[Speaker 4] (0:00 - 0:25)
Good evening. I'm now calling the meeting of the Lee College Board of Regents Budget Workshop on May 29, 2025 at 6 p.m. to order and we do have a quorum this evening. Our first order of business will be invocation and pledge the United States flag and pledge the Texas flag and Regent Gina Guillory will lead us.

[Speaker 10] (0:26 - 1:20)
Now please join me in prayer by bowing your heads please. Father God, we just come to you tonight just thanking you for another opportunity to serve you. We thank you for the privilege that we have, God, to be free in the United States of America.

We thank you for everything that's happening at Lee College through us and the staff and the faculty and the students. We ask that you allow us to come together today, come on one accord, God, and do the things that are in the best interest of this college and this community. We ask you for all things in your darling son Jesus' name I pray, amen.

I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all. And the Texas flag. I honor the Texas flag.

[Speaker 14] (1:20 - 1:27)
I pledge allegiance to thee, Texas, one state under God, one and indivisible.

[Speaker 4] (1:27 - 1:33)
Thank you. You may be seated. Thank you very much.

All right, we're in public comment. Do we have anyone signed up?

[Speaker 5] (1:34 - 1:35)
No one signed up, Mr. Chairman.

[Speaker 4] (1:35 - 1:45)
Thank you. All right, we have a couple of items of action under new business which we're going to handle in just a second after Dr. Villanueva has something for us to say.

[Speaker 2] (1:47 - 2:31)
Romero, can you come out for just a second? Romero, I just wanted to welcome you back to the college. We have missed you after six weeks and would like to acknowledge that in front of the board.

You do so much to help us across the entire college and I just wanted to welcome you back. So and then as real quickly as Calbert here, Calbert is a brand new employee in IT and excited to be with us and I think primarily because he said he's from he was having to commute from Rosenberg to somewhere else and now he's cut his commute in half. That was a big reason for coming early.

I'm kidding, but welcome to the team.

[Speaker 4] (2:35 - 3:23)
Thank you very much, Dr. Villanueva. Okay, we'll move on to new business. We have a couple of items.

First item is consideration of change proposal requests for emergency services for column replacement and column shoring for the cosmetology renovation project. The administration recommends that the board authorize the president her designee to negotiate final terms and approve the change proposal request for emergency services for the column replacement and column shoring at 700 West Texas Avenue for the cosmetology renovation project for sum of $137,591.85. So moved. Second.

Motion from Regent Fontenot and a second from Regent Guillory. Any questions on this item? Could we get an explanation of what we're looking at here?

[Speaker 3] (3:25 - 3:38)
This is what we're we're building cosmetology in inside the old auto place, right? Yes, that's this is. So are we using the existing building for part of the new structure there?

[Speaker 8] (3:38 - 4:25)
There's, yeah, we're with all within the old building everything they're doing renovation inside and we're doing adding on some of this inside the parking garage and when they took that wall down that was the back of the of the building before when it goes into the parking garage it uncovered this column right here and it's right where that roof steps down and it had been leaking for years and years it looks like I don't know if you saw the picture.

It's hard to I'm not sure which way to turn it to be honest with you. It's along the, let's see, is that a wooden column we're looking at? No, that's there's actually it's this one that's up vertical and the one that's going across that's brick within the web of the I-beam that's the brick you're seeing right there that looks like wood and that's concrete that's kind of loose.

[Speaker 4] (4:25 - 4:26)
I think it goes

[Speaker 8] (4:26 - 4:38)
this way yeah just like this and water's been running down that column for many many years it looks like it's a it's totally

[Speaker 4] (4:38 - 5:05)
eating it away up at the top so yeah Mark this was a discoverable during construction wasn't part of the original scope of work they did bring it to the building committee a couple weeks ago we did review it went through a lot of detail a lot of questions and so yeah we we've discussed it it's just work that had to be done I mean you couldn't get around it if you unfortunate we didn't get around we may have a lot more of this there's no more yeah

[Speaker 8] (5:05 - 5:29)
no he guaranteed me there's no more that could be discoverable they from what they looked out you know taken down already and then in the back it's visible in the parking garage he said there would be no others like this from the general contractor any other questions hearing none all in favor say

[Speaker 4] (5:29 - 6:08)
aye aye no motion is approved second item we have consideration of life safety ada phase 2 fire sprinkler system installations for Tucker Hall, John Britt Hall, Tech Vocational 1, and Grace Science Building.

The administration recommends that the board authorize the president or her designee to negotiate final terms and approve the life safety ada phase 2 fire sprinkler system installations for Tucker Hall, John Britt Hall, Technical Vocational 1, and Grace Science Building not to exceed the sum of two million fifty eight thousand dollars. I have a motion.

[Speaker 9] (6:09 - 6:09)
Second.

[Speaker 4] (6:10 - 6:22)
Motion from Regent Warford. Second from Regent Geralds. Any the details of the cost for each of these buildings are listed just below.

Anybody have any questions or comments?

[Speaker 3] (6:23 - 6:27)
So these are required to be done we have no no options right?

[Speaker 7] (6:31 - 6:44)
Yeah so what we're trying to do is we're trying to bring all of our buildings back up to code. This is the start in accordance with our sfp going back through the systems and trying to find out what we need. This is the sprinkle have actual fire sprinklers throughout the buildings on these four buildings.

[Speaker 3] (6:46 - 6:49)
Is it required we have no option but to do this?

[Speaker 7] (6:49 - 6:53)
Once we start doing any type of remodel it's going to be an actual mandatory thing that we have to do yes.

[Speaker 3] (6:54 - 7:02)
But but like on John Britt and maybe Gray we've already you showed us in the tours we've done a tremendous amount of work on these already.

[Speaker 7] (7:02 - 7:58)
We've done cosmetic work as of so far now this is actually getting into the actual building meet. So once we start doing anything of that nature we need to get these buildings sprinkled because it will be required in the future as a must and if we start doing it now it's going to hit us less in the pocketbook now than to have to do them all in a later time. So it's not required today?

It's required but we're kind of what's called grandfathered but we're not technically grandfathered. We do have to add these into. They let us suffice as of right now when they do their inspections.

It has been highly suggested to have them done by the fire marshals. Sure I mean there's no doubt. And we're continuing to do constant restructures and constant improvements to the buildings and as we continue to do that it is going to be mandated but they're not going to let us pass by anymore.

[Speaker 4] (7:59 - 8:02)
I would think fundamentally we're also improving the safety of each of our buildings.

[Speaker 7] (8:02 - 8:24)
We are and this is coming out of our actual life safety ADA money that we set aside for the four million and with doing these projects and doing everything that we're doing we're still going to have a total of 230,000 I believe left over in the four million. These projects have been. $240,786 will be left.

[Speaker 4] (8:25 - 8:53)
These projects have been reviewed with this four million dollar board approved projects list for a couple of years now and yes sir these these are towards the tail end of it and the building committee has been reviewing these these projects throughout this this whole time. So again I see it as you know we're not being forced but we're improving the safety of our facilities. Yes sir.

Any other questions or comments? Hearing none all in favor say aye.

[Speaker 16] (8:54 - 8:54)
Aye.

[Speaker 4] (8:54 - 9:18)
Opposed no. Motion is approved. I believe the next item is being delayed deferred right?

Okay we'll move on to informational reports. We'll get to our 2025-2026 budget workshop. So looks like Jacob's coming up.

He couldn't talk Annette into it so nope I'm done.

[Speaker 1] (9:32 - 10:07)
So one of you may have mentioned at our last meeting that sometimes there's a lot of detail on these slides. So you all have a handout, full page slides. You're welcome to follow along and take notes.

The other thing I'd like to say about this presentation is this is really meant to be interactive. So if you have questions at any time during the presentation please feel free to stop me and make comments or ask questions so we can discuss those issues in the moment as we're going through these individual issues.

[Speaker 14] (10:08 - 10:11)
Be careful what you ask for. We'll give you interactive.

[Speaker 1] (10:14 - 36:16)
So the first thing I'd like to do is talk a little bit about the proposed timeline. Today we're going to be discussing revenues. On June 17th we will review the proposed expenditures for the budget for next year with the intent that on July 24th we'll be ready to formally approve the budget for FY26.

In terms of our taxing process we typically get certified rolls from Chambers County sometime in July. Harris County is always late and so usually sometime mid to late August we get certified rolls from Harris County which will allow us to officially obtain vote and approval to set the ad valorem tax rates for the upcoming year. Let's start by looking at how we're doing in the current year.

