Earlier this year, Mid Michigan College in Harrison, MI announced that it was laying off nine employees to address a budget deficit. Community college layoffs are a common strategy for balancing institutional budgets. In the grand scheme of things, nine is not a big number. What’s interesting about the nine layoffs is that MMC chose to focus the job cuts on its high-ranking administrators. The cuts largely spared MMC’s full- and part-time staff of about 250 people.
Like many Michigan community colleges, Mid Michigan College (MMC) in Harrison, MI was founded in 1965. MMC operates two campuses – its main location in Harrison, and its second campus in Mount Pleasant. Harrison is about 30 miles north of Mount Pleasant. MMC It offers a range of occupational programs and certificates, as well as transfer programs. And like other Michigan community colleges, it was not spared the impact of COVID 19.
In any given year, MMC is heavily dependent upon student tuition (37.25%), auxiliary revenues and its state appropriation for funding. It reported an unduplicated headcount of about 4,800 students in FY19. That represents a greater-than-20% enrollment drop between FY18 and FY19. Even without the pandemic, MMC would have a hard time managing the impact of a substantial drop in its enrollment. Auxiliary revenues – revenues not directly related to instruction – likely also took a major hit during FY20.
For MMC, property taxes account for mere 7% of the college’s total institutional revenue. MMC has the lowest property tax support of any Michigan community college as a percentage of total institution revenue.
Community college layoffs from the top down
Prior to the start of the fall semester, MMC determined that its enrollment would likely drop by 12%-13%. MMC President Tim Hood, who joined MMC in July, needed to close a $2M budget deficit. For nearly two months, the college staff looked for ways to reduce expenses or improve efficiency without reducing staff. MMC also supplemented its revenues by drawing from its cash reserves. That process reduced the deficit by about $1M.
After making those changes, the only remaining area to cut was personnel. Instead of leaving the responsibility of personnel cuts to department heads, Hood took on the task himself, spending about a month reviewing college operations. Cutting the nine administrative positions produced the other $1M in expense reductions.
To address revenue issues in the longer term, MMC proposed to annex school districts in the Gratiot-Isabella ISD to its district. In November, voters in those districts approved the annexation plan, but turned down the accompanying millage. The annexation plan, which would have more than doubled MMC’s property tax revenues, failed by fewer than 400 votes.
Taking lessons from MMC
The lessons here are two-fold. First, no one likes to cut personnel. But when community college layoffs need to be made, they should be made from the top down. Having joined MMC just a few months prior to the layoffs, President Hood could look more dispassionately at the MMC administration and the roles of each administrator.
In the case of a community college, its primary function is education, not administration. Cutting lower-paid employees would mean a higher number of layoffs. It would also mean making cuts that were closer to the primary function of the college. Higher paid employees are often not closely tied to instruction. Because MMC receives nearly 40% of its revenue from student tuition and fees, cutting any instructional activities would jeopardize income. Cutting instructional support would have a similarly negative impact.
The second lesson worth looking at is the value of annexation. Expanding the size of the community college district can generate needed revenue. I have often said that WCC does not need more revenue as much as it needs better spending controls. But WCC’s reality is that nearly half of its student tuition and fees come from out-of-district students. Many WCC students live in Livingston County, which has no community college and shares a border with Washtenaw County. WCC could make a good case for proposing to expand its district boundaries into Livingston County.
Adding administrators just increases operating costs
In cutting high level administrators, MMC’s Hood recognized a universal truth about community college administration. Some administration is absolutely necessary, but more administration does not increase institutional efficiency or reduce operational expenses. In fact, it does the exact opposite. Larding on administrators is costly and acts as a drag on the institution. Worse, it diverts badly needed resources away from education.
The taxpayers’ cost to administer WCC has increased by nearly 17.5% in the last decade in 2019 dollars. That represents increased salary and benefits expenses, but it also represents an enormous increase in the number of administrators on WCC’s payroll.
It is time for the WCC Board of Trustees to start exercising the fiduciary responsibilities the voters assigned to them. The first step toward that is to insist upon the downsizing of WCC’s bloated administration.
Photo Credit: djwess, via Flickr