[Speaker 7] (0:42 - 0:43)
All right, folks, it's 5 o'clock.

[Speaker 2] (0:43 - 1:18)
I call to order the meeting of the Lee College Board of Regents budget workshop on Tuesday 8 26 2026 at 5 p.m. looks like all regents are present so we didn't have a quorum we'll move right into agenda item number two which is workshop for the fiscal year 2027 budget no but that would have been funny

[Speaker 10] (1:18 - 1:34)
all right BFO today I was gonna get a hat that said CFO but all right so

[Speaker 1] (1:36 - 10:45)
today there are a couple of objectives first I kind of want to set the baseline by showing you some comparisons between Lee College and the other institutions in the Gulf Coast region and then I want to go over all of the expenses and additional items that we have been considering as a cabinet as as we prepare for the budget cycle this year so as you consider the institutions that we're looking at you can see the service map here we are in the middle there are three institutions that are larger than Lee College San Jack Houston and Lone Star all of the other institutions are smaller and we're honestly about twice as big as as all of the other institutions in our service region so here you can see enrollments by year and I printed and provided copies of the slides because some of this detail gets a little small so we are we we have been flat the last two years but we're still right at our all-time high in enrollments you can see that San Jack Lone Star and Houston City have all experienced pretty significant increases in their enrollments in the last year but they they are still most of them a long ways off from their all-time high in enrollments there are only two institutions in the region that provide prison education Lee College and Alvin Community College in terms of prison education statewide we provide over 60% of all prison education in the state of Texas and and so there's really no one that compares to the size and scope of our prison education program as we start talking about revenue sources across our peer colleges all institutions follow the same pattern most are anchored by their ad valorem taxes that range between 40 and 50 percent of their total funding state appropriations are typically the second highest revenue source and followed closely by tuition and fees so it's kind of a 50 25 25 for most institutions there are other sources of income that include grants contracts auxiliary revenues but for today's comparison purposes we're only going to compare the big three right ad valorem state appropriations and tuition and fees here you can see the total budget by comparison and so you can see that San Jack HCC and Lone Star are really operating on a different scale than everyone else of the remaining institutions we have the largest budget by about 30% compared to Brazosport which is the next largest at 60 million operating expenses if we take our operating budget and we divide it by students so how much are we spending essentially to educate each student you can see that we are third highest at 10,422 and there's really an inverse relationship right the larger the institution the less it costs on a per student basis typically the smaller the institution the more it costs and that's partly due to the fact that every institution has fixed costs associated with just running and maintaining a college and then variable costs that increases the number of students increase well you know there is some scalability on the fixed costs but there's kind of a minimum amount of money that it takes to just have facilities and administration and all of the internal support services that are required and then as you add more students it becomes more and more cost-effective so you can see Lone Star College the largest at $6,700 per student by the way if you have any questions or comments don't feel like you need to wait until the end of the presentation please jump right in so here is a comparison of tax rates for FY 26 and you can see that we are not the highest in terms of rate but we are on the higher end the smaller institutions typically have higher tax rates while the larger institutions typically have the lower tax rates and you can see the breakdown between M&O and INS or debt service so let's talk a minute about ad valorem tax capacity and and this is a reflection of how rates change from FY 25 to FY 26 we had the largest reduction in our tax rate of any of the schools last year our rate dropped by 4.12 percent and some of the institutions actually increased their tax rate as a result of their operations last year had I provided this graph going back to six years you would have seen a regular and consistent reduction in our total tax rate now the amount of taxes that we've collected hasn't necessarily gone down because of the increase in property valuations but our rate has been cut on a consistent basis for many consecutive years now the value of one cent of tax is really important you know it's one thing to say that we're at 18 and a half cents and that Houston City College is lowest at 9.8 cents but how much revenue is generated with one cent of tax is a reflection of the value of your tax base so you can see here that we're third lowest one cent generates about 2.16 million dollars for us if you compare that to Houston or Lone Star one cent of tax generates 30 million dollars for them and and so that you know that that difference of you know of 15 times as much money being generated for every cent it is really what allows them to maintain such an incredibly low tax rate we have the added challenge of only having one ISD that is within the taxing district especially our larger institutions the vast majority nine 90 percent or more of their service area is also in their taxing district and so their efficiency on a one cent for $100 of value becomes much much greater where we're trying to support our entire operation from Goose Creek Consolidated Independent School District only the next thing I want to show is the total tax revenue generated on a per student basis and this is a good way for us to equalize this information across the many districts and so there's an error on the first line with Wharton County but if you look at the others right we we actually are on the low end when you look at tax generated per student right we're third from the bottom at four thousand eight hundred and seventy dollars the only institutions that collect less on a per student basis are San Jack and Lone Star and so when we're looking at our tax rate and the appropriateness of the level of our tax rate you know these are things that I would like the board to consider right as opposed to just eighteen and a half cents which I realize is on the higher side when when you look at it in context and by comparison with how that is generating revenue to the support of our students we're one of the most efficient institutions in the Gulf Coast area yes mark