You can see that our original budget was $89 million in projected revenue. We're expecting only to collect $88.6 million. As you can see there's a lot of negative numbers related to ad valorem taxes that as you know is a result of the reduction in rate.

Tuition and fees is projected to be up this year and our other revenue is expected to be up this year due mostly to high returns on our interest income. As we look at the last five years you can see that we've grown fairly consistently with the majority of our revenue coming through ad valorem tax. If you add M&O tax, INS tax and in lieu of taxes that's approximately 50 percent of our budget.

Right now state appropriations accounts for 25 percent and tuition and fees accounts for around 19 percent. Those are our three key sources of revenue. In 2024 we saw a big jump in our state appropriations with the implementation of HB 8.

That accounts for the big difference between 23 and 24 with some growth between 24 and 25. Throughout this presentation we're going to be drawing comparisons between Lee College and the other colleges in the Gulf Coast area. What I've done here is arrange these colleges by their spring 2025 enrollment so that you can see that there are a number of colleges that are significantly smaller than we are.

There are a number of colleges that are significantly larger. The way that they manage their funds varies based on size and so this should give you a broad view and a broad ability to compare how we stack up with our neighbors here in the Gulf Coast District. Let's start with ad valorem taxes.

As a high level overview you are responsible for setting the ad valorem tax rate. That tax rate is made up of a maintenance and operation rate which is used for the general operations of the institution as well as an interest in sinking fund or an INS fund which is used to make the principal and interest payments on general obligation bonds that we might issue for the construction and maintenance of facilities associated with the college. Per Texas code there are caps.

The total tax rate is capped at one dollar per 100 dollars of value. We're at 19.5 cents so we're well below that cap and for INS it's 50 cents per 100 dollars and and we're at two and a half cents, 2.2 cents. So we're well below the caps.

As part of the annual adoption process we have to adopt a voter approval rate. The voter approval rate is the top threshold that you could set the rate at without having to go out to the general populace for a vote. That rate is calculated by looking at a percent increase in your collected revenue from the prior year.

So if we if we collect ten thousand dollars this year we could collect ten thousand eight hundred dollars next year and so whatever rate we would set to get us to that ten thousand eight hundred that would be the voter approval rate or the max rate that we could set as a group without having to go out to the public for a vote. With that in mind here is the breakdown of our M&O and INS taxes from 2020 through projected through the end of 2025. You'll note that FY22 we saw an actual decline in our collections.

In 2022 and you'll see this later there was zero increase in the tax base. So a couple of components that impact how much money we actually collect as an institution. The first is the rate that you set as the board.

The second is the property tax valuations. So as valuations go up either through growth and the addition of new industry or through the appraisal and growth of the value of the individual properties we collect more money and and the rate that we set by necessity may fluctuate in order to stay below the voter approval rate. So for example if we saw a 12 percent increase in property valuations and we've seen that and even higher in certain years the voter approval rate would be an eight percent growth.

That means we're going to have to cut our rate or go out to the community for vote and we would still be collecting eight percent more revenue than we collected the year prior. So we watch this closely. We have received initial valuations.

We will get those final valuations in July and August and we won't be able to concretely say how much money we expect to collect until late in our meeting in August. In terms of how our rates compare to the other gulf coasts you'll see that while we are the seventh smallest or the fourth largest however you want to look at that our rates are in the same range as Brazos sports and college well they're less than Brazos sports and college of the mainland. We're much closer to Alvin Community College and San Jacinto College which are right next to us in terms of size.

So the larger the institution and the larger the tax base like Houston and Lone Star the lower the tax rate needs to be in order for them to collect the revenue that they need to operate. The smaller your tax base you know Galveston or Brazos sports the higher your rate needs to be in order to collect enough revenue to maintain operations at the institution. For comparison's sake Houston which has the lowest at .096 collects over 60 percent of their 465 million dollar budget through ad valorem taxes. Our rate is much higher but it only accounts for 50 percent of our total budget. So tax base makes a big difference in the flexibility that we have as an organization to set our rates lower. I also wanted to show comparisons based on a five-year change.

So you can see that most of the institutions in Gulf Coast have lowered their rates from 2020 to 2025. We were second highest we lowered ours by three and a half cents. The only institution that outpaced us was Galveston who lowered theirs by 3.97 cents during the same period. However this is an extension of a trend that started even five years before that. You have to go back to 2015 to see our high at 26 cents. We've steadily maintained or declined since that time.

This particular table shows all of the detail for the last 10 years. You can see the property values and in the next column you can see the value increase or decrease. You'll notice that there are a few years like 2020 and 21 where the increases are very flat one or zero percent but then you have some exceptional years where the growth weight was as high as 17 percent.

If you look at the average rate of increase for the tax base in our taxing district over the last 10 years we average eight percent per year. You'll also notice that there is a strong correlation between the reduction in our rate you'll notice the 17 percent increase here and eight percent decrease in our tax rate versus a one or a zero percent increase in tax base and no change to our tax rate right. So your your responsibility is to try and manage that to meet both the needs of the college while protecting your responsibility as stewards of taxation within the community.

So this is the bad news for us. This year based on preliminary valuations we're only looking at a 0.61 percent increase in property valuations. It means there'll be no growth, no tax revenue growth because of growth within the tax base.

If we keep the rates the same we will collect virtually the same amount of money next year as we collected this year in taxes. And here you can see the calculated dollar amount so the voter approval rate that would be the maximum amount of revenue that we could collect without having to go out to vote and the estimated no new revenue rate we still have a few months where we might collect different but but we expect that we'll collect around 41 and a half million dollars. So somewhere between no new revenue which is the same as we collected this year and the voter approval rate is typically what you would be targeting as board members as you decide how to set the property tax rate.

I also wanted to talk about the financial impacts of the change. Now you'll notice the note down at the bottom in 2023 the median home value in our taxing district was $187,000. So I worked up a scenario using 250,000 as the value for a home.

So in tax year 23 or last fiscal year if a if a home was valued at 250,000 we offer the maximum homestead exemption of 20 percent. So we would take $50,000 off. The 200,000 would then be subject to the tax rate and last year that was 0.2101 which means for somebody with a $250,000 home they would owe $420 in property taxes. If we look at the this year and and this is I've tried to make this as as representative of the changes as possible from from tax year 23 to tax year 24 or from fiscal year 24 to fiscal year 25 average property values went up by five percent. So I showed the property value increasing from 250,000 to 262,000. We still take the 20 percent exemption which means that this particular taxpayer would now owe taxes on 210,000.

With the cut that was passed their actual tax liability dropped from $420 a year to $410 a year. So a typical regular non-65 non-disabled taxpayer saved $10 on their on their property taxes for Lee College. They paid $10 less this year than they paid last year.

Now taxpayers over 65 because they also get $120,000 flat exemption their their margins narrowed and if we worked through that same calculation a 65 and older would actually see an $8 increase after the tax cut but 65 and older have their tax rates frozen so they don't always see any additional money but there's there's an advantage for us if and when we decided that we needed to cut to maybe target increasing the 65 and older exemption that that doesn't have a significant impact on the amount of taxes that we collect when we when we cut our when we cut our actual rate it has a tremendous impact for the college. So what I've done here on the right you see the impact on Lee College. You have the taxable value.

Now in the first column you see that our tax rate is 19 and a half cents and our current property tax revenues or projected collection of revenues is 43.8 million dollars. That's what we expect to collect this year and that includes revenue in lieu of taxes as that's an extension of our ad valorem tax for our federal company partners that that don't show up on the rolls the same way as everyone else. In the column on the right I tried to show what that would be with the same rate of collections at the former rate and so for this year I estimate that that tax cut that you made last year saved the taxpayers 2.7 million dollars. 2.7 million dollars makes a big difference at the institution. To kind of put that into context that's more than twice what we need to provide a four percent COLA increase to every single talking about maybe 30 new employees you know for 2.7 million dollars in terms of growing and expanding and if you wanted to roll that 2.7 million or that one and a half cent into that service you could issue a significant bond that would allow us to build essentially almost an entire new facility. The other thing I want to point out is that when we make these tax cuts it not only impacts the year of the cut but then that cut carries forward right and if we use that 8% average increase you know for 10 years then that means that that tax cut saves an average homeowner with a $250,000 home about 150 bucks over 10 years. For the institution it costs us over 39 million dollars in revenue and so what I'm asking you to consider right when you consider adjusting the tax rate it has significant financial impacts for us both in the present and and especially long term when you consider the opportunity costs that that come with those types of cuts and that's a hard decision and I don't envy you the responsibility of trying to balance all of those needs but you're going to see at the end of this presentation we're looking at a relatively flat revenue year for us right.

