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Palomar College. Courtesy photo
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Report says Palomar College at ‘high risk’ of fiscal insolvency

SAN MARCOS — At its Nov. 12 meeting, spanning over four hours in length, Fiscal Crisis & Management Assistance Team Deputy Executive Officer Michelle Giacomini said that Palomar College faces a “high risk” of fiscal insolvency.

Presenting the results of a six-week analysis done by the state agency to assess financial risks faced by the college, Giacomini displayed FCMAT’s findings in front of the Palomar College Governing Board and an overflow crowd which poured into an outside seating area and library audio room set up to accommodate the large audience. She said the college now faces “tough questions” in the months ahead as it attempts to steer its economic ship in a different direction.

FCMAT is a state agency which does fiscal risk analyses at K-12 public schools and community colleges. Giacomini served as the overseer for FCMAT’s analysis for Palomar College.

Calling the fiscal health risk analysis “one of the fastest I’ve ever done,” Giacomini lauded the college’s staff for quickly transmitting documents over to her and FCMAT staff to complete the inquiry. She also called the college “brave” for putting itself through the ringer of the analysis.

Giacomini added that she thought that might signify that the college may not face much fiscal danger. But Giacomini thought wrong, she said, pointing to the college’s $12 million financial deficit

“That’s concerning and usually I trust my gut reaction more,” she said. “And it was wrong.”

For the fiscal health risk analysis report, Palomar College earned a score of 44.5%. For FCMAT, a score of 40% or higher connotes facing a “high risk” of driving off the fiscal cliff.

“At the current pace, salary and benefit costs will consume 100% of the unrestricted general fund revenues in three years,” reads the FCMAT report. “In two years, the district will have consumed all reserves and will be forced to borrow $6.5 million from an external source to remain solvent. The district has now reached a point at which it is not possible to solve its fiscal distress through enrollment growth and related revenue increases.”

FCMAT also wrote in the report that the college missed the boat on boosting enrollment over a decade ago, and now will need to find other ways to balance the budget. The alternative is reaching insolvency, which means the school would face a state takeover.

Further, FCMAT calls for faculty, staff, administrators and the Board of Governors all to sit at the table and hash out the hard decisions ahead.

“Sustainable change will require that the entire district make a major paradigm and cultural shift in the manner in which it administers and manages its financial resources in all segments of the institution,” the report reads. “For the district to remedy its current financial condition, it will require contributions, input and solutions from all, with a focus on finding and implementing solutions.”

Responding to the report, Palomar College President Joi Lin indicated potential “health and welfare” cuts for faculty and staff.

“During times of transition like these, an organization can expect an uprising of emotion and criticism by those most impacted by the potential changes,” said Blake in a press statement shared with The Coast News. “We, as a College, must initiate immediate changes that will positively impact our fiscal health.”

Beyond the publishing of the FCMAT report and accompanying presentation, the Governing Board meeting also featured the presentations of two “vote of no confidence” resolutions calling for the ouster of Blake. One of them was voted on by the Faculty Senate at its Nov. 4 meeting, while the other was presented and read for the first time by Anel Gonzalez, president council of Classified Employees Local 4522, a union representing the college’s staff members.

Blake responded at the meeting by saying she “gets it,” further stating that the college’s economic situation has forced her to lead in a way not always popular among faculty and staff.

“I understand why you don’t have confidence in my leadership,” she said. “Because, you know what, I would be derelict in my responsibilities as CEO of this college if I continue the practices that we have engaged in over the last decade.”

Blake added that Palomar has “one of the richest health and welfare packages in the state of California for employees,” that “action has to be taken immediately” and that she is “unapologetic for the decisions” she has made leading up to the FCMAT report.

But Governing Board member Nina Deerfield offered a rejoinder to this notion.

“I feel like cuts and fiscal responsibility should start at the top and not at the bottom, which is what it feels like we’re doing.” she said to applause.

Rocco Versaci, an English professor at Palomar College and active member of the Palomar Faculty Federation union, agrees with Deerfield.

“President Blake’s fingerprints are all over our financial woes — even the issue of salaries: any budgetary spike in that area has much to do with the fact that President Blake authorized the hiring of thirty-five faculty members above what the school was obligated to hire, to the tune of an additional $3.9M,” he wrote on the faculty advocacy blog Palomar Files. “There’s a narrative at work here, and it’s one that’s all too familiar in corporate America: a CEO runs a company into the ground and the workers both get blamed and pay for it.”

The Governing Board will convene again on Dec. 10.