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Booming in the Bust

ACC advances its higher-ed march across the region – but not everyone is happy

By Lee Nichols, Fri., Aug. 27, 2010

ACC Faculty Senate President Jon Luckstead, a reference librarian, and President-elect Juan Molina, a math professor, are leading the effort for a pay increase.
ACC Faculty Senate President Jon Luckstead, a reference librarian, and President-elect Juan Molina, a math professor, are leading the effort for a pay increase.
Photo by John Anderson

Once upon a time, there was a governmental entity flush with cash. But then it decided to expand. Critics warned that the proposed expansion would be costly and would lead to cutbacks in services to its core customers in order to serve suburbanites, some of whom don't even live in its taxing district. And lo and behold, the predictions came true. Just as the expansion was completed, the economy went south and the agency made cuts to core services and found itself nearly penniless.

I'm talking, of course, about Capital Met­ro, and presumably there is no need to fully rehash the history of its commuter train here.

But we repeat that tale as an analogy: There's another local entity that finds itself in a similar situation as Cap Metro six years ago. It's an imperfect analogy, but the key components sound familiar.

Austin Community College in 2010 finds itself in good financial shape. And it's looking to expand – big time. If voters approve in Nov­em­ber, ACC could double the number of school districts it serves, annexing Bastrop, Elgin, McDade, Hays Consolidated, and San Marcos Consolidated. To prepare, ACC has negotiated for $35 million in land purchases in those districts (a process known as "land banking").

As with commuter rail, there are warnings from critics: In the ACC board of trustees election this past spring, some candidates ran on a platform wary of expansion, urging improvement of existing campuses before construction of new ones.

And there are cutbacks: For the first time in 30 years, ACC employees didn't get an annual raise. This includes the faculty members, who provide the "core services" part of this equation. Is history about to repeat itself? Can ACC really afford this expansion?

To the latter question, Ben Ferrell unsurprisingly says "yes." The college's executive vice president for finance and administration backs that assertion with "I get fired if something goes wrong." Ferrell says the issue revolves around two problems: "One, you know you have tremendous growth in this area and we're expected to meet it. Two, how do you do that without bankrupting the college or robbing the existing operations to do something like that?"

How that's accomplished, Ferrell says, will be based on the model ACC used for building its Round Rock campus when Round Rock Independent School District joined. "We [said], 'Okay, Round Rock, if you're annexed, you'll bring in this much money in additional tax revenue.' So we take that and run calculations and say: 'Okay, with your money, we can build a campus of this size and operate that campus in your area using your money, but we're not going to take the existing district's money and pour it into your deal. You will stand on your own.' That's how we approach an annexation. We don't want it to harm the existing district."

Ben Ferrell, ACC executive vice president for finance and administration
Ben Ferrell, ACC executive vice president for finance and administration
Photo by John Anderson

But some faculty worry it already has. While ACC goes on its land-buying spree, the administration has tightened up in other areas, with grave warnings about an uncertain economy ahead. In July, staff went to the board with its fiscal year 2011 budget – balanced in part by denying the usual 4% across-the-board raises to ACC staff. Instead, the board mustered up a $100 stipend to help with rising health costs. Although board members expressed reluctance, they were talked into passing it. Some faculty members object, saying the money for the raises exists.

Reference librarian Jon Luckstead is the president of ACC's Faculty Senate, and math professor Juan Molina is the president-elect (essentially, the vice president). They argue a pot of money is readily available: ACC's cash reserves, which are projected to hit $26 million by the end of FY 2010. Board policy requires that reserves be at least 8% of the budget. With FY 2011's budget coming in at just under $235 million, that would be about $19 million. They don't argue that expansion might be necessary, but they say ACC has enough cash that "they can have their cake and eat it, too," as Molina put it.

"When we asked for a salary increase, we were looking for money that they could use for that that is not attached to something else, like land," says Molina. "The cash reserves is one of those things that it's up to the discretion of the board on how to use it."

That $7 million from the reserves, says Molina, is more than enough – the administration's own numbers show an across-the-board 4% raise would cost $5.3 million. Luckstead and Molina also say another $2 million is available in "lapsed salaries," money allocated for positions that have not been filled. They also complain about the $1.6 million being spent on the Student Success Initiative – a cross-departmental program to examine ways to improve student performance – and argue that the teachers themselves are the best way to do that.

The pair also argue that the warnings of Ferrell and other ACC higher-ups are a bit overdone, if not disingenuous. Over the past decade, Travis County's appraisal values – and thus, ACC's tax collections – have soared. Collections have gone from $17.6 million in FY 2000 to $87.6 million in FY 2009. Com­bined with tuition revenues and other increasing income sources, the revenue per full-time student equivalent (that is, total enrolled class hours divided by a 12-hour course load) has risen from $7,052 in FY 2003 to $10,608 in FY 2008 (a 34% rise, they note, while employee compensation per full-time student equivalent has risen only 24%).

