Welcome to the Spring 2017 semester and this new iteration of the Chancellor's Update. I will be regularly sharing information about the 84th Texas Legislative Session, the State budget and bills that impact Lone Star College, our college budget and other substantive matters of interest.
I appreciate all that you do for our students and wish you a fulfilling and productive semester.
Standard and Poor's (S&P) "AAA" Rating Reaffirmed
I am pleased to report that Standard and Poor's (S&P) reaffirmed Lone Star College's AAA credit rating in mid-December. AAA ratings are the highest awarded by S&P. Click here to read the official report from S&P assigning Lone Star College an "AAA" rating.
The report is short but worth reading. There are five colleges out of 50 community colleges in the State of Texas that maintain an AAA rating and only a small number in the United States. Many colleges and system construction projects are funded directly through state appropriations.
The significance of this rating is that it allows LSC to assume debt for bond construction projects at a lower interest rate and free up funds for either operating costs or additional debt payments. Institutional ratings are similar to your personal credit rating in that the better your credit, the lower your interest rates.
I am particularly pleased because S&P looked favorably on the changes we had made over the past year with the support and approval of our Board of Trustees. These actions included our decision to refund unused general obligation and revenue bonds to reduce our debt; our five-year planning model; and our future plans to insure the long-term financial stability for Lone Star College.
Expenditures for Lone Star College for 2016-2017 will be approximately $500,000,000 for operations and construction. The budget is extremely complicated with many moving parts and involves tax rates, debt payments, construction and startup costs, tuition rates, and state appropriations.
As you know, we're entering a State Legislative Session in which NEW state funding for community colleges is expected to be minimal. Other tax reform bills would place a lower cap on our tax revenues, which compose almost 40% of our revenue. As the state contribution to our operating budget continues to decrease (21% and declining every year), we are striving to find the right balance of tuition and fees (35% of our budget), and other sources of revenue while providing high-quality programs and services to students, fair salaries and benefits for our employees and maintenance of our facilities. It is a challenge requiring a great deal of careful thought and decision-making.
Lone Star College is in excellent financial shape and will remain so thanks to our financial philosophy, community support and the support of our Board of Trustees.
- Read the official report from S&P assigning Lone Star College an "AAA" rating
- Read the Press Release
Human Resources-Support Staff Position Classification Study
As promised, we are moving forward on the Support Staff Position Classification Study.
Our consultants have been interviewing supervisors and have met with the System-wide Steering Committee and are planning a second January meeting. The Steering Committee will meet again to review the employee job questionnaire draft, interview results, and a very rough draft of the proposed new compensation philosophy and strategy statement. We will also make a website available for everyone to track our progress.
I also want to reiterate that we're exploring the options in close cooperation with our staff. Our objective is to develop 1) practical and understandable categories for staff; 2) fair compensation ranges for equal work; and 3) a system of incentives that promotes personal and professional growth opportunities for our staff.
We'll work together on the options and determine if changes are both desirable and feasible.
Stay tuned for more updates.
I want to thank all of you who are serving on the Campus Carry Task Force and those of you who have participated in the forums and provided input.
This site will be open for comments through Jan. 31. The new guidelines will be effective Aug. 1.
State Budget for Community Colleges
The initial message from the state Controller is that the state budget will be c. $7 billion less this coming biennium than the previous period due to lower oil prices and the subsequent reduction of sales tax revenue in the state.
Our budget planning has assumed that there would be no NEW state funds available. But, keep in mind that the state provides $74 million annually to LSC, and we believe that our funding will be at least that much. As noted above, that figure represents about 21% of our operations on a $347,000,000 budget (construction expenditures are another $150,000,000).
The allocation for community colleges is based on a set amount determined by the legislature for the biennium, c. $1.2 billion, which is then divided based on a college's percentage of the overall contact hours and performance points based on state established metrics. If we do receive any additional funding, it will most likely come from other colleges who have not experienced growth or improved performance goals, as has LSC.
Some legislators favor a minor increase in the appropriations for community colleges based on performance metrics but we're not sure funds are available. LSC helped develop the current model and has voiced support for increased performance metrics dollars. LSC is now using state metrics such as success rates, completion of Math and Reading courses, and graduation rates to determine allocations for our campuses. The administration works closely with the Board to insure that we review and plan our financial commitments.
We view financial decision making in five-year time frames and have a clearly delineated strategy on personnel costs (including salaries), tax rates, tuition rates, new facilities, additional faculty and all the special initiatives and projects that make LSC one of the premier community colleges in the country.
We've spent many hours over the past year looking at next year's budget, and I'm comfortable that we'll be in excellent shape regardless of what occurs at the state level.
Bachelor of Nursing (BSN)/Bachelor of Applied Technology (BAT)
Bills have been introduced that would allow community colleges that meet certain criteria to offer a BSN and BAT. Lone Star College meets the proposed criteria and we believe those bills have a good chance of legislative approval. The criteria include no new state funding (programs would be financed by the college), location in larger areas, meeting accreditation and Coordinating Board standards and limited to colleges with demonstrated financial resources. If approved, these programs would be system wide programs housed at selected LSC campuses.
I'll be updating you on a more regular basis this semester. In the meantime, your questions and comments are welcome. The best email is Chancellor@LoneStar.edu.
Stephen C. Head, Ph.D.
Chief of Staff,
Executive Assistant to the Chancellor
Interim Vice Chancelor,
Program Coordinator, Office Operations