HFCC President Jensen: 'Financial Road Ahead Won't Be Easy'

In one of his first official duties as the new president of Henry Ford Community College, Stan Jensen presented a sobering budget report to the Board of Trustees at its meeting on Monday.

Jensen and Vice President Marge Swan revealed that the college is facing a staggering $16.5 million budget shortfall for the coming year.

Swan said HFCC's the budget shortfall is due to a combination of lower property values, decreasing student enrollment, uncollectable revenue from the federal government's Pell grant and FAFSA loan programs, and rising costs for teacher retirement.

"Property tax revenue is not expected to increase at this point, although we'll know more in June when the report from the city assessor is released," Swan said.

She said the college is projecting to receive $10.5 million from property taxes.

On top of that, funding from the state has gradually declined over the years, Swan said. The state once provided more than 50 percent of HFCC’s revenues, tuition accounted for 30 percent, and local property tax 20 at percent. Tuition now accounts for over 50 percent, the state less than 30 percent, and, due to declining property values, local support less than 20 percent.

Swan said Gov. Snyder has suggested the state Legislature will pass a budget by June that could provide an increase in funding of $300,000 for HFCC.

During Monday's presentation, Swan said enrollment for the spring is down approximately 25 percent, which equates to a revenue reduction of $1 million.

"This is likely reflective of the improving economy, as well as measures we implemented this semester that are designed to reduce our noncollectable tuition and fees," she said.

Those measures include requiring documentation of a high school diploma or GED upon registering; and setting deadlines for tuition payment in advance to allow the college's financial aid office to determine a student's enrollment eligibility. 

For the current fiscal year, Swan said uncollectable revenue from tuition and fees amounted to roughly $12.1 million. With the new measures in place, she said the college hopes to reduce that number by $4 million in fiscal year 2013-2014.

Due to the decline in enrollment for the spring, Swan said the college is projecting a 15 percent decrease for the 2013-2014 academic year.

College implements cost saving measures

In order to overcome the $16.5 million budget shortfall, Jensen said his office is proposing $5.27 million in cost savings measures.

That number includes:

• Reducing program costs ($2 million)
• Reducing non-teaching assignments ($650,000)
• Realigning the college's Perkins loan match ($550,000)
• Reducing costs for lower class enrollment ($1.5 million)
• Reducing purchasing services ($350,000)
• Assign costs to grants ($220,000)

Jensen's office is also looking at several revenue enhancing measures, including increasing student tuition fees across the board at $5 per credit hour beginning with the winter 2014 semester. The revenue from the increase could raise roughly $700,000.

Other measures include:

• Increasing the excess contact hour fee for students. Courses that have excess contact hours with professors would have an additional cost of $65 per credit hour. ($200,000)
• Reducing uncollectable tuition and fees ($4 million)

"Together we will continue to work to meet our financial challenges," Jensen said. "It won't be easy moving forward. The focus, however, must always remain on providing outstanding educational opportunities to students as they prepare for careers and to transfer to four-year colleges and universities, and on meeting the needs of our local businesses and industries to support economic development for the region."

Despite the cost savings and revenue enhancing proposals, Jensen said the college would still face a $6.5 million shortfall.

"In my mind, that $6.5 million is on the front burner. We need to address that soon through savings or revenues to fill the gap," he said. "We do have plans to meet individually with our board members and leaders throughout the campus to obtain input to figure out how to meet the challenges to move forward. It will take every one of us."

Jensen would not directly state that the college plans to cut employees to make up the difference, however he eluded that it is a possibility in the future.

"Reducing savings from paper costs and computer purchases only goes so far," he said. "We have a tough road ahead, but I believe we can emerge from this problem stronger and in a better position to help our students succeed."

Following the presentation, Brian Yinger, an adjunct professor at HFCC asked the board why it negotiated a contract buyout with former president Dr. Gail Mee for $250,000 if the college was in such financial constraints.

Trustee Aimee Schoelles said the contract was negotiated to "minimize the impact to the college" and the "inevitable change that needed to happen" at HFCC.

"It was a financial decision that we, as a board, made to move the college forward," Schoelles said.