[Speaker 7] (10:55 - 11:00)
yes I think we could put that together I I don't have that prepared for today

[Speaker 1] (11:15 - 12:54)
it's a it's a it's an interesting idea and I can have that comparison ready for the next budget workshop next I'd like to talk about our outstanding debt as you can see we are very low at only thirty six million dollars of remaining outstanding debt there are only two institutions with less debt well I guess three Wharton doesn't have any current debt what's interesting is for those of you who went on the tour at San Jack they have added several new facilities and that's reflected in their total outstanding debt profile they have the most debt of any of the institutions though they are half the size of HCC or Lone Star this is important to keep in mind in terms of having debt is an appropriate way for us to leverage our resources to maximize our services to our students as we as we chip away at the thirty six million dollars we're gonna be well positioned to potentially go out to bond to expand in a meaningful way to address some of the needs that we have from a facilities perspective and expansion of programs and so as that number gets lower and lower it becomes easier and easier for us to essentially refinance that debt and to draw more out so that we could start a major project or initiative in

[Speaker 2] (12:54 - 13:02)
the future is that just general obligation bond debt yes that's our our

[Speaker 1] (13:02 - 19:29)
geo debt another important comparison is on a per student basis so you can see that on a per student basis we are second to lowest only Alvin and Wharton have a lower debt per student ratio again this kind of equalizes the debt across all institutions so even though San Jack has the most debt on a per student basis College of the Mainland is heavily heavily leveraged at roughly $28,000 per student in debt moving on to state appropriations looking at our three-year trend I am happy to report that on a per student basis Lee College earns more in state appropriations than any other institution in the state and certainly more than any of the other institutions in the Gulf Coast region we are average in terms of our completions for our traditional and dual credit students we are performing exceptionally well in our prison education system not only do our students in the prison graduate at a rate of almost 85% but almost every single one of our students qualifies as academically and financially underprivileged and they're almost all over the age of 25 so presently we get a 100% bonus for every one of those graduations right because you get 50 for 25 and older and you get 25% for financially or economically under prepared students and so because of their success we have done very very well under the new model now you can see that in 20 from 24 to 25 we took a big jump but from 25 to 26 we we took a large decline there are multiple reasons for that and none of it has anything to do with how many students actually completed a credential of value each year since HPA was passed we have completed at a higher rate the problem is the state made a mistake on our 25 year estimates and paid us too much which we had to repay some in 2026 and they keep changing the formula which drives the total amount of payments down and because of the populations that we serve we expect to see an even bigger hit next year and so while while we're doing very well I expect a 5% decline in our state appropriations next year despite completing at all-time high for the college and I will go into much more detail on that next month when we're diving into the revenue figures state appropriations on a per student basis $2,410 when you look at state appropriations at roughly twice that on a per student basis we're we're we're doing an excellent excellent job in this area tuition and fees so tuition and fees are usually a component of your standard tuition and then your required fees associated with that with the exception of Brazos Port Lee College is the only institution that has a fee built in for course materials for us that's $33 per credit hour so a student that takes a three credit hour class pays a hundred bucks in fees to cover the course materials and then we provide them everything that they need the textbook papers pens whatever they might need for that course and that's flat to all courses the other institutions do not have a mandatory fee excluding Brazos Port like that so if you take out our course material fee our cost per credit hour is 9174 if you compare that in district to the other institutions that puts us at the bottom end of the spectrum when we're trying to compare apples to apples so with that fee we're on the higher end of of the fee spectrum but our fees include course materials the others do not so the other institutions typically don't have a fee based model in place for offering course materials so they might have a bookstore and students can go and purchase their books at the bookstore or find their books at Amazon or some other location but they're not they're not assessing a fee to the students and then providing the course materials to the students on the first day of class as we've looked at this model and ours is a modified version of universal access for course materials we found that this improves completion rates and persistence for our students it makes it easier to charge this to their financial aid so we're not distributing money to the students after the semester has started and then asking them to then go buy course materials weeks after the first day of class they get those course materials on the front end we're also not expecting students who don't qualify for federal financial aid to have to decide to prioritize buying course materials over whatever other needs that they might have as a result all of our students have course materials on the first day and that helps to avoid students getting behind

[Speaker 4] (19:29 - 19:46)
at the beginning of the semester I got a message from up in the booth if you're

[Speaker 8] (19:46 - 19:50)
gonna ask a question please turn on your feet cheaper than they would have to go

