Taking Back America By Taking Back Our Schools
by Mary Beth Faller - Jun. 10, 2011 12:00 AM
The Arizona Republic
The 10-college system is proposing a $1.4 billion budget for 2011-12, which includes a 3 percent increase in the property-tax levy. The board's vote will follow a public hearing.
If approved, the annual tax increase for a home assessed at $100,000 in Maricopa County would be about $24, effective July 1. The property owner would pay $121.60 per year, up from $97.34 in 2010-11.
The state cut its funding to the community by 85 percent, or $38 million.
"We were not under any illusion that we would be spared, but $38 million was a surprise," said Gaye Murphy, associate vice chancellor for business services.
The community colleges are funded in three ways: property taxes, tuition and state aid.
Property taxes are the largest revenue source - about two-thirds of the total. Because property values have declined over the past year, revenue from property taxes is projected to decline about 36 percent, from $11 million in 2010-11 to $7 million in 2011-12.
A 3 percent increase in the property-tax levy would generate $11.4 million. The last time the district raised the property-tax levy was in 2008-09.
Tuition and fees account for about a third of the system's revenue. In March, the board raised tuition 7 percent, from $71 to $76 per credit hour. That increase will generate about $12.5 million.
In the 2011-12 budget, state aid will account for less than 1 percent of the community-college district's revenue.
The state will give the community-college district $6.9 million for 2011-12, down from $45.3 million in 2010-11.
State aid to the district had been as much as 10 percent of its revenue in 2007-08.
The community-college district is spending $10 million in one-time federal stimulus money to offset some of the decline in state aid.
Also, the district office and individual colleges have cut their budgets by a total of about $10 million, according to Debra Thompson, vice chancellor for business services.
The budget earmarks 62 percent toward instruction, academic support and student services; 11 percent to administration; 11 percent to institutional support, such as security and computers; 6 percent to operations and maintenance; about 3 percent to scholarships; and 7 percent to a contingency fund.
The district is spending more next year to help its workforce in two ways: by splitting the 26 percent increase in health-insurance costs with its employees, which totals about $5 million, and by giving a 0.5 percent wage increase to partially offset the extra money that employees must pay into the state retirement fund, which totals about $2 million.
To boost retention, the community colleges also earmarked an additional $3.7 million in student-success initiatives, such as more counselors and advisers.
Kevin McCarthy, executive of the Arizona Tax Research Association, a business-supported advocacy group, questioned whether a tax hike is needed when the contingency fund is $160 million.
"That's a significant rainy-day fund that would allow them to be able to weather the current recession and decline in assessed values and state aid and still maintain their operations," he said. "We're very supportive of maintaining cash balances. There is a tension there in how much is enough when you talk about raising taxes.
"But there is some recognition that the large decrease in state aid that they had to absorb was well beyond what they anticipated," McCarthy said.
Chancellor Rufus Glasper said $160 million would cover about 63 days of operation for the district.
Thompson said the fund balance the district is able to maintain is one reason the community colleges have a triple-A bond rating, allowing it to pay low interest rates on bonds, which saves taxpayers money.
In addition, the district is anticipating receiving no state aid next year, she said.
The Goldwater Institute released a report this week criticizing the district for seeking a tax increase and raising tuition before making deeper cuts in its spending.