A drop in enrollment paired with increases in mandatory spending have left Cuesta College facing a budget deficit of more than a half a million dollars, and that number could get worse in coming years, the school says.
The faculty union, however, is not convinced the situation is as dire as the administration makes out and is pushing for better pay as the possibility of a strike looms in the background.
In the current fiscal year, Cuesta is predicting a shortage of $551,000 in its ongoing unrestricted general fund resources.
Most of the college’s funding comes from enrollment of full-time equivalent students. As that number has decreased in recent years, so has the amount of revenue the school would otherwise receive from the state, according to Cuesta College superintendent and president Gil Stork.
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The college is targeting 8,309 full-time equivalent students this year, down from 8,646 full-time students funded by the state in 2011-12. Each full-time equivalent student is funded at $5,320, meaning the loss of 337 full-time students resulted in a decline of $1.79 million from what the school received eight years ago, Cuesta College spokesperson Lauren Milbourne said.
If enrollment continues to decline, the school could eventually face projected annual budget deficits of about $2 million, Stork said.
Increased pension payments of more than $600,000 to the California Public Employees Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS) also have contributed to the deficit.
“This year, the budget deficit will be covered by district reserves,” Stork said. “However, this is not a sustainable practice.”
Adding to an already strained financial situation is a displeased faculty, which picketed on the first day of spring semester to protest what they consider to be unfair compensation.
The faculty’s position
Debra Stakes, an earth sciences professor who serves as president of the Cuesta College Federation of Teachers, said that among 11 comparable community colleges in California, Cuesta College faculty have been paid the lowest “for at least the last decade.”
The average faculty salary among those 11 schools is $85,133, while Cuesta College faculty make $78,795 on average. It would take an 8.04 percent salary increase for Cuesta College to meet the average, Stakes said.
The union is requesting a 2.5 percent salary increase, while the district is offering a 1 percent raise.
The two sides are currently gathering facts and information to take to a mediator — the third time an impasse has been declared since Stakes became union president in 2013 — and a fact-finder report will be released during a Feb. 21 meeting.
If the district decides not to budge on salary increases after reviewing the report, “then and only then are the faculty legally allowed to strike,” Stakes said.
Stakes also emphasized that the $551,000 deficit is simply a projection.
“I have looked over the actual budgets going back to 2012, and we’ve always had money left over,” Stakes said. “We’ve never spent it all. I don’t see how you could call that deficit spending, if you know that you’re not going to need all the money that you have put in your expenditure column.”
Stork said the district feels that a 1 percent increase for faculty, which comes after a 2 percent raise in 2014-15 and a 5 percent increase in 2015-16, “demonstrates an effort to be fair to our employees while running a financially responsible institution to the community’s benefit.”
He also noted that the part-time faculty salary rate is 20 percent above the median salary and ranks second among the 11 comparable schools.
Stork said Cuesta College’s ending cash balances are well below the average of comparable districts.
“Maintaining adequate cash balances protects the district and its employees in times of fiscal crisis and/or state funding cuts during recessionary times,” Stork said. “The district does not want to be left unprepared for inevitable state revenue shortfalls.”
Board takes action
To combat the projected deficit, the Cuesta College Board of Trustees is implementing “several proactive strategies” aimed to permanently offset future budget deficits.
The strategies proposed include a retirement incentive program, a pension stabilization investment, a selective hiring freeze, relying more heavily on part-time faculty to fill vacant positions, and debt retirement from the $275 million Measure L bond passed in 2014.
Cuesta College officials also are looking for ways to increase revenue by growing enrollment.
The Cuesta College Promise Scholarship launched in 2014 and is awarded to recently graduated SLO County high school students each year. The number of local high school students attending Cuesta College has reportedly increased by 25 percent since the start of the program.
The school is considering new “in-demand academic and degree programs” and increasing dual enrollment for local high school students, among other initiatives. In fall 2017, more than 2,500 high school students took Cuesta College courses.
Other revenue-generating considerations include increasing parking permit fees, introducing a technology fee and leasing property on the North County campus.
“We have gradually been adapting to serving a smaller student base for those traditional majors, and then trying to expand our student base for other demands in our region,” Stakes said. “But the fact is that we need to reduce the (number) of our employees. That’s a good thing and they should do that.”
Cuesta College budget gap strategies
▪ Separation incentive program: Employees at the age of retirement can choose to retire and receive 75 percent of their base pay over a five-year period. Employees have until Feb. 23 to take advantage of the program, according to vice president of administrative services Dan Troy.
▪ CalPERS/CalSTRS stabilization investment: In 2017, the board approved an irrevocable trust for pension costs, authorizing the district to make an initial investment of $3 million in accumulated one-time funds. Investment returns from the trust can help offset increased costs of the pension systems, Troy said.
▪ Selective hiring freeze: A freeze for management and staff positions went into effect in July 2017. The district opted to no longer automatically fill vacant positions, and instead considers organizational restructuring to save funds and “increase efficiency.”
▪ A policy to leave some positions open: In effect since July 2017, the policy aims to save salary from faculty positions left vacant by retirees or resignations. Part-time faculty replace most positions, the school said, while others are not filled based on need.
▪ Debt retirement: The $275 million Measure L bond passed in 2014 includes debt retirement in the form of paying off certificates of participation (COPs) taken out to make “urgent and necessary improvements” to the college over the years. Without this debt retirement, the deficit would have increased by $1.2 million, according to the school.