If we had to address a 2.7 million dollar cut this year we would have to cut services and potentially even eliminate positions. We definitely would be going into a hiring freeze right so any questions on that particular scenario? Awesome.

The other thing I want to address as we did this I tried to review potential threats to the process right. What do we need to be aware of that could be problems now or in the future? Now thankfully the legislative session is coming to a close and nothing dramatic was passed that will impact the way that we manage our ad valorem taxes but there were a few proposals that would have had significant impacts on our ability to use this money the way that we need to to manage the institution.

First there was a proposal to limit debt to 20 percent of the total tax collected. Now right now we have a very small portion that we use for debt service but we're at the end of trying to pay those those bonds off and clear that so that we can issue new debt. This would limit our debt service to 20 percent of whatever our tax rate is so out of the almost 20 cents that we would have essentially four cents would be allowed to use for debt service and we could not we would not be allowed to go higher than that even if we could afford to shift the maintenance and operations into debt service they would they were proposing a hard line 20 percent.

For some of the other institutions in the Gulf Coast they would be well outside of compliance with that law already with their current debt to M&O balance. The second issue that we thought was of particular concern was the reduction of the voter approval rate from eight percent down to as low as three percent. So if the voter approval rate were to drop from eight percent to three percent that's not terrible for us in a year like this where valuations are flat but if you have a valuation year where it jumps 17 percent and you only get to capture three percent of that you you have a massive growth year for the community and and you only get a fraction of that in terms of automatic revenue.

It practically forces colleges to have to go out to to vote simply to maintain a reasonable rate and and so these these were really problematic and and the Texas Association of Community Colleges and the coordinating board worked very hard to lobby to make sure that these were addressed in a way that was favorable for us as community colleges and thankfully these bills weren't passed but when something like this starts coming up in the legislature expect to see it next session and the session after that and until some type of concessions are made with regard to these types of proposals. The other issue that we see that is a real and genuine threat is the fact that so many of our other partners are issuing bonds and going out with bond referendums to the general public. There was an article this week Harris County's facing a 270 million dollar operating deficit and the first thing that they say in the article is that they may have to raise taxes to address that so they're going to have to raise taxes.

We're seeing these large bond proposals going out for counties and and school districts and from a political perspective our citizens who are very supportive of lee college are being drilled by all the other agencies if and when we decided we needed to go out for a bond referendum you know that might just be the straw that breaks the camel's back right enough is enough and they may already be to that point with these other requests that are coming out but but this makes it more difficult for us in the future which allows us to go back to our original strategy pay down debt build capacity within our rate and then issue new debt so that we can both maintain operations and manage our debt service without having to increase our rate or go out to the general public for a vote moving on to state appropriations you can see that from 2020 to 2025 our state appropriations were very consistent year over year with a big jump in fy24 so from 2020 to 2023 75 of our funding was based on contact hours how many kids do we have in seats with only 25 being roughly based on completion or performance in fy24 for lee college as we don't qualify for any kind of base tier funding we're too big for that a hundred percent of our funding became reliant upon our completion rates and to go from 10 million to 20 million was an exceptional achievement and it really demonstrated how far ahead of the curve we were in putting the focus where it needed to be and that's in trying to help our students complete at the highest rate possible when we look at the same comparison for our peer institutions in the gulf coast area you can see that in 24 we had a 91.9 percent increase in total funding you know miles ahead of the next closest institution uh within our within our area now from 24 to 25 we saw uh you know a one and a half million dollar increase that was because we continued to improve our rates of completion we saw about an eight percent improvement in completions from 24 to 25 so we're not done with this work and it's still our highest priority to help our students be successful we uh we want to continue that great work we want to expand our transfers uh for our students we want to continue to to grow this but we were not the only institution that did that there were many many other institutions that saw increases and that put a lot of pressure on the legislature as a community college system we submitted a 90 million dollar budget adjustment request because our performance under this program had exceeded expectations far more than anticipated by the legislature that creates a fundamental funding problem for the legislature right they have a program where based on our performance we can get paid and that puts the power with us and and with our interactions with our students to potentially generate more money uh possibly even without generating more enrollments and that problem magnified across the state put the state in a position where they needed a more predictable model for future funding for for community colleges as a result a modified bill was passed and we're still waiting for rules to be completed through the coordinating board they are making changes to the formula when they originally passed hb8 a credential of value was considered a credential of value if it added more value over a 10-year period right so if you took a high school student and somebody who went and got a credential of value if after 10 years after completion the college individual with the credential made more over that 10 years than the high school student that it was a credential of value right it added over the course of 10 years to the value of that individual well what we're seeing here is a broad representation of that same principle however the rules are moving it from a 10-year breakeven analysis to a five-year breakeven analysis so if if a credentialed college grad doesn't make more after five years than they would had they been in high school then that credential of value no longer qualifies as a credential of value and this only applies to associate degrees for this year based on the information that we've received from the coordinating board so far associate degrees in agriculture natural resources arts biology communication consumer culinary wellness and psychology may not qualify for the 3500 associate degree credential of value payment those degrees would still qualify for transfer credit so if the student completes one of those degrees and transfers to another institution of higher ed we'd get the 3500 transfer payment but we would not get the 3500 associate degree payment because based on their analysis of state earnings for those particular categories it took at least 10 at least six or more years for those degree earning individuals to surpass what they could have earned had they been just a high school grad with with no college credential

[Speaker 2] (36:17 - 36:37)
jacob can i also add that it would also preclude us from receiving additional funds that are along with that that are related to if you are an economically disadvantaged student an academically disadvantaged student or if you were also an adult learner yes so the the bonus payments right the 25

[Speaker 1] (36:37 - 37:24)
25 or 50 percent extra that we got for having a student in any one of those three categories only applies if the credential of value applies so when you take the credential of value out the modifiers also no longer apply so this is going to have an impact on us we don't know how much of an impact this is going to have on us at this time we were pretty excited at the beginning of this legislative session you know we had an eight percent growth in our completions and we are looking at continuing that growth into the future but this is going to be a setback for us because we are going to lose payments for these credentials for our students that are completing associates degrees in

[Speaker 3] (37:24 - 37:28)
well how many we awarded in these categories

[Speaker 1] (37:30 - 37:48)
no i mean we could potentially pull up for all of these categories we're really waiting for more clarity from the coordinating board so that we can specifically identify those degrees that that won't qualify and as soon as we get that information and can make that that calculation accurately

[Speaker 11] (37:48 - 38:15)
we'll get that and provide it to you how does that information measure five and zero to ten five years five years high school graduate is not at someone who's been to college either with a certificate there's they're not making more considerably more than someone who just no i mean they just

[Speaker 1] (38:15 - 39:37)
have to even break a dollar i think so so the way that it works um there there are there are a couple of components that go into this first you have the student investment and the student investment includes the cost of tuition and fees and the cost of books and uh you know the the payments that they they would make to support themselves while at school then you have opportunity costs or foregone wages so the fact that they're taking time to go to school might mean that they might be making less in their in their part-time job or they may have quit their part-time job altogether the point is they could either be working or they could be going to school but most students can't do both so you have what the student invested in school plus whatever they lost in wages that that is the amount that needs to be overcome um so so that is either a plus or a minus to a student's calculation for for their base and then their wage for the first five years their wage has to to overcome those deficits that the student incurred in going to school plus it has to be in addition to that more than what they could have made had they just stayed

[Speaker 11] (39:37 - 39:43)
in school calculated by student or is it just this kind of generality that the state puts out

[Speaker 1] (39:43 - 40:19)
so on a state level they're looking at workforce data for particular job categories and and uh classifications of student we do not do this on an individual student basis right so we might have an exceptional student in psychology who is making way more than they could with just a high school degree but but that's it it doesn't apply that way right we look at we look at statewide classification data to determine if that degree on average is a credential of value and that applies broadly to all schools

[Speaker 2] (40:21 - 41:00)
um would you also want to mention that um we we have uh regional credentials of value that that also um help us count our credentials and we are um in our area it wasn't the chemical the whole chemical area um was not uh our process technology area was not included and that's a very important part of the work that we do here and the graduates we produce they weren't included and we said it submitted a petition from all of the gulf coast colleges to include that so so with credentials

[Speaker 1] (41:00 - 42:09)
of value if it's in a high demand field we get extra payments and and so what the president is referring to is you know petro-chem related degrees which are obvious and high demand uh field for for us here we're not included as high demand qualifying uh degrees so in collaboration with the other community colleges in this area we're petitioning the coordinating board to add those uh as um credentials in a high demand field which if that happens we get an extra thousand dollars per credential for any student that completes a credential within those fields so we we monitor this actively we're engaged with the other institutions in our area we've coordinated closely with our large economic partners in this area to get their support in promoting these as as credentials of high demand and and we're doing what we can to make sure that we provide the best opportunities for our students to succeed and that we're compensated

