Enrollment: Austin Community College started
offering classes in 1973 and now has college-credit enrollment of about 31,000
students, who take a total of about 600,000 credit-hours each year in about
10,000 “sections” (college-speak for a specific class with an instructor and students). ACC also offers continuing-education classes
that account for 8% of tuition/fee receipts to about 9,000 students, as well as
free adult basic education and ESL classes to about 4,000 students.
Revenues: ACC FY05 revenues total about $128
million per year (net of tuition waivers) and come mainly from local property
taxes (36%), student tuition/fees (34%, all but 3% from college-credit
students), and enrollment-based state appropriations (28%). Student tuition/fees is the only revenue
source over which the college has direct control. The college waives about $2.3 million/year of tuition, with about
2/3 of that for early-college-start students.
Expenses: Employee pay is about 70% of ACC
expenses. Facilities costs, including
depreciation, debt service, and facilities-related operating expenses, are
roughly 12% of overall costs. The rate
of marginal expense (i.e., the change in expenses due to changes in enrollment)
is an area of disagreement, but the consensus of the previous ACFB was that
growth in enrollment will entail growth in expenses (including the overhead
expenses necessary to maintain quality of service) by at least 80% of average
expense rate, implying that growth is not usually self-financing.
Cost of
instruction: For FY05,
the overall average cost to ACC of providing college-credit instruction is
about $202/credit-hour.
Enrollment-based reimbursements from the state for Texas residents
(based on student contact hours) average about $60/credit-hour, making the net
cost that must be covered from local sources about $142/credit-hour. Tuition/fee rates currently are
$53/credit-hour for district residents, $112/credit-hour for “out of district”
Texas residents (e.g., Round Rock ISD), and $198/credit-hour for out-of-state
and international students. Allowing
for the state reimbursements, this implies that property-tax funds now cover
about 44%, 15%, and 2%, respectively, of the average costs for such students.
Tax-rate
authorization: ACC is unique among
Texas community colleges in having its taxing level determined by a
voter-specified tax-rate cap. From 1986
(when voters narrowly approved the minimum tax that the state required) until
2003, this cap was 5 cents per $100 of assessed property value. In May 2003, voters approved an increase to
9 cents/$100, plus $99 million in bonds that require an additional 1 cent/$100
to service. The 4-cent increase in the
operations rate was phased in over three years, with the full rate effective
from FY06 on.
Tuition: ACC tuition for in-district students is
higher than the state average for community colleges. Out-of-district (but in-state) tuition is high compared to most
other Texas community colleges (especially those who have few out-of-district
students), but is still about $30/credit-hour less than needed to match the
average cost of instruction, implying that about $5 million/year of tax
revenues is being used to subsidize out-of-district students. Under current ACC Board policy, the
surcharge to out-of-district students is being gradually raised $3/credit-hour
per year until that subsidy is eliminated.
ACC out-of-district tuition/fee charges, at $112/credit-hour, are still
well below those of Texas State University ($156 or more) and UT-Austin ($191
or more), with that gap expected to widen rather than narrow in coming years.
State
appropriations: State
funding is distributed among community colleges based on student enrollment,
with the payments per student contact hour based on a fraction of the typical
program costs for each area (excluding facilities and some other
overheads). Appropriations have not
kept up with enrollment growth and inflation, leading to this source of funding
shrinking from about 70% to less than 30% of total revenue over the last two
decades. FY04-05 appropriations are
nominally 62% of program costs, but under ACC’s expense structure this
translates into about 28% of full costs.
Program
costs: Even though the
state reimbursement level is higher for high-expense instructional programs
(e.g., nursing), the low reimbursement percentage combined with the Texas legal
requirement that tuition be the same for all programs means that these programs
require disproportionate support from tax funds. While there are some unresolved questions about how to
realistically allocate overhead costs, most transfer-student lecture sections
(e.g., government, composition, history, college-credit math) are clearly close
to being self-supporting, but the small-class-size remedial-education and workforce-related
programs clearly require substantial subsidies from tax funds. Note that ACC’s low tuition means that even
transfer courses generate little if any net cash – ACC is a service, not a
business. The substantial expansion of
ACC’s health-science and workforce-related programs and courses in recent years
has absorbed much of its increase in revenues, but of course these expansions
were part of the justification given to voters for increasing the tax rate.
