“In order for the College to fulfill its top priority of student success, we must be financially stable and live within our means,” OCC Chancellor Timothy Meyer says. “This requires the College take a detailed, long-range approach to meeting financial needs.”
A number of economic factors in recent years challenged the College’s ability to meet this goal. The slow rebound of property tax revenue since the recession, declining enrollment related to an improving economy, a reduction in high school graduates, and increasing operating costs have all strained OCC’s financial health.
This year, the College is taking important steps to manage the impact of these factors with the introduction of a three-year budget and five-year forecast.
Peter Provenzano Jr., CPA, CGMA, Vice Chancellor of Administrative Services, is leading a team looking at ways to achieve efficiencies from energy conservation to changes in employee contracts to improvements in student services. Efforts will continue toward balancing community need, student success, and the financial stability of the College.
“We are looking at everything,” Provenzano says. “We need to run a college that is fiscally responsible, and accountable to taxpayers, students and employees. A balanced budget is required in a healthy organization.”
Provenzano, who arrived at OCC from Macomb County last fall, drew up the College’s first-ever five-year forecast. In January, the original forecast showed annual deficits ranging from $17.5 million for 2016 to $28 million in 2020.
Through a series of budget reductions and innovations, administrators reduced the projected 2016 deficit from $17.5 million to $4 million in the budget approved by Trustees in June. Trustees approved a transfer from the College reserves to balance this year’s budget. However, administrators will continue to seek ways to close the gap even further as the year progresses.
“We narrowed the 2016 budget gap through a combination of strategies to increase revenue, reductions in operating costs and position eliminations,” Provenzano noted.
Increased revenue projections of $3 million come from expected growth in bookstore sales and tuition revenue as a result of a tuition rate increase. Lastly, based on the most recent projections from the State of Michigan, appropriations are expected to rise by $300,000.
Cost reductions include $4 million from salaries and wages mostly from eliminating vacant positions and a proposed freeze on inflationary increases to pay scales. Fringe benefit costs are expected to fall $1.1 million due to the fewer positions, coupled with a proposed implementation of the State of Michigan “hard cap” on health benefits. Utility costs are expected to decline $400,000 due to management of market pricing and reduced energy use.