VTC President Updates Trustees On Growing Deficit
Vermont Technical College expects to end the current fiscal year with a larger than anticipated deficit.
VTC has been trying to deal with an ongoing shortfall without making significant cuts and last year the Vermont State Colleges Board of Trustees agreed to loan the college $2.5 million.
Trustees asked VTC President Philip Conroy to brief them this week after an article appeared in the Herald of Randolph detailing the increasing deficit.
Conroy told the board that the deficit for the current fiscal year will likely reach $2.4 million, $1 million more than anticipated. The college’s overall budget is approximately $36 million.
Conroy’s estimate is based on preliminary first quarter figures and could change over the course of the fiscal year which ends June 30th.
Last May, the trustees approved the loan to VTC and required that the college submit a four year business plan detailing how it would erase the deficit and pay back the loan at 4.5 percent interest. The money for the loan is coming from a state colleges system reserve fund.
The news of the higher than expected deficit means things are not going according to plan, at least initially.
Conroy says that’s because fall 2013 student numbers were down. 1,302 students were enrolled at the college, the lowest fall number in seven years.
Vermont State Colleges Chancellor Tim Donovan says less than 18 percent of the money to operate the five colleges comes from the state. As a result there is a heavy reliance on student tuition.
"The real proof in the pudding is next fall when the first round of effort is realized from all of the things that we've been doing." - VTC President Philip Conroy
“We’ve had a saying for years in this system that one bus load of students not showing up can make the difference between being in trouble and being in good shape, and that’s the case here. One busload of students,” Donovan says.
According to Donovan VTC’s deficit is large, but as a percentage of the overall budget it is not unprecedented among the state colleges.
He says what is unusual is the hands-on approach the trustees are taking by offering a significant loan and requiring that the college submit a business plan for their approval.
VTC’s dilemma is clear: Simply making cuts and raising tuition and fees to erase the deficit risks making the college less attractive to the potential students it badly needs.
Conroy said there have been cuts in discretionary spending and equipment purchases. There has also been a partial freeze on filling vacancies. One senior administrator position has been eliminated.
“The one area that we will not sacrifice is if that area touches the quality of the student experience, we’re going to proceed with the spending,” he told trustees.
The $2.5 million loan will allow the college to avoid making drastic changes while it tries to build enrollment.
Conroy outlined a number of steps the college will take to market itself and provide incentives to students to enroll and to stay for a full four years. He said there’s been a decline in the number of students who continue beyond their two year associate degree.
He said the school will implement a “guaranteed job placement program” for four year degree students. Graduates who don’t find jobs can take additional courses at no charge. Conroy said there is little risk in implementing the program because the lowest placement rate for a four year degree at VTC is 95 percent.
The school is also considering selling land that is part of VTC’s Williston campus.
Conroy assured the board of trustees that VTC will be back on track to erasing its deficit.
“The real proof in the pudding is next fall when the first round of effort is realized from all of the things that we've been doing,” he said.
Conroy said there are early indications enrollment is beginning to rebound: There’s been an 11.4 percent increase in applications for the fall 2014 semester.
The college has also addressed a lack of clinical openings, which led to a loss of nursing program students.
On the revenue side, Conroy said VTC is increasing fees for student labs to bring them in line with costs. A new methane biodigester, fueled by manure from the college farm will begin generating electricity this year and a dairy and produce plant at the farm will also bring in new revenue beginning in the fall.
None of the other state colleges is running a deficit. Donovan says unlike the other colleges, enrollment in VTC programs is more sensitive to changes in the job market.
“The nature of this institution is to have programs that are geared to some very specific occupational areas, so it’s a little more subject to some of these external forces.”
He says the declining number of high school graduates is also having an impact on all of the state colleges.
“All of our colleges are operating close to the margin,” Donovan says. “There’s not a lot of room for a lot of error.”