[Speaker 3] (42:09 - 42:28)
from the state for those efforts so are you so unclear these these six here do not qualify for the 3,500 extra that that we get but did you did y'all just say that process technology does not

[Speaker 1] (42:28 - 43:12)
get the 3,500 process technology gets the 35 okay we're asking the coordinating board to award a high credential which would award it at 4,500 only these six are are potentially victims of losing credential of value status and it's it's gonna it is going to happen i mean it it is right i mean this was a whole part of getting the modified bill approved was an agreement on changes to the rules which we will see more data on hopefully next month what percentage of our enrollment falls under these six categories i don't have that information with me i we can pull that information and get it to you

[Speaker 2] (43:12 - 43:41)
yeah and we would it's it's not just a matter of how many students but it's a matter of looking retrospectively at how many have earned the actual associates in that area we do have a number of students who are transferring transfer students or transfer seeking and they don't necessarily complete the associates degree so that would also be a factor in calculations no we gain money when they transfer when i said if they don't transfer then we get no payment

[Speaker 1] (43:42 - 44:04)
yeah this is not a perfect system we we argued adamantly that when you look at these associate degrees that are really intended to transfer to a four-year institution for an advanced degree within that field you know you know and using psychology as an example

[Speaker 2] (44:05 - 44:12)
you always pick this is a pick at me thing because psychology is my background it took you about 12 years to figure it out yeah

[Speaker 1] (44:13 - 45:43)
you know the the two-year degree doesn't really allow for many opportunities but it's a popular degree when you look at a transfer into other programs or a growth as a bachelor's degree in psychology and on the problem is transfer students the clock starts when they graduate from lee college it doesn't start when they graduate from whatever college they're going to so if they transfer to university of houston and spend two more years getting a bachelor's degree they've wasted two out of their five years of wage earning capability and and so like i said this is not a perfect system but it was the compromise the coordinating board came up with in terms of trying to get continued financial support for the state funding model for community colleges and we're very grateful for that you know you know we've seen tremendous increases we've done a lot of good with that money most of the changes that we've made across campus in terms of dedicating you know five million dollars a year to facility improvements changes that were were gravely needed right that was a result of of this change in in state appropriation so we can't complain about this too much this is still very positive for us but we do need to be aware that this is going to impact our total amount of state appropriations for next fiscal year

[Speaker 3] (45:44 - 46:00)
other colleges may be scaling back some on on these programs i.e. maybe not offering as many classes as they might a normal technology type class in order to cut that i think it's possible

[Speaker 1] (46:00 - 46:46)
that some community colleges may eliminate these i didn't say eliminate i said go back so so yes we will have to balance that the same way that all other institutions will even though our students may not get uh we may not get a payment for their credential of value we have lots of students that are getting these associates degrees with the intent to transfer and we're still a really good deal for them to come and get their education at a fraction of the cost than then doing those first two years at an associated university so we don't want to cut these just because we're not getting paid for it but we do have to build that into our our budget for

[Speaker 3] (46:46 - 46:51)
next year maybe we scale them back instead of offering psychology morning and night we just

[Speaker 4] (46:51 - 47:04)
offered it at night or something you know or we we focus on improving our transfer rate yeah which is good right well we we don't have a whole lot of control over that but the chair

[Speaker 1] (47:04 - 47:54)
is right yeah we do we do to your comment yes we got we're losing two years that's the most proactive thing we can do to recapture some of this revenue our transfer rates are low there's lots of room for improvement within our transfer rates and and if we get those up to our you know 40 or 50 percent like like we would like then that addresses a lot of these problems you know we can supplant what we used to get in associate degree revenue with transfer revenue and have a net zero impact on our budget so so there we still want to put the student first as we plan on how to address these changes and we don't want to eliminate opportunities for our students who intend to transfer just have to balance the cost of those programs with the potential revenue that those

[Speaker 4] (47:54 - 48:03)
programs would generate those students are still paying tuition and fees right they are still paying tuition and fees are getting still getting revenue from those students well and the right marissa

[Speaker 2] (48:04 - 48:44)
so it's important i think to note as well that one of the goals that the legislature and the coordinating board and all of us should have for ourselves is that we want to focus on providing programs that will offer a living wage right so um they are in this sense saying like if it's not doing that that you really need to look at your inventory um and what i'm saying is there are several colleges though that are now adding to their inventory those types of programs that will ensure that students have that earning potential so for these students outside of

[Speaker 6] (48:44 - 48:50)
improving the transfer rate like what can we actively do now to limit the impact of this

[Speaker 2] (48:53 - 49:44)
right now you know this we have to make a we have to find the final determination when the the bill is done and signed um and then you know we just have to you know carefully advise like we do and and really do everything we can to help them to transfer well anything that's now considered we we use through that lens now and so yes we are looking at some additional programs certainly at the barbers hill campus but also you know as we look towards addressing the needs of petrochemical and you know the the new trends and new energy etc and the plans are to develop several new programs that will address that and help meet that criterion

[Speaker 5] (49:44 - 50:11)
i've got i've got a question about the transfer i'm an example of a student who transferred to a major college back in the day without an associates i think i had you know 28 hour i don't remember what i had but it was uh wasn't a full associates transferred that do we what how does that impact us if someone transfers but without the degree and they may just be three hours

[Speaker 1] (50:11 - 50:39)
short so excluding the hours that they may have earned as a dual credit student for which we paid for right because we don't we don't double count the same hours if a student has completed 15 hours or more we still get transfer credit it's 50 15 15 15 15 so so you know essentially they could do it in one semester 15 hours and then transfer we still get paid get prorated or

[Speaker 2] (50:39 - 50:53)
we get the full no we get the full transfers transfer wow okay but that change in 10 to five years and then that clock ticking for them the day they start is a is a huge consideration

[Speaker 5] (50:53 - 51:18)
and impact but does it start the clock let's say a student does not receive a degree in whatever area that it does it if they don't receive the degree here and continue on and we get the transfer credit does the clock start on this calculation of whether so once they

[Speaker 1] (51:18 - 51:45)
transfer from us if they haven't completed a credential then we're done right we got paid for transfer and the the ability to get paid for the credential would then go to whichever institute they transfer to the clock would start once they graduate from that institution in order in terms of calculating whether or not it was a valuable credential or not okay

[Speaker 5] (51:45 - 51:56)
that's kind of a you said it's not a perfect system that's kind of a odd it can be three hours short and delay the start of the clock which increases the

[Speaker 1] (51:57 - 52:10)
but also keep in mind we're talking about averages across the state not any one individual student right so so there there is a lot of leveling that takes place when you start averaging it

[Speaker 3] (52:10 - 52:17)
over millions of students so the the takeaway on this slide would be to

[Speaker 1] (52:26 - 52:49)
programs in the last couple of years yes and and we'll provide that to you before the july 24th meeting with hopefully more detail from the coordinating board showing exactly what that impact is right now right now we know we'll have an impact we're just not sure how much but we really hope to have that information before we ask you to approve a budget in july

[Speaker 3] (52:49 - 52:55)
but but the number of degrees in the transfer we we have that already right assuming that

[Speaker 1] (52:55 - 53:00)
the this is the list yes we can pull it for this i'm guessing that dr bennett is going to be all

[Speaker 2] (53:00 - 53:05)
over this already yeah i i think he could just tell

[Speaker 3] (53:08 - 53:22)
say the word being you know often lost time statement for these but we ought to we ought to know that i guess you know i'm sure that we can have that ready by another june 17th in a way that

[Speaker 1] (53:22 - 53:30)
we we may do june 17th what june 17th at our next at our next board retreat we'll bring all of that

[Speaker 4] (53:30 - 54:01)
data and no pressure scott i just i just also want to say you know to kind of keep us calibrated here we're talking about this gift we've been given for two years and we may lose a little bit of it and we're we don't need to panic you know we want to serve our students continue offering what will help students be successful in life and if we've got to tweak a little bit here and there then we work it but it's not like we're we're getting cut our fundamental funding right i mean we haven't been getting this for 20 years we'd be getting it for two

[Speaker 1] (54:02 - 54:32)
no and i don't expect it to go back to 10 million um you know we we had a one and a half million dollar increase from 24 to 25 we're probably not going to have that from 25 to 26 but that's a one year adjustment right when they change the rules after that we'll we'll be back to getting credit for our continued growth after that so yes this will require some adjustments this year but we are not anticipating that this is going to be a dramatic flash the budget cut positions hiring