Annexation: Within its legislation-defined “service
area”, ACC can annex school districts or counties by a 5%-of-voters petition
and a majority vote in the new area.
Manor (1999) and Del Valle (2004) ISDs have joined ACC’s founding ISDs
Austin (1971) and Leander (1985) with this method, and San Marcos Consolidated
ISD will hold such an annexation election in May 2005. ACC can also on its own initiative call an
election on expansion to include all of Austin, its primary city, which
requires only an overall majority vote.
Annexations of areas that are part of metropolitan
Austin are a net financial gain for ACC, with new taxes exceeding the loss of
tuition surcharges, although generally there is a short-term loss because
tuition discounts start over a year before the new taxes are due. Del Valle ISD, for example, will contribute
about $2 million/year in taxes starting in January 2006, while the $0.9
million/year tuition reduction for its students started in June 2004. An all-of-Austin annexation would bring
about $7 million/year in additional taxes that would be partially offset by
about $3 million/year in additional tuition discounts. On the other hand, the San Marcos annexation
will yield about $2.4 million/year in taxes, but is expected to be roughly
breakeven due to the costs of building and operating a new campus whose
enrollment will be modest in its first few years.
FY00-FY03
losses: The bottom
line of ACC annual financial statements is “change in net assets”, which is
closely analogous to profit and loss in business accounting. Over the four years from FY00 through FY03,
ACC net-asset totals (analogous to net worth) dropped by about 25% (from $78
million to $59 million), in response to cutbacks in state funding combined with
deliberate use of reserves and borrowing to cover operational
expenditures. FY04 (Sept03–Aug04, for
which the audited statement will soon be issued) had a much smaller decrease in
net assets. The current year (FY05) is
expected to show a loss on an accrual basis due to the delay in receiving Del
Valle taxes, but FY06 revenues will include both that $2 million and about $5
million more from phasing in the last penny of the new tax cap.
Cash: Even with its losses, ACC has
encountered no operational cash-flow difficulties and current unencumbered cash
reserves are above the Board-policy mandate (8% of annual expenses, plus
payables). While ACC’s reserves are
much lower than those of some Texas community colleges, they are similar to
those of other local taxing entities with discretionary sources of revenue, and
seem more than adequate to the college’s needs.
Adjunct
faculty: While ACC has
significantly reduced its dependence on part-time faculty whose course load can
be varied at the college’s discretion (once as high as 90% of teachers and 70% of
classes), such faculty still teach over half of ACC sections. Pay for ACC adjunct faculty is substantially
below that of full-time teachers with the same courseload (who also have other
responsibilities), but is well above the state average for community colleges,
and is currently a little below its target, the average pay for lower-division
adjunct teaching at local colleges such as Texas State. Other employee salaries are close to the
averages for Texas metropolitan community colleges, which is the target set by
ACC Board policy.
Scheduling
efficiency: While the mix of
program offerings is the main strategic decision driving college costs,
operational efficiency is strongly influenced by the extent to which individual
ACC classes are filled to capacity.
Fuller classes permit a given number of students to be served with fewer
instructors, and an increase of 1 student in average class size would save well
over a million dollars per year. On the
other hand, having more classes increases student access to courses, especially
at small campuses, and smaller classes are easier to teach and learn in. ACC scheduling efficiency has fluctuated as
these opposing considerations have been emphasized. Improvements in this area accounted for most of the potential
cost savings identified in the Texas Performance Review of ACC operations in
2001. As it turned out, the surge in
enrollment caused by the 2000 recession (college are countercyclical) enabled
ACC to reach the recommended targets by the time they were announced. However, the college still lacks a measure
of scheduling efficiency that is generally accepted as promoting practices that
avoid waste while maximizing student access and efficient use of specialized
equipment.