Texarkana College's economic outlook continues to improve as its staff works diligently to align expenses and revenues, but the college's president warns there's still plenty of work to be done.
TC President James Henry Russell presented the second draft of the proposed 2014-15 budget to board members during their Tuesday noon meeting and said although the TC's finances have improved considerably, there's no room for complacency while the college strives to operate without counting on one-time donations.
The proposed budget shows total revenues of $40,270,223 and expenses of $38,957,31, and projects TC will end its 2014-15 fiscal year with a $580,250 surplus.
The surplus is in large part due to a $1 million gift from Texas billionaire and TC alumnus Ross Perot, along with almost $250,000 from other donors.
Perot's donation is part of a five-year, $5 million pledge he made contingent on Bowie County taxpayers' approval of a countywide annexation and accompanying property tax, which they passed in November 2012. Without Perot's gift, TC would end 2014-15 with a $419,750 deficit, Russell said.
The college is also heavily indebted to Bowie County voters who approved a property tax of 10 cent per $100 valuation that will generate $5.3 million in the coming year. However, about $2 million of that amount is offset by the fact that all Bowie County residents now receive in-district tuition rates, Russell explained.
The FY 2014-15 budget won't be finalized until the college receives its certified tax values Friday from Bowie Central Appraisal District.
The college will end FY 2013-14 on Aug. 31 with a projected $1.7 million deficit, which basically reflects the one-time cost of TC's new Jenzabar Enterprise Resource System that is replacing a multimillion-dollar system TC purchased in 2009.
"We think we will end this year better than anticipated, but the final numbers won't be known until after the audit is completed in November or December," Russell said.
Jenzabar replaces the college's current operating system from Ellucian, formerly SunGard Higher Education, whose Banner software has cost the college more than $1 million annually for consulting fees and maintenance. TC's three-year, $8.4 million contract with SunGard in 2009 did not include the annual consulting and maintenance fees.
Russell said the Jenzabar system can be maintained in house at a cost of about $130,000 a year, versus the $1 million-plus fees the college has been paying Ellucian.
Jenzabar, like Ellucian, provides the technology infrastructure and operating systems for student records, student scheduling, the business office and records.
With the switch to Jenzabar, TC expects to save about $3.8 million by 2018-19.
"The software is our whole operation software platform," Russell explained. "(The Ellucian system is) basically what the college spent a huge sum for in the past that also led to very high maintenance costs the college couldn't sustain. It's been costing $1.2 million to $1.3 million annually, though it was costing more than $2 million a year when I got here. The cost of that system was a lot of the big (financial) issues of the college."
Russell came to TC in June 2011, after the college had gone from enjoying more than $18 million in unrestricted net assets in 2005-06 to only $1.6 million in 2010-11.
Regarding the FY 2014-15 budget, projected tuition, taxes and fees totaling $13.8 million account for 55 percent of TC's revenues. Money from the state, expected to total $8.2 million, accounts for 33 percent of revenue. Auxiliary services income and miscellaneous income account for 9 percent and 3 percent, respectively, and total about $3 million.
"Six or seven years ago, the state accounted for 70 to 80 percent of the pie," Russell said, adding the state has steadily decreased funding to community colleges and will likely continue to do so.
TC faculty will receive step raises in the coming year as they move up with experience, but the majority of employees' salaries will remain flat, including Russell's.
Tuition and fees will remain the same as last year, as will the property tax rate.
"We're working really hard to keep the cost of education low and the quality high," Russell said.
He said the $38 million budget is somewhat misleading, as money received through federal and state grants and contracts, about $15.1 million, is "a wash" because it is financial aid students apply for that is dispersed to them so they can pay for tuition, books and fees.
"It seems like double stating it, but that is the correct accounting practice to show how the money is received and dispersed," Russell said, adding that realistically, the college's budget is closer to $25 million.
TC's fiscal year ends Aug. 31. Trustees will vote on a final draft of the 2014-15 budget when they meet again Aug. 26 in regular session.