Stimulus funds help offset college budget cuts

By Kyle A. Porter, December 2009
Editor-in-Chief

Photo by Ginger Hoil MCCCD manages $15.1 million in stimulus money.

Phase I of federal stimulus funds totaling $15.1 million were released to Maricopa’s College District by Arizona Gov. Jan Brewer in October.

The governor’s office met with the state’s community colleges last summer to make budget plans for the $183 million Arizona would receive for higher education via the American Recovery and Reinvestment Act, State Fiscal Stabilization Fund, said Debra Thompson, vice-chancellor, business services, MCCCD.

The result of these plans was that stimulus money was earmarked to cover budget expenses, which qualified with the federal government. That freed up funds for other budget priorities and left some cushion against further state cuts in the current fiscal year, Thompson explained.

The stimulus money is meant in part to offset state budget shortfalls and MCCCD is bracing for the possibility that the state legislature may take back 15 percent of the money allocated to the district due to the deepened Arizona budget crisis, says Paul Dale, Ph.D., PVCC’s interim president. The amount could range from $6.1 to $9.3 million

With a nearly $2 billion state budget deficit looming, the governor has called legislators back into session with the intention of reducing the deficit by at least $450 million.

The purpose of the ARRA State Fiscal Stabilization Fund is to help states maintain critical funding of areas like education. Phase I money was delivered quickly following passage of the Recovery Act to meet the urgency of states’ budget issues.

But federal stimulus dollars come with reporting and performance requirements says Bernie Ronan, associate vice-chancellor of public affairs in the MCCCD Office of the Chancellor.

Going forward, states have to demonstrate a “maintenance of effort” in the funding of schools to qualify for stimulus money said Ronan. This means that with federal stimulus funds included, states must maintain education funding at the level which is highest of the two prior years.

Arizona has also been selected as one of 16 states being tracked by the U.S. Government Accountability Office. These states contain about 65 percent of the U.S. population and will receive about two-thirds of the ARRA funds. The GAO plans to monitor the use of the funds distributed to these states to ensure transparency and assess achievement of the stated purposes of the recovery act, says Eileen Larence, director of Homeland Security and Justice for the GAO.

The U.S. Dept. of Education outlines four assurances or reforms to improve student achievement in schools. These guidelines form the criteria to measure appropriate use of stimulus funds, said Ronan.
According to the U.S. Dept of Ed. “Overview of ARRA,” states and schools are required to do the following:

There is also stimulus money anticipated from competitive grant programs which are implemented in the colleges through collaborations between the district and local social agencies. They provide targeted training in healthcare fields and some technical skills, especially for individuals affected by high unemployment rates.

Phase II of stimulus funds are projected to bring $176 million more to Arizona for institutions of higher learning. These funds may be distributed to schools hardest hit by state cutbacks said Ronan.

“Maricopa can’t count on the same amount of money as phase I,” he cautioned, since most of community college funding comes from property taxes while the state universities rely on state funding.

While reviewing current budgets and preparing for possible further cuts, PVCC and MCCCD administration are also gathering information for next year’s budget, FY 10-11.

Declines in the economy and real estate market have pushed down projections of property tax revenues, according to Gaye Murphy, associate vice-chancellor for business services at MCCCD. The district relies on property taxes for nearly 60 percent of its budget. Tuition provides approximately 25 percent and state funds about 8 percent. With an annual budget of $635 million, even 1 percent is $6.5 million less for education services.

Murphy will draft tuition and fee proposals for the Governing Board to consider in February 2010, and they will review tax rates and the next year’s operating budget in March for approval in April.

The property tax levy is calculated from an annual abstract created by the Ariz. Dept of Revenue from each county’s property valuations as of Jan.1, according to Valerie Courtright, research and compliance manager with ADOR property tax division. Each school district sets its own levy to maintain its operating budget.

In past years of building and development, the tax base for the county grew even without increases in existing property values. In the current, stagnant growth period few new properties are added to the tax roles and the decline of existing property values further diminishes the tax base.

Higher tax rates on homes with lower values are a burden to homeowners and taxpayers, which the chancellor and Governing Board must consider in setting tax rates in this economy.  But with record enrollment increases, the colleges have a duty to fund and provide the service that the community needs and expects, said Ronan.

“That tension is exactly what the board and the chancellor are struggling with,” Ronan said.

For now, stimulus funds have replaced money lost to state budget cuts, Ronan says.

Looking to the future, Dale at PVCC has convened a panel of nine employee representatives to develop strategies for maintaining educational standards and services in a variety of budget scenarios.