[Speaker 1] (19:50 - 21:13)
out to Amazon or someplace else so because this is an average of all of the costs for many of the materials it's less for some of the materials it's more right because we're we're leveling that out across all course materials that we provide to the students in general the point of this is to take advantage of stronger buying capacity because we're purchasing all of the course materials up front and hopefully to approach this more from a break-even perspective now one of the things that we will be discussing later is whether or not it's time to reevaluate the amount of this fee you'll notice in the monthly presentations that our revenues are always a little higher than expected and part of that is because of this fee and so we're collecting more money than we need to which will allow us to cut those fees and still cover all of the costs for the course materials but the the universal access system isn't intended to be a money-making venture for the institution it's intended to be the most cost-effective way for the students to acquire course materials and the most effective way for students to get their materials to help them succeed in their

[Speaker 6] (21:13 - 21:37)
coursework I'm thrilled to hear this because I remember days when students would say yeah it's half the semesters over and I just got my books or I just got my study guide or whatever because they had to prioritize they had you know tuition over whatever else and they were borrowing from a friend in the classroom or something so that's not an optimum way to do it I'm really happy to

[Speaker 3] (21:37 - 21:49)
hear that so so Jacob and for the in district the 124 33 are you saying that's not a good comparison to the other colleges can we know use that

[Speaker 1] (21:49 - 22:30)
number or can't use that no so the better number to compare to the other colleges is the 91 17 at the bottom right so the 91 17 takes out the course materials and just shows all of the other mandatory fees that are required the 124 the 124 33 that includes all the course material fee as well when you compare that to the other institutions only Brazos port has a course fee include a course material fee included in their costs with all of the other institutions the students will incur additional costs to acquire their course

[Speaker 3] (22:30 - 23:07)
materials if we had another column that said fees how would we line up do we know how would we line up to well I mean if there was a yeah but the other colleges have a some sort of a fee right so they don't pay anything you know the money so at Lone Star they pay 113 50 period nothing else no they pay

[Speaker 1] (23:07 - 23:13)
113 50 and then they have to acquire their course materials after paying the

[Speaker 9] (23:13 - 23:40)
113 50 so this is a much not really 91 is the like you might like I went to school you might have to go to your courses every professor would give you a book list you have to go to the bookstore and spend you know $500 on books yeah if it's in you wait hopefully somebody might have a used book this is much more efficient because the kids don't have to wait right they get all their materials right there and it seems like it's a good price point too yeah I

[Speaker 2] (23:41 - 23:45)
like the way you described it the intent is for what's best for the student

[Speaker 1] (23:45 - 25:03)
helping them be successful yeah now in most of these systems in most of these systems they average this out and charge this for every single course regardless of what kind of course material is being requested or required by the professor so we have open educational resources that are available for many of our classes that are available to students for free in those courses where faculty have selected and we are resource we do not charge the fee we only charge the fee if there is a college provided course material associated with the class there's arguments for both systems right if if we didn't do that we could lower the average cost across all classes because the denominator would get bigger in in calculating what the fee needs to be but we feel this is the best way to encourage faculty to adopt OER resources because their students get an immediate benefit in terms of cost and better allocates the cost to those students who are receiving purchased course materials from the college

[Speaker 2] (25:05 - 25:10)
thank you just a clarifying question on the fees this is all fees right this is

[Speaker 1] (25:10 - 25:14)
all fees so this this is everything that the student would pay okay to

[Speaker 2] (25:14 - 25:19)
attend school just clarifying it includes a revenue bond fee that we have

