Low-down on the break-down; $72 million Amarillo College budget explained

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By LAUREN EBBEN, Staff Reporter ¦

Amarillo College regents have approved a $72 million budget for the 2019 fiscal year, which began Sept. 1.

The budget reflects difficult choices, but not many changes from last year, according to Steve Smith, vice president of business affairs.

“For the most part, all of our expenditures are very close to what they were last year,” he said.

Smith said initial budget requests came to about $140 million and he had to make cuts based on priorities.

“The areas cut from requests were typically miscellaneous expenses … typically supplies,” he said. “There are so many things that people want and people need. The hardest thing about my job is that I have to prioritize what’s the most important, what has the most value for our students and our community.”

Dr. Russell Lowery-Hart, AC president, also stressed the importance of making smart budget choices. At the college’s general assembly Sept. 7, which is the annual meeting of all college employees, Lowery-Hart pointed out that managing the budget requires difficult decisions. “It makes the college better financially to be smarter about where we invest and spend our money,” he said.

Jeanette Nelson, AC budget manager, said the college gets the majority of its revenue from tuition and fees, state appropriations and property taxes.

“Of those, the state of Texas is the least. The property taxes and student tuition and fees are very close to each other, but property taxes provides more,” she said.

Although the property tax rate hasn’t gone up, the college will get more money from property taxes this year because Amarillo has grown.

“We aren’t changing the rates on property taxes and we haven’t in six years,” Smith said. “The city is bigger in total. There’s more property in Amarillo so we bring in more money. We haven’t increased the rate, just the base that the rate is applied to.” The current tax rate is 20 cents per hundred dollars.

The annual increase in property taxes is used for employee raises. “Employees are the biggest part of our expenses,” Smith said. “Most employees expect a raise at the end of each year because cost of living goes up. This year the increase was about $700,000 and that’s the amount of the raise that we offered. That was equivalent to a 2 percent raise for employees as a whole overall.”

However, that 2 percent is not dispersed evenly among employees. “Raises are distributed on the basis of evaluation scores. That’s what we call merit pay. Not everyone gets the same raise,” Smith said.

Beside property taxes, a portion of the budget revenue comes from the state of Texas. State funding is tied to enrollment and reflects significant decreases over the past few years due to lower enrollment. “In 2014-2015, we were getting $15.2 million. In 2016, it dropped to $13.7 so in total that’s about a $3 million decrease. We had to cut $1.5 million a year out of our budget two years ago,” Smith said.

The 2019 budget also reflects a slight decrease in capital expenses, which includes remodeling, because the college is going through the master planning process.

“The master plan is looking at what the college needs to be over the next 10 to 15 years, Smith said. “We talk to business leaders and city leaders and find out what jobs will be available, so we can prioritize where we spend money in the future.”

Overall, these talks determine the next steps for the college. “The programs that we offer and what we invest in are really driven by what jobs are available in the Amarillo and Panhandle market in the next 10-15 years,” Smith said.

To prepare the annual budget, AC uses a process called zero based budgeting.

“Zero based budgeting means you start with zero and you add the expenditures that you plan on spending.  Everyone has to account for what they are going to spend, so sometimes they may have more than last year, sometimes they may have less,” said Smith

Determining the budget is a legal process, according to Nelson. It starts with the individual departments determining what they need, then it moves up to the deans and directors of those departments, then to cabinet members and finally, to the board of regents, “who go through it with a fine tooth comb.”

“We take planning the budget very seriously,” Nelson said. “We’re very aware that we’re trying to keep the cost down so that our tuition does not go up. We haven’t raised tuition much in the past several years because we’re aware that if we raise tuition, someone might not be able to come here.”

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