Ozarks Technical College in Springfield, MO raised tuition for the FY21 year. The increases – $4 per hour for general education courses and $3 per hour for technical courses – will help OTC continue to offer programs without cutting services. OTC also eliminated at $65 flat fee for online courses. The fee had generated about $2 million per year. Instead, OTC will begin charging a $19 per credit hour technology fee. Previously, the technology fee had been $8 per credit hour.
Mercer County Community College in Windsor Township, NJ responded to the pandemic by cutting summer tuition by 20%. MCCC had charged slightly more than $200 per credit hour. The Trustees who approved the cut indicated that they were acting to assist local families by making attendance more affordable.
State Fair Community College in Sedalia, MO voted to approve a new voluntary retirement incentive program for eligible employees, in lieu of other cuts. The incentive would provide employees who are already retirement-eligible payments of $500 per year of service, up to a maximum of 25 years. The Board funded the program in the amount of $200,000. That could potentially induce as many as 16 employees with at least 25 years of service to retire. The college would then realize savings by keeping the retirees’ positions unfilled for one year.
Spending flexibility can help weather a storm
These are three examples of actions that community colleges are taking to mitigate the impact of COVID-1. Many community colleges have decided to freeze their tuition for FY21. Washtenaw CC is among them. Other community colleges have decided to raise tuition – unable to find other ways to address their budget crises.
But the colleges that cut tuition and/or fees actively lose money when they do that.
That can speak only to the flexibility to absorb loss. That flexibility comes from careful management of a college’s revenues. Perhaps they cover these losses out of their “rainy day fund.” Or maybe they “overbudget” in certain areas, which leaves unspent money at the end of the year. These schools may cover losses from their General Fund. Maybe enticing retirement-eligible employees to leave the payroll produces significant savings on personnel expenses.
And these colleges can do that because their General Funds aren’t completely mortgaged with decade-old debts. Maybe they don’t look at their tax appropriations or their enrolled student body as cash registers they can hit up when the Administration wants to buy itself a pony. Or it simply cannot get by without another two or three executives.
Obligating the College to make payments on long-term debt using the General Fund eliminates the spending flexibility the institution needs when the economy falters. Revenue-backed debt obligates the College to re-prioritize its spending away from education and toward debt repayment, without regard to the community’s circumstances.
Taking resources that the community pledged for education and using them to pay off debts for decidedly non-educational projects cheat the students and the community. It eliminates spending flexibility when it is needed most. It also commits the institution to making otherwise unnecessary cuts in payroll and programs.
Photo Credit: Jenn Durfey, via Flickr