In other words, times are good and possibly getting better: ACC projects that revenues will grow from the current $235 million up to $317 million by FY 2018.

Luckstead and Molina also contend that adjunct faculty are getting shortchanged on a formula that ties their compensation to a percentage of that of full-time faculty – in essence, they say, the adjuncts aren't getting paid for the week before the semester starts to prepare for classes or to have appointment office hours.

Ferrell counters that this boils down to a "philosophical disagreement" with the Senate: "We're paying you to teach a course; that includes course prep and all that goes with teaching a course," rather than for a specific number of hours worked. Similarly, in regard to the lag between full-time student equivalent revenue and compensation, he says, "We don't do a profit-sharing plan here."

And finally, Luckstead and Molina note that ACC administrators got substantial raises last year – the top being Workforce Education and Business Development Vice President Mike Midgley with a 42% bump, and Ferrell himself with a 33% increase. Ferrell, however, says these raises were "market adjustments" – long overdue pay changes to keep with the board policy of making ACC competitive by putting staff pay in the top three community colleges in the state. He notes that just a few years ago, faculty pay also went up with a similar market adjustment.

With a service area spanning eight counties, ACC is the second largest higher learning institution in Central Texas. If voters approve in November, ACC could double the number of school districts it serves, annexing Bastrop, Elgin, McDade, Hays Consolidated, and San Marcos Consolidated.
With a service area spanning eight counties, ACC is the second largest higher learning institution in Central Texas. If voters approve in November, ACC could double the number of school districts it serves, annexing Bastrop, Elgin, McDade, Hays Consolidated, and San Marcos Consolidated.

"Look, ACC is doing great, we're buying land like crazy, we're annexing like crazy, so we need a raise," Molina says the Faculty Sen­ate told the board. "They keep spending money on all these other things, but they don't want to spend the money on the salaries."

Separate Money Pots

Luckstead and Molina's ideas would be disastrous, warn both Ferrell and ACC board Vice Chair Allan Kaplan. Kaplan goes even further and calls the pair "disingenuous, and they know it."

The money to pay salaries and the money to buy land, Ferrell and Kaplan say, comes from two different pots. The money for salaries and other maintenance and operations must come, by law, from taxes, tuition, and state appropriations – and while all those categories have gone up historically, tuition is the only one going up from FY 2010 to FY 2011. The land purchases, except for $4 million spent to acquire part of Highland Mall, come from revenue bonds paid off by a student fee. "To even compare them is disingenuous and ridiculous," says Kaplan.

State appropriations for FY 2010 and FY 2011 are going down 5%, and the state has asked community colleges to make plans for 10% reductions in fiscal years 2012 and 2013. The 5% will cost ACC $2.3 million, Ferrell estimates. And property tax revenue dropped by more than $1 million over the past year as well.

As for dipping into the reserves, "I think it's a real bad idea," Kaplan says, adding that the money is needed for emergencies. By comparison, Cap Metro, with a similar size budget, aims to build up its reserves from the current $15 million to about $35 million. "It's not a smart thing to do, fiscally. I've been on this board 16 years, and I pushed very hard for adjunct pay increases, faculty pay increases to get everybody up to market [levels], and so the fact is, the faculty and staff are very well-paid right now."

Ferrell agrees: "When you give a raise, that is there forever. And then the next year, if you give another $5 million, a 4% raise, it's on top of that new base, and you have a compounding effect. If you add a permanent expense to your budget, you better have a permanent revenue source to pay for it. ... It would be crazy giving a raise right now knowing that our revenues are going to drop."

"They always say the land banking is a separate pot of money," counters Luckstead. "But it's like accounting tricks. ... So we'll issue bonds, you get the money up front for selling bonds. Now you have to pay the bond holders. That debt service gets lumped into a special part of the budget, then they can say that part of the money isn't available for anything else." The $4 million for the Highland Mall property, Luckstead said, "was cash. That wasn't a different pot of money."

"The accounting can be very artistic," adds Molina. "If it's going to benefit them, they're going to move the money around, but they won't tell you how they're moving it."

Of course, opinion is not unanimous among faculty. English professor David Lydic – whose name, we are compelled to acknowledge, was passed on to us by ACC administration – says, "I've been here 30 years, and I believe this is the first year we have not gotten a pay raise." Lydic says the complaints make faculty appear "oblivious" to the plight of others worse off in the current economy. "I don't want to say bad things about [the Faculty Senate's] motivation; I just think it's not the right time to be fussing about the lack of a raise when we've gotten one for 29 years in a row."

That doesn't satisfy Molina. "It looks from our perspective like a very self-serving system," he says. "They're making others money, they're building all these campuses, yet they don't really care much about the employees."

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