[Speaker 1] (25:19 - 32:14)
it includes all the fees right yes and that's why you can see that the fees are the same whether you're in district out of district or non-resident but the fees are set regardless of the residency of the individual students any other questions before I move on so just just a couple of key points that I want you to keep in mind as we dive into the next section we're the fourth largest institution we have the fourth largest operating budget we have the best state appropriations per student our tax rate is the third highest but the revenue percent is the third lowest so you know there's a big difference there between our rate and how much we collect revenue mix is really dependent on like each institution has a slightly different revenue mix and that's a function of how big is their tax district how much do they collect in state appropriations what are they charging for tuition and then again at 91 17 per student credit hour we are performing very competitively with the other institutions you know within three or four dollars per credit hour all right let's move on to college operational expenses as far as the board is concerned we will do a budget workshop today where I outline all of the expenses that we've considered right everything that we're looking at is pressing needs for the institution in June we're gonna do a deep dive into our revenues part of the reason that we're delaying revenue discussions until June is we'll have better estimates by June we won't have final numbers on much of our revenue until August and and so some of this is is working off of assumptions and estimates provided by the counties and they're always way off right the numbers we get in June will only resemble the actual figures that we get in August in July we'll go through a workshop where we provide a summary based on how much revenue we expect that we will get you know based on the assumptions that we're making with our revenue collection and the way that we've prioritized our expenses right what what we're hoping to actually cover as part of the budget and then that will give the board the option of either approving the budget in July or doing it in August like we did last year and of course roles aren't finalized till August and after the budget is approved in August in September the board would officially approve the tax rate so let me talk about the operational pressures that we are facing as an institution first we would like to continue offering a cola increase to all of our employees now the seven hundred and seventy two thousand is a three percent cola and and that is three percent to all employees that are not faculty if you go down farther the faculty pay adjustment 934 that is a similar equitable increase for the faculty right with the intent to be around three percent the CPI for last year was 2.8 percent and so this is this is mirroring essentially the rates of inflation that our employees have experienced during this last year we also want to do equity adjustments and I'll talk more about that in a minute we want to bolster our student employment we want to fix some adjunct pay issues that we have and I have a lot more information on that and then the other issue that we have is our ERP contract so the first year started in January it was a partial year next year will be a full year during implementation and so it'll jump up by seven hundred and fifty thousand for the next two years and then it'll drop off by several million dollars after that and so this is just the reflected changes required to stay on pace with the contract regarding the implementation of workday so let's talk a minute about the cola increases that we have provided to our employees versus the change in CPI going back to 2019 so as you know 2019 triggered a significant change and a tremendous fluctuation in the rates of inflation within the United States the blue line is the rate of inflation the orange line is the cola increase that we provided to our employees so if you go back to 2019 from 2019 to 2026 we have provided our employees a 25% total increase in compensation in that same period of time inflation has increased by 28% and so we're still lagging a little bit behind as an institution regarding the compensation for our employees in other words you know over the last seven years our employees purchasing power is actually less now than it was earlier because we haven't quite kept up with the rate of inflation in terms of our annual cola increases we could potentially try and correct that issue right now and and do a larger cola increase than 3% but as you saw all of those other needs we're really trying to balance trying to take care of the minimum increases necessary to keep our employees whole from an inflation perspective with all of the other needs that that we need to make and some of our employees will only get 3% if this is approved many of our employees if the other items are improved are approved we'll get more because we'll be fixing other issues and so it's this this is just one aspect of the total compensation package that we're proposing but it's the the most prevalent and it applies

[Speaker 2] (32:14 - 32:26)
equally to all employees a good question so the 3% you mentioned the other corrections does that amount of increase factor into future salary increases or

[Speaker 1] (32:26 - 36:47)
only the cola adjustment no and so let me let me move on to equity adjustments so equity adjustments are not one-time payments right these are permanent additions to the employee salary so whatever we add as an equity adjustment will permanently increase their base salary so when they get a cola increase in the future the cola increase will include include these equity adjustments now we do an annual study with Gallagher to review our employees compensation and during that study we look at comparisons between grades and positions we also look at our compensation compared to market and and so the point of the study is to ensure that what we're recommending for compensation increases is helping to keep our employees competitive with market if we get too far behind market we'll start losing employees in droves because they'll be able to find better employment just down the road at other institutions we have a couple of problems that lead to equity issues so from a structural perspective we'll have a supervisor that's so closely graded to the people that they supervise that there's compression issues right and and it makes it difficult for us to bring in skilled individuals because at the mid or high range of their grade they might be making as much or more than their supervisor that might be at the low to midpoint of grades slightly higher right so those structural compression issues are part of what we try to correct as we go through these equity increases the other problem that we have is if an employee started at the very low end of a grade and they've been here for many years they've they've experienced their COLA increases but COLA increases also impact the grades right the the market median needs to go up by the amount of inflation otherwise our market median our median for the position starts to lag behind market median and and so the grades increase the employees get COLA increases but that means that if they started at the low end of the scale they remain at the low end of the scale then we bring in other employees new employees that have less experience with the college and they're getting paid as much or more than these individuals right it creates a an equity issue for us because of the way that we slotted employees when we first hired them now ideally I'd like to see us start to move more and more towards identifying what we consider to be the required credentials and experience for the position and saying that that's midpoint right if if you meet all of the experience requirements for the job and and it's competitive then that should be closer to midpoint where we rarely bring in employees at midpoint most of our employees come in well below midpoint so we compound this problem over time because of where we're we're slotting our employees the 500,000 is out with would be allocated using formula that is developed and and vetted with Gallagher as part of the compensation study so so this isn't a random decision right it's it's a formula based application we take all of the employees all of their salaries all of their work history and experience put it into the table and then identify those individuals that are equitably at a disadvantage compared to their peers 500,000 does not correct all of these issues for us and and so this this would be part of a multi-phase approach where we would take the largest most obvious problems and address those first and then over time try to address issues so that we can eventually work everybody out of being in a equity deficit within their positions

[Speaker 11] (36:52 - 37:05)
yes the ones that you would address first would be the ones that are the furthest away from market yes and that is creating the most compression so those

[Speaker 1] (37:05 - 37:25)
are the ones you would start with first yes okay and and and so this this this just comes down to numbers right I mean you could take everybody's name off of the page and just look at their numbers in the matrix and we can go and identify those that are in need of an equity adjustment more than anyone else Jacob

[Speaker 8] (37:25 - 37:49)
is this a fixable issue like we'll eventually get to where we're not having that raises and stuff everything just goes on up so we're not seeing these issues where somebody falls really below and then we have to scoot them back up or is this just kind of the nature of the system oh I've never worked at an

