REGION — The Palomar Community College District’s finances look decent going into this year’s budget season, but could worsen significantly in the next five years, district staff told trustees at their April 6 meeting.
Palomar, a public entity governed by elected trustees, serves about 30,000 students countywide, including at campuses in San Marcos and Escondido. Its FY 2020-2021 all-funds budget weighs in at $601 million, including monies from Proposition M bonds, which voters approved in 2006.
The district currently forecasts net revenue surpluses of $6 million and $4 million this year and next year, respectively, according to Assistant Superintendent Ambur Borth. Though the current level of state subsidy, which won’t last forever, is “masking our structural deficit” and “artificially inflating our reserve,” she said.
When that state funding runs out in 2024, the district will fall over a “fiscal cliff,” facing a $15 million deficit, based on current projections.
Fund balance would also have dropped to $12 million, down from $27 million this year, more than halving the district’s reserves. The shrunken reserves would still sit “above the board’s set standard,” Borth said. “But if we were to project one more year out into that 2025-2026 school year, if we had the exact same deficit spend[ing], we immediately would not have sufficient reserves.”
Forecasts see staff compensation as a percentage of ongoing revenues rising from 88% this year to 96% in five years. That well exceeds the 85% level the Fiscal Crisis and Management Assistance Team, or FCMAT, recommended to trustees in January.
The district faced high risk for potential insolvency in 2019, which is why FCMAT, an independent public agency that helps education institutions right their fiscal ships, was called in. A FCMAT report last February noted some progress, but also continued room for improvement, especially with respect to controlling labor costs, as The Coast New reported at the time.
“[Budgeting] is the most important thing that we do as a board,” Trustee Norma Miyamoto said April 6. She asked that the board receive more frequent updates to ensure “that we’re fiscally informed.”
Borth suggested she could give budget updates at each board meeting, a “deep dive” workshop in May or June, and increase the frequency of a relevant board committee’s meetings.