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Enrollment losses drive budget cuts

The State of California has some significant budget problems this year. As in, it has a $22.5 billion gap between its revenues and its expenses. There are a limited number of places a state can make budget adjustments, and public education (at all levels) happens to be one of them. So, California’s budget shortfall has translated into budget cuts at the state’s higher education institutions. Two such institutions, the Coast Community College District and the Orange Coast College, now need to figure out how to get by with 20% less funding from the state.

To put this in context, if the State of Michigan reduced WCC’s appropriation by 20%, that would mean budget cuts of more than $3.25M in the space of a single year. Cuts on that scale could zero out both the scholarship budget and the Distance Learning budget. (It would also allow WCC to finally achieve a longstanding goal of eliminating the maintenance budget altogether.)

In Michigan, the state appropriations picture is very different. The budget passed by the state legislature actually included increases for the community colleges this year. That hasn’t been enough to shield institutions from funding reductions, though. Grand Rapids Community College is contending with a revenue shortfall of $1.85M, due to lower-than-predicted enrollment.

GRCC’s fall enrollment slid by 7.5% in the fall, and an additional 3.5% in the winter for a total decline of about 10.75%. The increased state appropriation offset some of the losses, but GRCC still needed to cut employee wages and benefits to make up for the lost revenues.

Budget cuts reveal the truth about outsourcing

GRCC also did something rather unusual. They canceled a contract that outsourced their custodial services and hired employees to clean the facilities. (That is not an error.) The cost of hiring custodians and putting them on the college payroll was less than the cost of retaining its outsourced custodial firm.

This certainly flies in the face of those who absolutely insist that outsourcing saves money. (In other words, no George Washingtons were saved by outsourcing custodial services.) The move fully undercuts the cost rationale for outsourcing in the first place.

It’s somewhat refreshing to see an institution admit (at least through its actions) that outsourcing hasn’t lived up to its promise. Of course, WCC has had its own experience with outsourcing – which has also proven to be more expensive than keeping workers in-house. Initially, the Administration claimed that outsourcing the college’s IT Department would save $600,000 per year. (Not even close.)

Chronic enrollment losses are not sustainable in the long-term. Unfortunately, the administration does not seem to have any viable plans to reverse that trend. When the budget cuts come, the Board of Trustees should insist that personnel cuts should come from the administration first, which has enjoyed an unfettered and unquestioned expansion over the last decade. Second, it should also insist that the administration avoid outsourcing as a means to “save money,” because – as GRCC has demonstrated – outsourcing just doesn’t work that way.

Photo Credit: Phil Roeder , via Flickr