[Speaker 1] (37:49 - 38:59)
institution that doesn't need to make equity corrections at some point now we can have practices that will minimize this and and and help avoid you know major issues I mean when you consider a 3% Cola increase is you know about 1.5 million dollars total between faculty and staff and we're talking about five hundred thousand dollars in equity it's a pretty big problem for us right now I would say that it's a severe problem for us which is why the request is so high for equity funding better practices will help slow the rate at which employees might fall into equity disadvantage but to Regent Guillory's point you don't ever completely eliminate this I mean not not in a governmental environment where compensation is really structured and based on comparison of credentials as opposed to you know negotiations and recruitment and that you know the types of practices that you see in in the

[Speaker 3] (38:59 - 39:23)
private industry okay the 500,000 are we more out of line with the administration or the faculty or were we out of line the most so we have issues primarily

[Speaker 1] (39:23 - 40:19)
with staff and faculty now you'll see that we have adjunct pay that we're trying to correct you know that and I'll discuss that in a minute you know we have some some structural issues with our adjunct pay that's creating issues for us the faculty pay adjustments 934 you have about the same number of employees in staff as you do faculty so I it's about 50-50 that there are issues on both sides the issues are a little different right with staff it's more about compression and starting salary with faculty there's a load balance issue for the way that we calculate load and compensation based on load and there's also a starting salary issue for for faculty as well oh you're

[Speaker 3] (40:19 - 40:37)
you're asking back up again you're asking so we're talking 772 plus 500 plus 300 plus 900 plus another 900 that's all new money yes so again well

[Speaker 1] (40:37 - 41:31)
I'm not limiting any of this based on available revenue that will happen as as we work into the revenue stage but as we're talking about where are issues and what do we need to address yes these are all what we would consider pressing issues and you'll notice that none of these issues are really for new services new initiatives new employees these are these are issues with regard to trying to correct structural problems that we have at the institution you did say the faculty pay adjustment is the 3% yes so so the 772 is 3% for staff the 934 is a 3% increase for faculty along with some other adjustments on the faculty

[Speaker 2] (41:31 - 41:36)
side but the faculty pay adjustment is not an equity adjustment it's a cola

[Speaker 1] (41:36 - 41:45)
it's a cola increase yes the 500,000 is going to apply to faculty and staff yeah

[Speaker 2] (41:45 - 41:53)
well just like any yeah but yeah but the two of them the two big ones were a 3% cost of living increase so

[Speaker 7] (41:55 - 42:10)
all right any other questions on equity adjustment before I move on to the next item all right student employment funding request

[Speaker 1] (42:15 - 45:50)
we get a tremendous value from the employment of our students they're excited they're committed they're grateful for the opportunity to stay on campus it is helpful to the students in terms of persistence right they're far likely to less likely to leave school if it means that they also have to leave their job we're we're very happy with our student employment program and this is centralized and managed through student services for all student employees we have several different funding sources for student employment so we have 400,000 that comes through federal work-study and through state granting programs and we have several hundred thousand dollars that is tied to our operating budget now some of the complexities associated with student employment if a student qualifies for federal work-study once they hit their limit which if the students are working the 17 hours that they're allowed to work that usually runs up somewhere between January and February for most students so we would either have to eliminate them as a student employee or we have to switch them from federal work-study dollars to operational dollars in order to keep them employed through the rest of the school year in addition to that like everyone else we've needed to increase compensation for our students now two years ago we were paying our students $7.25 an hour or minimum wage and at $7.25 an hour we had a hard time keeping our students consistently from one semester to the next because there were just too many opportunities in the community for these students to go out and get another job especially our high-performing students and so two years ago we increased the compensation to an average of $12 per hour so we had some at 10 we had some at 14 but we moved it to $12 per hour we only increased the budget last year $20,000 for our student employment so you increase the compensation by 40% almost 50% or almost double and we didn't really contribute any new money so we are we are over budget this year on our student employment and it's such a tremendous value to the institution we're looking to commit an additional $300,000 into student employment so that we can maintain the required workforce and ideally to meet all of our required needs we need 100 student workers at 17 and a half hours per week at $12 per hour and and that kind of works out too we need an additional 300,000 in order to maintain those levels of student employment associated with this we're looking at some new hiring request forms so that we can have a little better control over how these positions are allocated and the number of hours that students are working we don't want to be in the same situation next year that we are right now where we're over budget and and we haven't even made it

[Speaker 7] (45:50 - 46:04)
to the end of the fiscal year any questions before i move on to adjunct pay last fall