[Speaker 3] (54:32 - 54:37)
freeze type of an issue but but it actually is a cut though from what we've what we've seen yes

[Speaker 2] (54:37 - 54:44)
yeah it is it's only going to go we can only receive less based upon those changes yeah it is

[Speaker 4] (54:44 - 54:55)
any other questions that slide had a long time money's worth out of that slide didn't you

[Speaker 1] (54:55 - 55:01)
the one that surprises me is biology super super summarized version

[Speaker 9] (55:03 - 55:19)
and we're in the middle of the medical field but it's statewide i understand that too so right right have to start somewhere you're starting with us

[Speaker 1] (55:21 - 56:50)
moving on to tuition and fees here you can see the five-year history for all categories of tuition and for all fees this is the most in the most important part of of this slide is looking at the trends by category looking at tuition in district versus out of district versus dual credit you you can see that our growth in fy25 is significant in dual credit but we're actually down in in district you'll also notice that my book fees continue to increase we started at 16 and 23 18 to 2 million and 24 and 2.8 million in 25 part of that is because that that fee was extended to the prisons for our huntsville students and and charged their their pell money and and so that's been a good way for us to recoup some of the costs of the course materials that we've provided in general our tuition continues to go up we're on pace to earn a million dollars more this year than we did last year and and we expect that growth to continue into next year and so this is a an area of positivity for us in terms of net budget impact we we are planning on budgeting some increase for our tuition

[Speaker 4] (56:50 - 56:57)
and fee revenue for next fiscal year the top line jacob in district resident

[Speaker 9] (57:00 - 57:04)
prior two years that because of dual credit

[Speaker 1] (57:05 - 57:17)
no dual credit is tracked separately so your tuition resident in district those are our regular term students that are taking courses here on the main campus or or remotely

[Speaker 3] (57:18 - 57:23)
our enrollment is going up but our tuition is coming down

[Speaker 1] (57:25 - 57:55)
so what that means is the mix of students is changing right we're seeing a more significant increase in our dual credit students while our resident in district population is declining and you can see that since 2021 there's been fairly consistent growth with our out-of-district and our on our non-resident is fairly inconsequential to the budget that that

[Speaker 5] (57:55 - 58:21)
that population is relatively flat could we is it accurate that when we have a lot of dual credit students they may be taking the courses in high school that that they're not taking as a traditional student later that's where i was going so yeah so you dual credit does kind of rob you of you if you're going to have a big dual credit program you're going to see a decrease

[Speaker 1] (58:22 - 59:13)
most likely in your 18 to 22 year old you're right so if if students are really efficient in dual credit they're graduating with an associate's degree and they're never coming here as a regular in-district tuition student part of the growth that we've also seen there is the implementation of the fast program students are economically disadvantaged they get to take dual credit courses totally free and and we get reimbursed for the state for that for the tuition portion of that and and you can see that reflected in 24 but especially in 25 as we've implemented fast and made that available to the students any other questions so you're going to

[Speaker 3] (59:13 - 59:37)
somewhere maybe you have it give us a breakdown on on enrollment that so we can understand the last several years you had it going up and the the difference is there because if dual credit continues to to to grow eventually we have a problem right yes

[Speaker 1] (59:41 - 1:00:05)
now and and i haven't been here that long easily happen it's a good practice to do a an enrollment report once a semester and and we can certainly start that as a regular practice so that you can keep an eye on where we're seeing growth and and where we need to target more recruitment just some type of projection you know

[Speaker 3] (1:00:09 - 1:00:14)
right of industry credit up what that would be

[Speaker 2] (1:00:16 - 1:00:28)
there's so many different factors that play into that i it's almost like when we do the predictions way out for i mean you can make them say whatever you

[Speaker 3] (1:00:28 - 1:00:41)
want to say but well but if based on what we've seen the trend in the last credit like like you just said if that continues we're going to be the problem eventually so what i would say

[Speaker 1] (1:00:41 - 1:01:51)
it's difficult to project when you don't have linear data and if you look at resident in district for example 5.9 5 million 4.9 back up to 5.7 5.7 back down to 4.9 that type of fluctuation can be the result of other factors other than the inverse correlation between the growth and dual credit and the decline of in in in district resident so doing projections like that could introduce a high margin of of error in terms of predictability and deviation standard deviation because we don't have great linear data it would be difficult for us to to do that in the future i do think it's important for us to monitor this on a regular and ongoing basis and to keep you informed about enrollment trends and our recruit recruitment efforts but the significant increase in dual credit i believe that's more a result of fast funding and all of that scholarship that's available to students than it is a significant shift in the way that students engage with

[Speaker 3] (1:01:53 - 1:02:29)
enrollment i've got a question tell us how it's going to impact us somehow right yes we're looking at our in-district enrollment what do we what's our plan to fix that i mean why are we losing our traditional college student it's such a high rate not just us that's all over right but what what do we we can't we can't continue down that path what do we do now to well we continue what are we doing we

[Speaker 4] (1:02:29 - 1:02:55)
continue our efforts with downhill big time well wait a minute i mean if you look at if you look at 23 and 24 they were the same and dual credit increased a lot in 24 didn't affect in district i think like jacob said this is not linear data here it's it's all over the place there's other circumstances that are affecting this and unless you've got more years of data you really can't forecast anything we could be back up to 5.7 million in a year or two and and you and i don't

[Speaker 3] (1:02:55 - 1:03:00)
know why and i don't know why enrollment to do that have it i mean or increased tuition rights

[Speaker 10] (1:03:00 - 1:03:16)
and you can't project it out because you can't establish a good baseline when they're so sporadic this way so it's hard for you to develop a trend so you can just the best you can do is monitor it and then come up with ways to combat it as you're monitoring it you can't reject us it's too

[Speaker 1] (1:03:16 - 1:04:24)
sporadic to do that and we should have a recruitment and retention plan and that should be discussed with the board that you know this this is a key component for us this also has a direct correlation to completions right does our enrollment stay high you know more students in more students out on the back end right this this this is a top priority for us but based on trends i do not see an alarming trend developing regarding our in-district enrollments they're down this year but but that doesn't necessarily mean that we're trending down i see a positive trend with regard to dual credit we'd like to see all of our enrollment trends be that consistent and consistently growing but uh i'm not ready to uh pull a chicken little and start saying that the sky is falling i i'm i'm okay with this but but we will monitor it closely enrollment yeah i have a question on

[Speaker 5] (1:04:24 - 1:04:52)
the the dual enrollment tuition that we see listed here is there a distinction there or behind the scenes between in-district and out-of-district are we collecting exactly the same amount for in-district dual enrollment students as we're collecting for out-of-district or do we get more for our out-of-tax district we do not we do not we do not and and part of that

[Speaker 1] (1:04:53 - 1:05:49)
is the nature of dual credit they are not here on campus and there's you know less services that we're providing directly a lot of their you know counseling and supports being provided by the high school there is also the aspect of fast once fast what was passed that started to implement caps on on what we could charge our regular students uh versus our our our regular dual credit students versus our fast eligible dual credit students so that is the same for all school districts whether they're in district or out of district and our tuition rate is set remember you passed this last month the mandatory increase to dual credit tuition that's set based on the adjusted rate for fast that comes out every single spring that's for all that's a state zip that is a state set rate i think they

[Speaker 2] (1:05:49 - 1:05:55)
gave us an increase of what what was it in it like 70 cents per credit hour last time a couple of

[Speaker 1] (1:05:55 - 1:07:08)
bucks it went from 56 something to 58 something it's it looks like it's indexed at about three percent per year so they're they're trying to keep up with a measurable rate of inflation we're not they're not costing us money and the more that we market this and the more students that we get beautiful thing about dual credit is one of two things will happen either they'll get introduced to lee college and take a couple of classes and be more inclined to come here or they'll really get into it and they'll be successful and that will jumpstart their education towards completing their degree whether that's at lee college or another institute of higher ed either way this is helping the state to achieve its its ultimate mission and so we're we're very happy with this program we understand that there is you know 58 bucks per credit hour might not be enough to cover every single class when you consider the cost of instruction and the cost of course materials but in general it's a it's a it's a good program and it's an ex an exceptional program for our students so we we we support this and and it has other residual benefits besides what you see in

