Valuation Decline
Tuition and Fees
Dr. Tyler noted that there are concerns due to state reductions. He noted that although
there is growth, the state will not be funding for program growth. Dr. Tyler informed that
there is also the possibility of local tax valuation to decline. He further noted that the Board
may need to have a discussion regarding tuition and fees.
Dr. Tyler provided an overview of revenue forecast for 2011-2012.
Mrs. Sane requested to see the approved budget. Dr. Tyler apprised that the spreadsheet
reflects the approved budget for 2010-2011 as well as the projected budget for 2011-2012.
Mr. Austin suggested utilizing the more conservative approach because of previous
decrease funding decisions by the state. Mr. Schechter apprised that the Board needs to
be cognizant of possible additional reductions by the state.
Mr. Schechter inquired as to why the tuition and fees proposed for 2011-2012 are so
closely the same as the projected at 2010-2011. Dr. Tyler informed that the projected
amount of the spreadsheet is inaccurate and made an adjustment to reflect the actual
forecast amount based on an estimated growth of 2.5%.
Mrs. Sane recommended that the budget should reflect the conservative approach of
estimated state funding the same as 2010-2011. Dr. Tyler apprised that the proposed state
budget funding amount should be used in the budget that will be approved by the Board
since that is the amount the state is scheduled to fund. Mr. Schechter recommended that
the budget include 5% overage in case there is a reduction in state funding.
Dr. Tyler adjusted the Tuition and Fees for the proposed budget for 2011-2012 as follows:
Tuition (net) =
Fees
=
$40,703,406
$69,085,476
Dr. Tyler noted that the adjustments made to tuition and fees would cause a bottom line
shortfall of approximately $12 million.
Mrs. Sane recommended offering more courses. Mr. Schechter inquired of the additional
funds needed to offer more courses as discussed. Dr. Cook informed that the cost for the
Houston Community College
Budget Committee – July 26, 2011 - Page 3
summer to respond to the demand for the summer would have been approximately
$300,000.
Mr. Schechter asked administration to provide the cost for offering the additional courses.
He also proposed that administration provide realistic numbers so that the Board is
reviewing what is possible and most likely to take place.
Ms. Loredo requested that consideration is given to the closing of buildings during the
summer because that would mean that students are turned away. Dr. Seymour informed
that Dr. Garza did the analysis at Southwest. Dr. Garza informed that classes were held;
however, they were moved to other buildings. She noted that enrollment growth was still
experienced and apprised that the classes were shifted to buildings in the vicinity of the
original location.
Ms. Loredo requested that the college look at filling the buildings. Dr. Seymour apprised
that this has been reviewed by administration. He noted that other areas for cost reduction
have been reviewed so that class closure is minimum.
Mr. Schechter apprised that the shortfall would be approximately $15 million given that the
budget taskforce recommendations must be revisited and tied into the forecasted budget.
(Dr. Williams arrived at 11:50 a.m.)
Dr. Tyler provided an overview of the expenses. He noted that the largest hit in the budget
is benefits and retirements. He apprised that the state is not paying for a lot of the benefits.
Dr. Tyler noted that there are some saving options and apprised that the employee benefit
number reflects leaving the retirement as is without any reduction.
Mr. Austin asked if the Chevron analysis included the reduction in utility costs. Dr. Tyler
apprised that there has been approximately $3 million in savings.
Ms. Perez requested to review the renewal of the insurance premiums.
Mr. Austin informed that during the discussion regarding the insurance premiums it was
determined a risk assessment was needed because so many of the risks are unknown. Dr.
Tyler apprised that he would have to refer the discussion to the Risk Management
Department.
Dr. Tyler noted that the bottom line shortfall is approximately $12 to $15 million.
Mr. Austin noted that consideration must be given to the rating in lieu of the federal debt
ceiling issues.
(Ms. Perez stepped out at 12:09 p.m.)
Dr. Williams requested to discuss reduction in the worst case scenario. Mr. Schechter
mentioned that there are options without general obligation bond.
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Budget Committee – July 26, 2011 - Page 4
Dr. Tyler presented the following options for reducing the shortfall:
•
Possible Reduction in Expenses ($2.6 million)
o Provide 6% match in retirement
o Shift Long Term Disability Insurance to Employees
(Ms. Perez returned at 12:12 p.m.)
Dr. Tyler noted that if the long term disability insurance will be considered by the Board, it
would have to be done prior to the open enrollment closing period of August 5, 2011;
therefore, the Board would have to hold a meeting prior to August 5, 2011.
•
Possible new revenue ($1.9 million)
o Increase out-of-state tuition
o Increase out-of-district tuition
o Differential tuition for health and lab science
o Dual credit fee
Mr. Austin requested development of a sliding scale model regarding dual credit tuition.
(Mrs. Sane stepped out at 12:20 p.m.)
Ms. Loredo recommended reviewing the dual credit fee sooner.
•
Personnel Salary Increase ($2.1 million)
o Elimination of Step and Column increases for Faculty & Secretary/Clerical
•
Debt Restructuring
o Option 1 – minimum arbitrage ($4.5 million)
o Option 2 - negative arbitrage ($6.5 million)
o Option 3 – negative arbitrage ($10 million)
(Mrs. Sane returned at 12:25 p.m.)
•
Reduce Taxes below Effective Tax Rate
o Change tax rate to .0957 ($4.2 million)
o Change tax rate to .0972 ($6.1 million)
Dr. Tyler noted that a combination of debt restructuring and reduction of the effective tax
rates could be utilized. He noted that taxes have been lowered for five of the past eight
years.
Dr. Tyler apprised if the Board does not take action before November 1, 2011 regarding the
tax rate, the effective rate would have to be used, which would be .0957.
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Budget Committee – July 26, 2011 - Page 5
Mr. Schechter provided the opportunity for the Board to comment on possible options for
reducing the shortfall.
Dr. Williams noted that he is in favor of increasing tuition as well as the differential tuition
and a differential scale for dual credit. He noted that the option of debt restructuring and
changing tax rate to .0957 should also be considered.
Ms. Loredo noted that she is in agreement to charging dual a credit fee and she is not in
favor of raising tuition.
Mr. Austin recommended comparison of budget projection with budget task force
recommendations.
Mrs. Sane apprised that she would rather wait to see the data regarding increasing
students ratio and then analyze.
Ms. Perez noted that the decisions should be reviewed from a long-term perspective. She
requested to see the forecast for 2012-2013 proposed budget as well. She noted that she
does not have an issue with raising the tax rate as well as tuition; however, the review must
be from a long-term perspective.
Mr. Schechter noted that if the Board is going to consider the long-term disability insurance
to employees, a Special Meeting would need to be held before August 5, 2011.
Ms. Perez requested that median age of employees for long-term disability.
Mr. Willie Williams informed that the long-term disability plan is probably the only long-term
disability that employees may have because if they have been out of social security for 5
years or more, they are no longer eligible for social securiity. He noted that the college
currently covers the cost for long-term disability.
ADJOURNMENT
With no further business, the meeting adjourned at 12:44 p.m.
Recorded, transcribed and submitted by:
Sharon R. Wright, Manager, Board Services
Minutes Approved: _________________________________