[Speaker 1] (46:05 - 50:46)
the faculty submitted a proposal to address some structural issues that we have with regard to faculty compensation and most of this most of the consternation has to do with faculty workloads so we do not compensate lecture time at the same rate that we compensate lab time and for simplicity's sake it's essentially two-thirds right so one hour of lecture is paid at full rate one hour of lab is paid at two-thirds the full rate so this particular dynamic has broad impact for our faculty for our full-time faculty if you teach only lecture you have 15 hours that you're required to work if 30 or more of your teaching time is lab then your standard workload is 18 contact hours with the students and so lab heavy courses you know our our technical programs our science and mathematics programs have significant labs associated with them those professors end up having to work more hours per week to get the same compensation that they would get if they were in a program like english that has almost no labs associated with it right so so there's some inequities that are automatically created well those inequities filter through to overload time for our faculty right and uh to our adjunct faculty if we try to fix one issue with one group it kind of impacts all of the groups right and and so uh we looked at this and not necessarily that this is the plan that we want to move forward with but if we were to uh equalize the compensation for lab and lecture across all employees so full-time faculty overload and adjunct it would be a four and a half million dollar increase in compensation to our employees right keeping keeping everybody whole obviously we can't afford that in one year and so what we've done is we've identified our biggest issue and our biggest issue is with our adjunct faculty right now san jack pays 54 per hour to their adjuncts we pay 51 per hour to our adjuncts not a significant difference um but if an adjunct has lab associated with their course the lab is paid at two-thirds of 51 per hour so if you're a fact if you're an adjunct faculty that has lab associated with your instruction you're making significantly less now working for lee college than you would teaching the exact same course at san jack if we adjust the load ratio and the compensation between lecture and lab we have to fix it for everybody so changing it for our adjunct faculty is problematic because we can't just fix it for them we have to fix it for everybody and if we fix it for everybody that's a four and a half million dollar hit we need to break this up into pieces and work on this issue over time and contribute the additional funding that we can year over year until we can eventually fix this issue and put ourselves in a similar position to our competitors at san jack houston and lone star so the proposal is to increase the hourly rate for adjunct faculty by 20 to 30 percent so a 20 percent increase is closer to six hundred thousand dollars in new money a 30 increase is close to nine hundred thousand now this gets a little more money into our adjuncts right now so that when we fix it in the future we can reshift the compensation um without having to come up with more money to address our adjuncts right so it's our it's our way of minimizing reducing the problem now and creating a path forward for us in the future to actually completely correct this issue for our faculty thank you well what was the lab paid at such a lower rate so historically i am not the one to answer that it's been like that for a while

[Speaker 4] (50:47 - 51:22)
anybody care to comment from the the two-thirds pay for laboratory instruction is a board policy that seems to go back to about the year 2000 nobody is in i haven't found documentation on the rationale you know i i could speculate but i won't um and it's just it's you know it's a board

[Speaker 6] (51:22 - 51:31)
policy and so that's the way it is jacob do you have any idea the proportion of adjunct to full-time

[Speaker 4] (51:31 - 51:41)
faculty that this would impact it roughly 50 50 about 150 full-time faculty a slightly more

[Speaker 6] (51:41 - 51:48)
adjunct faculty if i was a full-time faculty member i would be mad that you're starting with

[Speaker 1] (51:48 - 53:59)
so me being full-time there is a significant number of our full-time faculty that teach overload and overload and adjunct pay are treated basically the same the calculation that we did is part of this will result in an average increase for all but 18 of our full-time faculty who teach overload in as much as three thousand dollar increase per year so this this this does benefit anybody who wants to teach extra courses and and keep in mind our our adjunct rate is calculated separately and differently from our full-time rate and the 20 increase gets us more competitive on average for all of our adjunct professors compared to the other institutions this is this is not uh this is not a huge windfall for adjunct faculty this is an effort to make them more competitive and make our our compensation more comparable with other institutions and because so many of our faculty uh teach overload courses they will benefit from this as well now the the only there are 18 into it so it's more complicated than this and i'm not now it's not the time to go into this but but essentially our goal would be to benefit all of the faculty and for the 18 individuals who have been here for so long that this might have a negative impact on them uh for 20 or 30 thousand dollars we can hold them harmless as well so that there is fair and equitable increases for everyone who teaches overload or adjunct courses at the institution jacob i think we were told

[Speaker 3] (53:59 - 54:13)
years ago that for instance at san jack they have a higher percentage of adjunct than we than we do is that still the case or is it going back the other way or do we know uh if we don't