[Speaker 2] (1:07:08 - 1:07:41)
terms of just tuition for our dual credit students and the data is clear that students who begin taking classes in high school are much more likely to complete than students who do not have a dual credit background that's very clear the other the other thing that i would add about not being doom and gloom is that mark when you were saying well this is taking away from what we would have very few i just want to clarify that very few students actually complete with their entire associate's degree we have many more that don't and that will come to lee college and that's

[Speaker 5] (1:07:41 - 1:07:58)
that's our intention and my taking away comment really was just a reflection of it could explain why we're seeing a change in that traditional student i'm not saying let's do away with it because we're hurting ourselves i'm saying that may explain part of this drop we're not but yeah

[Speaker 2] (1:07:58 - 1:08:03)
and i think the overall picture is we're not seeing that a problem it may but we really need three or

[Speaker 1] (1:08:03 - 1:08:09)
four more years of data to make that determination conclusively it had the same drop from fiscal year

[Speaker 4] (1:08:09 - 1:08:31)
20 to 21 same drop right fast did not exist then we didn't we didn't we didn't go thinking everything was going to be doom and gloom in four or five years so i mean like you said it's it's it's a one-year anomaly and another year in 2022 right so it's not like we're complete

[Speaker 1] (1:08:33 - 1:10:08)
and from a total revenue perspective where you know if you if you look at the bottom line that is linear progression and and that is a much better indication of where we're going to be five years from now than any one particular line item all right let's look at how our tuition and fee costs compared to the other schools within the gulf coast area remember all of the schools uh listed above lee college are much smaller all the schools listed below lee college are much larger at 91 for in district we're very competitive the only institution that's significantly lower than us is college of the mainland and in terms of competition right when we're looking at how do we compete and attract students that may be considering us or other community colleges it really comes down to the out of district rate at 63 we're close to the median on there there are a few institutions that are much higher than us houston lonestar and wharton are all much higher but our primary competitor san jack and san jack's 20 bucks cheaper than we are per credit hour right so that that gives them a competitive advantage in terms of trying to attract students to attend school there as opposed to attend school here at lee college

[Speaker 5] (1:10:15 - 1:10:21)
uh would you not consider lonestar particularly for our northern districts a prime competitor

[Speaker 1] (1:10:22 - 1:10:43)
say huffman crosby some of those we could but lonestar is a lot more expensive so unless unless distance and travel is the is the primary consideration for a student we we are a significantly better option than lonestar is we have any actual data that show

[Speaker 5] (1:10:43 - 1:10:49)
students from our district going uh from our service area rather going to san jacinta

[Speaker 1] (1:10:49 - 1:11:03)
we have any data or is it we're just speculating i'm gonna have to check with dr walters on that i don't know if we have that data or not i don't know that's not really our data that's their dr

[Speaker 6] (1:11:03 - 1:11:30)
bennett has it dr bennett there might not be any linear data but i know that so when you talk to students they're going to san jack a lot of students are going to san jack when we're talking to them they never mentioned any of these other places price or is it because of the program offered combination of both but mainly program offers price program and location they're

[Speaker 1] (1:11:30 - 1:11:42)
generally the closest to our highest concentration of of students and if they're out of district meaning that that they don't live in the goose creek isd area then they're paying out of district

[Speaker 5] (1:11:42 - 1:12:08)
with us or out of district with san jack if you do happen to run across some of the data because we we've talked about that this particular issue before but i've never seen any actual data of how many students are going there maybe based on those three price location and what was the third they have some programs there program price and location they have some programs there

[Speaker 3] (1:12:08 - 1:12:31)
that we don't have so that may be but and that's for not understanding how credit works would there be a place to put a box on this sheet to show the dual credit costs that not be when that not fit this this box we could have no idea how that lines up we could

[Speaker 1] (1:12:31 - 1:12:51)
add dual credit there's there's really two models for dual credit there are colleges that waive all dual credit costs and there are colleges who charge the fast rate for dual credit and it and it really comes down to to those two options so we could include that

[Speaker 3] (1:12:51 - 1:12:57)
i'd be good you know in a comparison like san jack you know what do they what do they do maybe

[Speaker 11] (1:13:03 - 1:13:07)
i don't know what chart it goes on this is based off of 12 credit

[Speaker 1] (1:13:12 - 1:15:06)
no and and so you you have you have the enrollments from dual credit but you also have the 2.3 million dollars in tuition revenue right so if we were to adopt say a system similar to houston community college where they simply waive all dual credit tuition and fees that would be a 2.3 million or more hit to our budget that would be that would be a pretty tough field for us to swallow at least it would be this year more or less so we have individual mous with each of the independent school districts and i haven't reviewed all of those contracts yet my guess is there's probably slight variations from one district to the next regarding how those transactions are managed but the model is generally the same we pay for the instruction we collect the tuition sometimes the school districts pay that tuition sometimes they pay that but we're collecting the same amount of money and providing the same services to each district whether it's an in-district or out-of-district yep school district they pay the same they pay the same so dual credit there's no difference between in-district and out-of-district treated exactly the same that's across the state well i can't say that conclusively but yes my assumption is that's across the state because the way that the fast law which 47 schools out of 50 have enacted fast requires that the fast students pay the same tuition as the non-fast eligible which levels the playing field for in-district out of district

[Speaker 3] (1:15:08 - 1:15:12)
we're we're kind of offsetting the cost of students

[Speaker 1] (1:15:14 - 1:19:04)
thank the taxpayers they're they're getting they're getting credit at a much lower cost than they would then if they were taking a regular class here yes because they're getting the dual credit rate as opposed to the out-of-district rate all right that brings me to another potential threat that's pretty significant for us right now uh health grant reform provisions in the federal budget reconciliation legislation are proposing two changes to pell that would have significant impacts for the institution number one students must be enrolled at 30 credit hours per year to receive full pell funding right now that's at 24 or 12 credit hours per semester that's the difference between four classes per semester and five classes per semester in addition to that loss of pell grant funding for students enrolled less than half time or less than eight credit hours per semester that they would receive none right so a student would have to take a minimum of eight credit hours per semester in order to qualify for any pell funding and they would have to take 15 hours in order to qualify for full pell funding as you can see from the chart below most of our students are below 15 credit hours right now we only have 405 students in our entire population that are taking 15 credit hours or more you'll also notice that between seven six and less than six we have over 900 students or approximately one-tenth of our total population that would no longer qualify for pell funding if this bill passes while this isn't a direct reduction in the amount of revenue that we receive this changes the way this changes our students behavior in the way that they try to pursue their education at lee college it does a couple of things one most of our students who are attending part-time live complicated young lives they have kids and families and they have jobs and six or seven credit hours is all that they can manage to squeeze into their lifestyle and and so to require them to take one additional class may put them in a position where they're going to struggle to meet satisfactory academic performance in other words if they don't meet the grade requirements in those courses they put future pell eligibility at jeopardy so so we don't like this in terms of addressing the contingent of our student population who are working and dealing with other life issues and need part-time the other issue that we have there's a there's a big jump between taking four classes and five classes in a given school you know it's it's kind of like the analogy you know if somebody's drowning you don't hand them a baby you know sometimes that one extra class is is just the the tipping point between being successful and genuinely struggling in your education and and so if this legislation passes it will undoubtedly have an impact indirectly on our institutional finances it will impact the way that students register and attend class and because so many of our students you know at 6.1 million dollars per semester 12 million dollars that's almost 15 percent of our total budget is being funded through pell funding this will have a financial impact difficult for us to estimate what that will be because we're not sure exactly how student behavior will change but but this is this is on our radar

[Speaker 11] (1:19:04 - 1:19:12)
and we're watching this closely all process behind successful since

[Speaker 1] (1:19:15 - 1:20:02)
so this is a federal program not a state program but the federal yeah and and there are a lot of changes being made in higher education at the federal level that are hard to justify from a student uh a student service perspective right we we get you know we've had international students that found out one day that their visa had been rejected they're out right um you know you know so there's there's a number of issues that we've seen uh since the beginning of the trump administration that are having an impact so far this is the one that's going to have the most significant direct impact on on our students and potential participation in in future and just

[Speaker 2] (1:20:02 - 1:21:32)
activity sorry jacob was there something else you're going to say before so in terms of where this um reconciliation bill is currently it's been passed out of committee passed out of the house and it was only it was 215 to 214 that's how close this particular bill was out of passing out of the house it and we just learned that the senate plans to include similar cuts we were hoping it wouldn't including major changes to eligibility so we don't know you know what that might mean really worried about huntsville and their ability ability to receive health funding so but also it's important to separate that because the reconciliation bill these are these are they deal with mandatory programs resulting in permanent changes so if this occurs then this is a permanent change until it's legislatively changed again but this is separate from just the the federal appropriations funds that are discretionary and that we have as well at the so that means and these have already been discussed as on the chopping block trio perkins title four rc campus grant for child care so we're talking millions of dollars as well

