SAN MARCOS — Representatives from Palomar College appeared before the Board of Governors of the California Community Colleges Chancellor’s Office Jan. 14 to discuss and answer questions about its budget deficit and its risk of fiscal insolvency. The Chancellor’s Office, in the aftermath of those deliberations, assigned the college a fiscal monitor.
The representatives, Palomar College Board of Governors President Nancy Ann Hensch and Acting President for Palomar College Jack Kahn, conveyed to the Chancellor’s Office its plans to tackle its deficit. With a deficit currently at nearly $12 million, the Fiscal Crisis & Management Assistance Team (FCMAT) recently declared that Palomar College was approaching a “high risk” of fiscal insolvency in the aftermath of conducting a Fiscal Health Risk Analysis.
“In reviewing the report, I can assure you that we’ve been forthright in our discussions with our campus community,” said Kahn. “We’ve been clear with all of our constituent groups that we have a dire need to make difficult and meaningful decisions to address our short- and long-term fiscal health.”
Michelle Giacomini, the deputy executive officer for FCMAT, also testified alongside the Governing Board members. She lauded the college for being “very approachable” when FCMAT conducted its recent analysis. But she concurrently sounded the alarm about the “high probability” she said the college has to go bankrupt if it does not reverse its economic course.
She added that the “rate of deficit spending” and “the amount of general fund unrestricted” money used on salary and benefits at Palomar raised red flags for her while doing the analysis for FCMAT. Further, Giacomini expressed concerns about ongoing tensions arising in recent months between the college’s faculty and the Board of Governors — as well as among board members — as a possible hindrance toward the goal of balancing the budget.
“I’ve sat through a lot of board meetings and sat through a lot of personalities of districts,” she said. “This is a tough one. There’s a lot of personal stuff. There’s a lot of anger at board meetings. I just have to tell you this board and Jack as the acting president have a really tough time ahead of them, but they’re going to have to do the right thing so that they stay solvent.”
And she pointed to what she said is a need to examine current faculty contracts and cost of living adjustments in salaries, or COLA.
“I’m not saying contracts are the problem and I never want to give that impression, but that’s where the money is,” Giacomini said. “I mean, there’s a lot that can be looked at, in addition to when we start talking about benefit plans and COLA and everything else, as far as the conversations that are going on.”
Eloy Ortiz Oakley, the chancellor for California Community Colleges, followed up Giacomini’s remarks about tensions between the board and faculty and among board members by asking Hensch if a special trustee was needed to come in and make unilateral fiscal decisions on behalf of the college. Hensch said she believed it was unnecessary, at least for now.
“I would like to the believe the Governing Board can do the work and is committed to doing the work that is the best for our college,” she said. “I think continuous oversight and being able to have open communication here with the Board of Governors and at the Chancellor’s Office, and perhaps the opportunity to report to this body in a couple of months with some updates and where we are in the process, and then I would ask you ask that question of me then.”
Kahn then said that a fiscal monitor for Palomar College may be another solution in the place of an appointed special trustee. In turn, Oakley agreed.
“We will try to contract with an individual as quickly as possible and make that introduction to you and expect the fiscal monitor to sit with you to not only monitor, but to be in some of those discussions you’re having and report back to the board periodically,” Oakley said.
During his turn at the dais, Board of Governors member Tom Epstein asked Hensch why the board did not take action on the deficit until it got to this point.
“It doesn’t sound like there was a recognition on the board until just very recently that there was a crisis, despite the fact there was deficit spending for years,” said Epstein.
Hensch said it was due to the lack of information given to the board up until the release of the FCMAT report.
“I was shocked at how things were running,” said Hensch. “I was not aware of how serious this was. That was not how it was presented to me or the board, that it was this dire straits for our students and our college.”
Oakley closed by saying that cuts, and perhaps major ones, may loom in the next budget cycle at Palomar College.
“I certainly empathize with the challenges you all face, having spent many, many years at a local district,” Oakley said. “It is a challenge to make the cuts that you’re discussing. It’s not in any way going to be easy. You’re going to have tremendous political pressure on the board from the various constituent groups who will in some ways be financially harmed by the decisions you’re going to make.”