[Speaker 1] (54:13 - 1:07:10)
know that's fine i don't know off the top of my head but but what i will say is the last time i looked at that comparison which was last fall i think um we we have a higher number of full-time faculty than the larger institutions that rely more heavily on adjunct professors the other thing that i would say we have a large number of full-time professors and our full-time professors teach a lot of overload and and so our our our students typically have more opportunities to get instruction from a full-time faculty member at lee than they would at uh san jack houston or lone star but i don't have those percentage that those percentage right off the top of my head all right erp investment requests uh so this year the budget was 225 000 next year and the following year we need three million dollars per year and once implementation is over then it drops down to less than a million dollars for the licensing for work day we would no longer be paying the extra funds for implementation and and so these are we have two more years of significant commitment on the erp implementation and then we'll have two million dollars a year that we'll be able to reallocate and likely put back into infrastructure and maintenance and repairs for the college all right so when we look at all of these issues right everything that i've discussed so far have simply been maintenance related issues right how do we correct equity issues how do we get our employees cola how do we correct some adjunct issues we weren't actually talking about new initiatives we weren't talking about new positions we weren't talking about adding anything to the college simply correcting some some issues that make it difficult for us to be competitive this year as part of the budgeting process we had each cabinet member develop a strategic plan look at their short and long-term goals and objectives identify what they need in terms of resources and then tie those needs to their key performance indicators and expected outcomes as it relates to executing their strategic plan and helping them to be more successful in achieving those goals and objectives last year and i can't speak to prior but i think it's fairly similar uh we would get all of the requests from from all of the divisions and we didn't have a very good way of comparing one request to another right which is more important a faculty member or you know switches and hardware for it right right there wasn't a good way for us to create those comparisons this has been a very helpful exercise for us in helping us to prioritize what we think is the most important and what we think is the least important now there is in your appendix kind of a breakdown of all of these requests and uh i'm not going to discuss those in detail today uh i will discuss these in detail once we've narrowed down our budget and and i actually know what we're going to request the reason i'm sharing this with you is i i wanted to show you a little peek behind the curtain so that you can see what's being requested how many of these requests are coming in the way we're justifying it how we hope to improve the circumstances of the college as as we go through these requests now 2.3 million dollars might be all of the new money that we have this year we could easily cover all of the new money in terms of addressing cola and equity increases and adjunct faculty we're going to have to prioritize and we're going to end up saying no probably to most of these requests but these are going to be real ongoing requests right these these issues these needs that will persist and so what you're seeing now is the same thing that you're going to see next year if if we say no to these items and we're trying to be as methodical as we can to ensure that every dollar we invest into the college comes with a high rate of return and hopefully this helps you to see that and offline i'd be happy to answer any questions that you might have about any one of these particular requests but this has been a value-added activity for us from an administrative perspective when we did the retreat in san jack we were actually listening to each other's presentations regarding strategic planning and these requests and how important these requests might be to to help their division move forward and so this isn't happening in a bubble the entire leadership team is seeing and vetting each other's plans and we're looking at these requests and going through a process to make sure that collectively as a leadership team we're trying to make the best decisions possible there are also one-time expenses now the way that we've handled one-time expenses in the past is by allocating budget surpluses from the prior year so last year we had six million dollars the year before that we had twelve million dollars this year we're going to have a lot less than that to allocate and renee is going to go over that presentation during the regular board meeting with regard to what what we expect to be available at the end of this year we are hoping to do the same thing with that and our top priority this year for one-time expenses are our it services we have 117 switches that are end of life now switches are all over campus and they are what help us to maintain our internal network right connectivity to the network connectivity via wi-fi and when it says end of life what that means is they're out of service there's no repairs there's no way for us to fix it there's no software updates they're toast right these these these are switches that are no longer going to be functional for us in any way and the 3.3 million dollars that's the total to replace all 113 we can actually break that out and pay for that at six hundred thousand dollars over the next five years which is probably the approach that we would take so that we can address some of the other needs that you see with regard to our it infrastructure for many years the college has been doing a much better job at identifying and addressing our deferred maintenance from a facilities perspective however during that time we have been neglecting our it infrastructure and and so what you see here is catch up on a lot of ongoing maintenance repair and replacement that should have been taking place in i in the in the it info world on our it infrastructure and hasn't and and so these are important on the bright side it won't cost nearly as much for us to address our it deficiencies as it has with our deferred maintenance on a facilities from a facilities perspective and i did not put this in the slide but we have four and a half million dollars of authorized money for facilities improvements right you you approved that money last year that we're not going to be able to spend this year and so our intent is to simply continue to work on those projects next year and not allocate any new funding as there are still many projects that need to be done and there there is legitimately a limit to how much money we can spend and how many improvements we can make every single year so we we were allocated a little over nine million dollars last year we spent a little more than half of that so so this this will this will keep john and his team busy for the next 12 months without allocating any new resources all right i want to talk finally about our reserve and our insurance and i need to go quickly because we're out of time so our policy requires four months four to six months of reserves and the way that we define reserves are funds from prior operating periods that have no obligation against them right the the money that we have in the bank that we invest and our insurance funds that we set aside have no restrictions right it's not part of our operating budget there's no intended purpose for those funds we simply hold those in reserves and under our policy we maintain the minimum amount required four months is is our target right as opposed to trying to get to the six month marker when you consider how many other institutions do their reserve calculation we are very well reserved so we use a four month reserve other institutions typically use 180 day cash on hand calculation and under a cash on hand calculation you're looking at all of your available cash so this could be funds from prior periods like our reserve plus your regular operating funds that are part of your current year operating budget and if you have enough to cover 180 days or six months of expenses then you're considered to be adequately reserved if we did a days cash on hand calculation based on our finances as of the end of april we have 316 days cash on hand right where most institutions are targeting 180 days so our way of managing reserves is very conservative and and we are more than adequately reserved for likely any contingency that might arise now several years ago we decided to eliminate our catastrophic named storm coverage right it was costing about a million dollars for us to have an insurance policy that would cover the institution in the event of damage from a named storm the idea behind that was to build up enough cash reserves that if we had significant damage from a named storm we would have enough money set aside to pay for that so instead of just lining the pockets of the insurance companies we would hold on to that we would enjoy the interest and the income earnings from those funds and we would protect ourselves in the event that there was a major uh that there was major damage to the college in working with Gallagher they do a 200 year history and and based on their 200 year history and looking at all of the storms that hit they projected that the largest potential damage or the largest expense that the college might incur for any one storm is 14 million dollars and and that 14 million dollars was based on Harvey which we had very little damage from as an institution so what I'm proposing with this is that we rethink the million dollar commitment that we're making every year into our insurance reserve and look at the funds that we've already set aside as sufficiently adequate to protect the institution in the event of a major catastrophe and that would allow us to reallocate those funds to address some of the other needs that I've already discussed so questions on our insurance reserves and the potential requests that you'll see to reallocate those funds from going into an insurance reserve back into the

