SAN MARCOS — A year after harshly reviewing the Palomar Community College District’s finances, state auditors note some progress, but also continued room for improvement, especially with respect to controlling labor costs.
In 2019, the district indicated “a high-risk score for potential insolvency,” said Michelle Giacomini of the Fiscal Crisis and Management Assistance Team, or FCMAT, an independent public agency, at the college’s Feb. 2 board meeting.
Palomar, a public community college governed by elected trustees, serves about 30,000 students countywide, including at campuses in San Marcos and Escondido. Its current annual all-funds budget weighs in at $601 million, including monies from Proposition M bonds, which voters approved in 2006.
Facing a $12 million deficit last fiscal year, the district asked FCMAT to review its finances. In a nutshell, FCMAT determined Palomar was spending above its means, owing largely to personnel costs.
The college took steps toward closing its budget gap, including removing unfunded positions and borrowing from one of its retirement benefits funds, which it still needs to repay. It also offered early retirement last spring to thin its payroll, following similar programs in years past.
“Palomar College has come a very long way,” Giacomini told trustees while briefing a one-year progress report last week. “But I need to remind you there’s still farther to go.”
She cautioned total compensation as a percentage of revenues still exceeds the target level, and also that the college may currently rely on too-rosy financial forecasting.
FCMAT found in 2019, “with the exception of adjunct faculty, no analysis or adjustment to staffing is considered based on enrollment.”
Moreover, “position control for budget development is nonexistent, and as a result positions that were not authorized or in the budget were often approved by the business office, adding to the overall deficit. … [N]either the vice president of instruction nor the deans have control over full-time and adjunct scheduling for courses and overload, right of assignment, enrollment management, or class efficiency.”
“The college has not yet developed a report based on enrollment trends with suggested staffing levels,” Palomar spokeswoman Julie Lanthier Bandy said. “This is a project that will be reviewed with the Board of Trustees and if prioritized, it will be initiated.”
The college recently “developed a position control system and multi-year projections that will ensure the institution does not hire more positions than it can afford,” she said. Though “the average number of students per class at Palomar is [still] too low to earn the revenue needed for the expenditures at the college.”
“A frequent evaluation of expense reducing initiatives and continual negotiations with all represented groups continues to be our focus, so that we may address our structural deficit for the long-term,” Interim Superintendent Jack Kahn wrote last fall in his budget introduction.
Palomar’s fiscal woes aren’t unique among California’s community colleges.
“We’re finding a lot of districts that are far beyond their [minimum required full-time faculty] and therefore not balancing the expenses associated with offering classes,” FCMAT’s George Walters said.
“Truthfully, community colleges haven’t quite ‘gotten there’ in a lot of ways, when it comes to financial standards,” Giacomini said.