[Speaker 9] (1:21:34 - 1:21:51)
in services discretionary programs discretion what happened to the 12 hours is a full-time student i just threw it out what do you mean well if this passes yes that just goes out yeah i mean for years it's been generally agreed upon that 12 hours was a full-time student

[Speaker 2] (1:21:52 - 1:22:13)
i mean their original goal is is to cut the budget right and eliminate what they perceive as waste and there are i guess some that don't believe that this is successful or it's a waste obviously we don't see that and we we can measure impact on many

[Speaker 1] (1:22:13 - 1:22:35)
different in many different ways positive but like with other legislation we've been active we've sent letters to our congressmen and our senators imploring them to please consider a different solution as it relates to this but we are at the mercy of congress for any talk of

[Speaker 15] (1:22:35 - 1:22:41)
when they cut budget that they would be sending some of that money down to the states for

[Speaker 6] (1:22:43 - 1:23:01)
just cuts i don't i don't think either the national or state government i don't think either the national or state government or fans are big on supporting public or higher education so we're probably going to see cuts well we've kind of been the

[Speaker 2] (1:23:01 - 1:23:52)
darlings for a while in terms of community colleges because they are very at the federal level and the they really value career and technical education so but higher education in terms of universities absolutely not favorable and k through 12 it seems to be that way right now so what's happening though for from our perspective and is that you know we are being caught in the crossfire against universities so when they're wanting to make these changes and and hurt universities or get them to change in the ways that they want to we fall under the same umbrella so for example the governor had an executive order that froze tuition increases and uh that's been interpreted i mean obviously that was aimed at the universities

[Speaker 3] (1:23:52 - 1:24:13)
but we fell under that as well but we get caught on the 15 and more they get 2600 but 12 to 14 the average is 2800 that mean that when you go to over 15 if you max out is that why that

[Speaker 1] (1:24:13 - 1:25:01)
number is lower so there's a lot that goes into pell awards because you have lifetime awards and depending on how much versus later in their career it's not necessarily the same amount per credit hour the whole time that they're in their education and so that just depends the the biggest issue that you're seeing here 12 to 14 and 15 and more are all full time considered full time under the current laws or at least as far as this data was concerned so they're all receiving their maximum benefit available for the semesters that that they're enrolled and and so that just again that that's a reflection sometimes of how much

[Speaker 3] (1:25:01 - 1:25:20)
hell the students have already received prior so i guess if they hit their 30 they're only going to get roughly on this example it's only 635 dollars if they take less they're going to get more money like the 30 hours per year

[Speaker 1] (1:25:23 - 1:26:08)
so that's for another as you said too many variables manual award so there's it it it's it's it's function and the students have some options as as they determine how to draw down pell and not all students you know elect to draw down the same amounts there's this is just an average a historical average it is not a reflection of what the students would qualify for how much they they could have but you'll notice a big difference between full time and less than full time right that's that that's the big difference and this is you know jacob i think you pretty

[Speaker 2] (1:26:08 - 1:26:32)
much covered this but when you said register but we're anticipating that we will see fewer students enroll at all so that's the kind of impact that we're expecting because they're hearing about this change no not hearing because the actual amount of money that they will need to to be in school is not going to be what they need to support them yeah that's a bigger risk of affecting our

[Speaker 4] (1:26:33 - 1:26:40)
traditional student than dual credit does yes absolutely this this is a genuine threat

[Speaker 3] (1:26:40 - 1:26:53)
to the institution we are watching this closely hate to ask this a dual credit student cannot get this money right the other questions

[Speaker 12] (1:26:55 - 1:27:34)
one question pell eligibility is um you at the beginning when you register for classes at the start of the semester that's when your pell grant is determined when you fill out the okay but what i'm asking is this 15 hours versus 12 hours versus nine hours okay if i register for 15 hours at the beginning of the semester and i drop a class is there something reconciled on the back end yes okay there is okay so students can't game the system

[Speaker 1] (1:27:34 - 1:31:45)
they can't register for 15 get into class the first day drop three classes and then keep all the money however they like to try they do like to try but but there is a reconciliation process so depending on when the student fills out their FAFSA and how far in advance it gives them the flexibility to find the right mix between what they could be awarded in pell and how many classes they'll they'll take if students wait till the last minute to register and then fill out their FAFSA they're not getting that notice of award until after the semester started and and and those students are basically stuck right they had to decide up front and maybe they get enough to pay maybe they don't okay other revenues this is a relatively small amount of money when considering the entire budget you'll notice that the most significant increase comes due to our interest income while we are in a declining interest rate environment it's declining slowly so we're we're actually projecting uh fairly flat uh revenues in terms of other revenue for next fiscal year so just a summary of threats right we have state legislation on ad valorem we have ongoing modifications to the state formula uh state funding formula pale is a big one and then of course the other grant funding perkins trio title five as those become affected those those last three and and some of the other federal programs that that may also end up being cut the institution has a choice right we either have to cut the service that was originally provided through that grant funding or we have to figure out how to fund it out of operating funds right so we're either cutting services or we're generating additional expenses either way it puts more pressure on us from a budgetary perspective in order to continue to provide the same services to our students so all all serious considerations and we will go into this in more detail hopefully on the 17th we'll have an update on all of these issues for you so in conclusion uh you can see on the left where we were with our 25 budget where we look at uh ending with our projected revenues for the upcoming fiscal year our recommendation is to keep the same rate right no change to the rate and with only a 0.6 increase in property values that's going to generate uh very little difference in terms of state in ad valorem taxes right now we're projecting a flat on our state appropriations so we have our our growth and completions that's going to be offset by the decline in qualified credentials of value uh tuition and fees we do expect that to be up again next year and so we're budgeting a 760,000 increase and like i just mentioned with our other revenue we think that's going to be relatively flat when we compare the 26 budgeted revenue to the 25 adopted budget uh we're looking at a 777,000 cut in the budget now we cut the tax rate after we adopted the budget so really we're looking at very very similar year last year to this year um from a revenue perspective our expenses are still going up you know cost of living was three percent we still want to try and take care of our employees we'll be talking about how we're going to try and address all of those issues on the 17th but uh we're going to have to be creative this year and and while we might be able to figure out how to handle all of that this year if we have multiple years like this it will eventually result in no increases for our employees or uh mission reduction with that any questions i have one

[Speaker 9] (1:31:46 - 1:31:51)
do our various departments um start with a zero-based budget when they build their budget for

[Speaker 1] (1:31:51 - 1:33:06)
coming so in a traditional zero-based budgeting model you strip everything down to the to the grassroots and you require the departments to justify every single thing that they do well we don't we don't go all the way to the ground we make them go through line by line and justify everything that they're doing and i will show you an example of that on the 17th of a department's budget request process where you can see that they're cutting and justifying and they have notes regarding any changes why they're cutting their budget why they're asking for an increase and the justification for those increases so it's not a traditional zero-based budgeting module model but it's so detailed and and our departments put so much effort into that that it's practically the same thing they're defending all of their activities on a very granular level and looking at very granular changes to to the requested budget essentially no department just has a pot of money that they get to decide how they how they use it everything is is very specifically identified i remember how detailed

[Speaker 9] (1:33:06 - 1:33:12)
it was and but i think it's important that we take a look you know and at it at that level

[Speaker 1] (1:33:13 - 1:33:46)
departments so that's great you know the the hard reality that departments are going to have to face and this is new information for many in the audience you know with flat revenue it means that they might be able to make some reallocations but there's not going to be large sums of money for new initiatives and we have many needs and we've had many requests for many very important new initiatives it's a difficult process deciding what we recommend to fund and what we recommend to cut

[Speaker 3] (1:33:53 - 1:34:03)
they're holding up the enrollment based on the money well it's not just instructional so it's every

[Speaker 2] (1:34:03 - 1:34:08)
single department across the college so kind of all based on

[Speaker 3] (1:34:17 - 1:35:20)
it's just not really it's not really based on they do you look at that to see because a lot of our our dual credit for instance those are taught by district teachers right no we pay I think we talked about how how all that works between us and in the district how do we settle that how do we pay and how do they pay or

