TO:        Lane Faculty and Staff

FROM:        Mary Spilde

RE:        Budget Update

DATE:        November 21, 2003

Here is a summary of the remarks I made at the all staff meeting yesterday.

It seems that over the last two years since I became president, I have talked with you many times about the budget - either in person or by e-mail.  For all of that time it has essentially been miserable news!  It has been a real struggle to deal with the state revenue shortfalls.  Cutting programs, faculty and staff and increasing tuition, while necessary, took us away from the central work of the college - teaching and learning.  However, it was essential to take action to bring expenses in line with revenues.

So, following that, it is with a great deal of pleasure that I share the new projections with you.  For the first time since becoming president I am able to share some positive budget news.  Now I want to say up front that we still need to be cautious. There are a lot of uncertainties that I will address later in this e-mail, but I do want to say that our projections show that we will be able to get through this year and the next two years without dealing with the kind of huge deficits we have seen over the past two years. In fact, we should complete this year and the next two years at the current service level, at least.  We project another deficit in 2007, but with careful planning we can address that shortfall over the next two years so that by the time we get there we will have a balanced budget.

Knowing the toll the past two years has taken on everyone, I am looking forward to getting through a budget cycle without having to ask people to consider what we are going to cut.

These projections also include funding for major maintenance, equipment and computer replacement which will be on a four year cycle. This is not enough to address all of our deferred maintenance needs but we will phase in funding over the next few years.

I have attached the revenue and expense projections spreadsheet.  I should tell you that all of this, and more, is on the budget website but I wanted you to have the summary.

I want to direct your attention to line 41 on the spreadsheet. This shows the revenue over expenses that we project at the end of each year.  

The board directed me to include funds for major maintenance and equipment in the budget. I do not need to tell you that there are many parts of the college that need attention. So, please note line 28 where we have budgeted for recurring increases for equipment and computer replacement and line 36 where we have budgeted recurring funds for facilities and maintenance. Finally, note lines 45 and 46 that propose using some ending fund balance for one time catch-up for deferred maintenance and to build capital reserves.

These projections are very positive but there are still uncertainties and concerns we need to keep in mind.

•    We must continue to be careful about spending.  It is due in part to the care that everyone has taken that we have saved some money.  We need to continue to be vigilant.
•    State funding is still uncertain. Even when things have gone well, the state has never kept up with inflation.
•    The State funding formula for distributing state resources has not been determined for the long term.  The presidents have reached a one year agreement that focuses on equity and capping growth. The state board is working on a longer term formula so our numbers may change. We believe we have taken a reasonable approach in the projections.
•    The effort to overturn the tax increase will not impact us this year but if successful would deprive the college of $450,000 each year of the biennium.  We have not counted on the revenue from the tax increase for our projections and will be able to maintain the level of service this year regardless of what happens. However, were the ballot measure to fail and the tax increase upheld, then, we would have about $900,000 more to serve students.
•    We are still engaged in bargaining with the faculty and in discussions with the management group.
•    We have no reserves.  The college spent its reserves in the 90's to fund growth. We do not have a reserve to use if we were to have a major facility issue or are presented with an opportunity to better serve the community.
•    There is a bill in congress that ties tuition increases to cost of living and imposes sanctions for colleges that raise tuition more than the cost of living. Obviously, since 2002 we raised tuition more than the cost of living. Had this bill been in effect the last two years we would have had to file a plan to address the increases with federal financial aid at stake if we did not.
•    Although we plan to ask for an increase in state funding in the next legislative session, we cannot guarantee that will happen.
•    The governor has announced that he plans to make higher education a priority over the next three years and stop the disinvestment in higher education. This is a good sign, but we need to assure that community colleges are included. The governor asked for the resignation of most of the higher education board members and appointed former Governor Neil Goldschmidt to the board. One of the charges the Governor has given to Goldschmidt is to improve collaboration between universities and community colleges. Since there was a bill introduced in the last session to change the governance of community colleges (that ultimately failed) we will need to pay attention to this.

So while there are still many unknowns, I am cautiously optimistic that we are through the worst! There has only been one year since I got here in 1995 that we have not cut something, so I am glad to add this year to make it two years when we haven't had cuts. We are not out of the woods yet, but we can look forward to a more regular budget process where we are not asking for reductions.

Please remember that these are projections and are subject to change as we receive more information. Also, the proposals for maintenance and equipment will be considered during the budget development process
This will free us up to work on a myriad of other issues that need to be addressed. I recognize that many people are feeling overwhelmed and over-worked. That is something we need to address.  I don't have all the answers on that. This year we did budget some funds to look at some of our processes and see what we can do to streamline or eliminate some of the things we are currently doing.  We have a couple of groups involved in a small pilot program. We need to assess it, and if successful, see if we can garner more funds to continue evaluating our processes and systems. And there are a number of other things that need our attention.  Hopefully, now we can turn to those since revenue shortfalls will not be so central to the work we have to do.

I want to touch very briefly on strategic planning and governance. By now you have the strategic directions draft for review and we will be organizing feedback over the next few weeks. I know that there is tension between specific and general statements. Some think that we should have more specific goals; others think that general is better.  The task force that worked on the draft struggled with this also. What I would say is that, of course, if these are the right strategic directions, we will need more specific goals and activities that will lead us in moving the college in these directions. These strategic directions, once approved, must link up with unit planning so that all of us are working on their achievement.

I am about due to send out another governance update but I know that conversations are going on in councils and small groups, and I think that is a good thing. Many of you have said that this is still too abstract, and I think the task force is trying to develop a proposal that will be more concrete.  I believe we are making good progress and are beginning to deal with some of the knotty issues that have tripped us up in the past.  Last week, the board gave me permission to extend the timeline so the plan is to bring a proposal to the board in February.

If you have any questions about any of this, please do not hesitate to ask. In the meantime, my best wishes for a happy thanksgiving. I know that I will be particularly thankful that so far the college has weathered the perfect budget storm and can look forward to focusing on our vision, mission and core values.

Thanks.