After months of uncertainty concerning further revenue reductions from the state, Northern New Mexico College finance officials were able to balance the budget — the only problem is they had to deplete the school reserves to do it.
The Board of Regents approved a $17.3 million operating budget that allocates nearly $200,000 more for instruction, than was set aside for that purpose, last year. This year’s budget is $1.5 million less than the $18.9 million Northern officials budgeted during Fiscal Year 2017.
Budget Analysts Evette Abeyta and Alexandra Williams were able to funnel the increased revenue to the school’s instruction budget, thanks to the Board’s decision to implement a 4.5-percent tuition and fee increase and eliminate three administrative positions.
Northern officials expect to earn about $81,000 from the new students who enroll in classes this upcoming 2017-2018 School Year under the 4.5-percent increase. The anticipated revenue would be more, but because of the school’s tuition promise, most returning students won’t have to pay the increase.
The tuition promise implemented in 2015 guarantees students who entered in the fall of 2015, won’t have their tuition increased.
Neither Williams or Abeyta could be reached, to determine exactly how much they will save by eliminating the executive administrative, receptionist and unassigned part-time positions.
The balanced budget drained the institution’s $781,305 reserve fund balance.
Williams reminded regents, during a June 3 meeting, that using the reserve fund to cover expenses is a stop-gap measure that won’t be available in the future.
“It is significant to mention, given that we haven’t raised tuition and fees higher, that we depleted the fund balance we had built up,” she said. “These are recurring costs and they are going to have to be addressed whether it is tuition and fees or grants or whatever.”
The lack of reserve fund balance knocks the school out of compliance with the state’s Higher Education Department, which mandates the institution has cash reserves
Outgoing vice president of Finance and Administration Domingo Sanchez said in a perfect world, Northern should have a cash reserve that equals approximately 5 to 6 percent of the unrestricted operating budget.
Based on the $15.5 million in projected revenue, its cash reserves should hover around $779,165.
About 44 percent of the state’s budget reductions during the last couple of years, came off the backs of the state’s colleges and universities.
He said those cuts represent about $800,000 in reductions to the institution during the current fiscal year, which impacts Northern’s budget for years to come.
Regent Kevin Powers said the zero cash reserve balance is a conservative estimate and would probably increase at the close of the fiscal year.
“There are a number of things in the preliminary stages,” he said. “We aren’t even finished with this fiscal year. We made a conservative estimate, but it could be higher.”
Powers is no stranger to finance. He retired from a career as an investment banker.
He said the Board chose to invest in the classroom during a time of cuts for two reasons.
First, instruction has absorbed most of the cuts the school has endured in recent years.
Second, it sends a message that Northern’s Board and administration are listening to the community.
“We put more money in instruction because these are the areas that have been cut because of state budget cuts and reduced enrollment,” Powers said. “We felt it was important to demonstrate our commitment to the community and students. They are worth the investment.”
Provost Ivan Lopez-Hurtado said the instructional budget increase would fund a full-time fine arts instructor and administrative assistant, as well as several adjunct instructors to help facilitate the institution’s expansion.
They also will use part of the increased allocation to pay a portion of the dean of education’s salary, which was covered by a grant that expired.
“We wanted to show our commitment to making our fine arts department stronger,” Lopez-Hurtado said. “We need to hire many more adjunct faculty members in humanities and social sciences and language and letters.
He said next year, Northern’s finance officials will have to keep a close eye on the school’s budget to make sure the hole doesn’t get bigger.
“Next year, College officials will have to closely monitor the budget or be prepared to make some tough decisions,” he said.
Regent Damian Martinez requested that Williams come up with a schedule for giving budget updates monthly or quarterly.