[Speaker 1] (1:35:23 - 1:36:57)
so so we we bear the brunt of the instructional cost we pay the teachers directly or we give the money to the school district and the school district pays the teachers either way we are the ones that are covering the cost of instruction what I would say um Regent Himsel to your question about do we try to tie enrollments to allocations of funding that that works fairly well in some areas you know so for example if our biology enrollment is exploding and they simply have to have more teachers to cover the additional sections that we're trying to offer we have to provide them with the additional funding for the additional teachers but in terms of other other initiatives right you you have growth initiatives which is what you're talking about but you also have efficiency initiatives and you have safety and compliance related initiatives that often have nothing to do with whether or not enrollment is going up or down in a particular category and so while it would be nice if we could adopt a model like that even most universities haven't gone to a a a revenue center model where you're applying revenue to a department based on the revenue that they generate and then letting the department decide how to spend it and I haven't seen any community college in the state of Texas that uses that model

[Speaker 3] (1:37:00 - 1:37:09)
so some of our instructors go to the high schools said there's some that that don't what what is that virtual or do we teach

[Speaker 6] (1:37:35 - 1:38:12)
it's also going to depend on the facilitator both depends on the program I'm sorry going to depend on the program sometimes like our students they might take cosmetology so cosmetology doesn't come to our school our students drive over and do cosmetology so everything's going to be on a program or student-to-student basis it's hard to say just umbrella and say all of these kids have to do something a certain way like the college does a good job to adjust to the needs of the student but I love the model the way it is I don't know I'm not I guess I don't know what you're

[Speaker 13] (1:38:12 - 1:38:32)
asking for at this point around depends on how we um how we help serve the needs of those students

[Speaker 3] (1:38:32 - 1:38:43)
what our costs are you know if we're out we're paying extra money if we're getting facilitators that cost us more and we may not be recouping all that.

[Speaker 4] (1:38:44 - 1:38:47)
Regent Hemsel is asking if we're subsidizing dual credit.

[Speaker 1] (1:38:50 - 1:39:28)
So, Marissa and I are actively working on a essentially a profit and loss for dual credit a cost study to determine at what level we start subsidizing dual credits the there's you know the direct expense the instruction and the course materials that we have to provide and we we cover those costs but the indirect costs and the support costs that might may be associated with dual credit some of that may be uh may be being subsidized by you're working on that

[Speaker 2] (1:39:30 - 1:39:42)
we are and that's just financial I mean there are so many other factors that we gain or that are important to consider when we have dual credit instruction and it's national this increase in in dual credit

[Speaker 10] (1:39:44 - 1:39:49)
a few slides above where you saw the numbers and dual credit was bringing in the mothers

[Speaker 9] (1:39:51 - 1:39:58)
mention they're more likely to complete yes yeah yeah absolutely they pay the the fees that

[Speaker 2] (1:39:58 - 1:40:34)
other students pay no I Regent Hemsel I was well I was going to say I I thought I understood that the main concern of what we were talking about is whether or not we have a process that really controls whether you know when we make the budget and there are a lot of requests and how that is addressed whether it's through cuts or actually providing additional support so I was just going to say that we do and anything that is a significant request not only comes with an explanation but has to be defended by a cabinet member so we get into

[Speaker 3] (1:40:34 - 1:41:01)
that room together and yeah but as as dual credit continues to grow like it's growing and if we're baytown taxpayers are covering the fees or if you're fixing to tell us about that I think but in any other cost you know we need to understand that if we don't we don't make make a change but we need to I don't think we understand totally what we're doing talking about

[Speaker 1] (1:41:01 - 1:42:03)
fees so they don't follow the same fee structure and give us time to finish the evaluation when we look at dual credit you have the tuition you have the fast reimbursement and you have the state appropriations due to students completing 15 hours of dual credit education right those those completions associated with that that's the total revenue on the expense side you have the cost of instruction you have the cost of course materials that are not paid for by the student or the district and then you have the administrative support costs to my point earlier we cover our direct costs right so we're not we're not losing money on dual credit but you know it is not a bad program for us financially but but but it is not a money maker that is compensating or contributing funds for other programs and and we will when we're finished and we feel comfortable

[Speaker 3] (1:42:03 - 1:42:42)
bring that to the board to review but the local taxpayers are not subsidizing other districts for dual credit no period and not a lot of our fees are not being paid by all those so that was hill kids in cosmetology for instance they all pay the same cost it's 58 subsidizing baytown but he's basically going to subsidize more of his hill how are we not if they're not paying the same fees but another day another day let him work

[Speaker 4] (1:42:42 - 1:42:57)
his uh analysis out and get back to us like i said that was the primary question that we've spent a lot of time on is are we subsidizing out of district dual credit students and if you can just get that information for us we'll be satisfied with your response okay i have

[Speaker 5] (1:42:57 - 1:43:30)
i have one one question that we didn't talk about we have privately and when we toured the prison system in huntsville in our education program up there and you indicated y'all were also or you were going to initiate or are doing a study of of state revenue that's paid to us and all the income streams off of that i'm i know you probably haven't begun to have time to complete that but when do you expect to have um a profit loss i guess i can say on the

[Speaker 1] (1:43:32 - 1:43:39)
prison education let me qualify this response if i could i'm not putting any pressure i'm just

[Speaker 5] (1:43:39 - 1:43:47)
you just did well i can wait i can wait six months when it comes to when it comes to job

[Speaker 1] (1:43:47 - 1:44:52)
costing at the institution but we all understand how important that is we want to know which programs are more profitable or less profitable than others we we want to know especially when we're talking about dual credit or huntsville education right is that a self-sustaining program or is it being subsidized through other revenue streams at the institution we understand that what i will say is that we do not have the capability to update and pull that data directly out of people soft right one of the things that we'll be looking for in a new erp system is the ability to streamline some of this so that we can build reports that get updated on a regular basis so you're talking about a very time intensive very manual process that we really have to do one program at a time and so i will commit that we will have that kind of detail for you for the next next budget cycle and it'll be sometime between

[Speaker 5] (1:44:52 - 1:44:58)
now and then okay that's good that's good because i'm i'm a great proponent of the program but

[Speaker 3] (1:44:58 - 1:45:10)
that question has come up a number of times and but we don't have a gl accounts for huntsville and credit we're not separated like that we do but it's not that simple

[Speaker 1] (1:45:11 - 1:45:43)
right because you're trying to allocate revenues and expenses you're not just talking about what did we budget for huntsville you know that we track but but but it's more than that and so uh we we want to make sure that we're generating reliable business data that that we can use to make good decisions and and so it's more complicated and it's more time consuming and i've only been here for two months i i need some more time i thought you would have had it by

[Speaker 4] (1:45:43 - 1:46:03)
now i just you know we'll give you a couple weeks jacob is this an accurate statement as long as we're collecting property taxes we are a subsidized institution yes okay quit collecting property taxes we're fully funding ourselves but until then we're subsidizing everything we do

[Speaker 1] (1:46:03 - 1:47:01)
and essentially every public university that receives state funding is a subsidized institution right we property taxes in public education uh public education is subsidized if you're talking about private universities and private colleges they're generally not subsidized which is why their tuition is so high their enrollments are so low and when you have sweeping changes due to problems like covet all of the universities and colleges that are closing are all private right that subsidy allows us to weather difficult financial challenges so that we can continue to provide those services even when we can't pass the full burden of the education onto the students and so we're i'm grateful right what we do matters tremendously for our community and and it happens at a very reasonable cost

[Speaker 2] (1:47:01 - 1:47:23)
to our community and to our students and i would just add right 90 of the huntsville students are on pell 80 of them or we saw just recently actually 85 percent are completing their programs and that's a significant reason why our hb8 funding went up so that brings in a lot

[Speaker 10] (1:47:25 - 1:47:27)
good job jacob thank you very much

[Speaker 2] (1:47:31 - 1:47:36)
breathe well jacob broke his back a couple days ago i was thinking about you standing there all

[Speaker 4] (1:47:36 - 1:47:43)
thank you for the great uh report on revenue can i just say while it's great i think it's a great

[Speaker 9] (1:47:43 - 1:48:04)
idea for us to do all of these analysis so we really truly know what we're talking about when we're making decisions budget decisions financial decisions but at the end of the day we do a service that can't be beat for our students and we give them the best education there is without them having to leave college even if they transfer with you know thousands and thousands and

[Speaker 4] (1:48:04 - 1:48:29)
thousands of dollars of debt and i'm proud of that yep me too all right thank you very much okay at this time we're going to move to executive session the meeting of the lee college board of regents on the above list to date after proper posting in accordance with chapter 551 of the texas government code for the specific purposes provided will recess from open meeting to close meeting no action will be taken while the board is recessed in executive session

[Speaker 16] (1:48:50 - 1:48:51)
how old you been there

[Speaker 9] (1:49:07 - 1:49:14)
basically giving agreement was that we would pay our readers