[Speaker 5] (1:07:10 - 1:07:58)
regular operating budget concerning the insurance insurance reserve and I'm uh that we've been uh holding money for three or four years and not paying that uh premium could you would calculate you you that's the first time I've heard the 14 million dollar uh number what would the cost be if we had to go out for a bond to cover that 14 million dollars and and you don't have to answer that now but that's when we first looked at that several years ago that's the way I looked at it is uh how much would it cost us if we had to actually go borrow the money to take care of the damage it was significantly less than what we were paying in insurance premiums so

[Speaker 1] (1:07:59 - 1:09:06)
you know I I would estimate that we're probably looking at five to seven hundred thousand dollars to execute a bond right between uh hosting an election processing the paperwork paying the fees associated with issuing the bonds that that would be a sunk cost with no benefit back to the institution and and then on top of that we would have the interest associated with however much debt we were to borrow still from an expense perspective you know a million dollars a year to the insurance company with no residual benefit uh you know I can see how it would make sense to to use that as the ultimate failsafe in the event of a major catastrophe but but what I what what I'm suggesting is the reserves that we have are adequate are adequate and if we were to have a major issue my recommendation based on a 14 million dollar loss would be that we covered that out of reserves and then start back up uh the the following year trying to reinvest back into our reserves to build those

[Speaker 2] (1:09:06 - 1:09:24)
funds back up think about I think part of the insurance discussion also was when we realized that each building had its own deductible yes and after you paid out a deductible on any building that was damaged you were in for millions of dollars already exactly right that yeah the

[Speaker 5] (1:09:24 - 1:09:38)
deductibles plus the million you've already sunk and into the premiums into the premiums and we had no losses that even reached a deductible on any building in the 20 or 30 year from a storm

[Speaker 1] (1:09:38 - 1:10:38)
name storm I I favor and admire the model that the college has adopted and this took place before I was here but but this is a a sound financial approach to protecting the college in the long term you know not only are our reserves enough to to manage what would likely be uh an unlikely damage to the facility because of a named storm those funds are available in the event that we have some other unforeseen catastrophe at the institution and so we really are well prepared for virtually any inevitability right to any any damage to the college that would be in excess of you know the 35 million dollars that we have available right now is going to wipe out the entire city of baytown right I mean if it's if it's wiping us out to that level the town's gone and we have broader issues as a community than trying to figure out how to reopen the college

[Speaker 2] (1:10:39 - 1:11:32)
I think the calculation for reserve is based on operating revenue it is which is assuming you need to supplement your operating revenue for a period of time and we talked about spend down models I would never be in favor of spending down our reserve uh for any longer than just a period of time to stabilize we would never spend down our entire reserve I can't see that scenario I think it's a reserve that we have to have to be in good financial standing right for our financial ratings it's just part of what every taxing entity is supposed to have to be able to function in a time of crisis or emergency and if we want to include structural repairs to our facility as part of that emergency I think that's a conversation we can have I agree okay are you at the end of your I am finished if there are no other questions other

[Speaker 3] (1:11:32 - 1:11:45)
questions I will say that in my 20-some years that's the most comprehensive first one at the budget I've had so I appreciate all the work you guys have put into that excellent

[Speaker 2] (1:11:45 - 1:12:05)
thank you thank you very much yeah for our audience we are still in our budget workshop so you didn't miss anything okay uh matters of concern for future agendas anything all right hearing none we are adjourned from the budget workshop anybody need a couple minute break