CHICAGO – The Chicago City Colleges approved a $443 million budget for fiscal 2018 late last week that a local research organization said will begin the work of stabilizing the system’s damaged finances.
The plan approved by the Chicago City Colleges board of trustees for the system is balanced without a tuition or property tax increase and will reduce operating costs by 16% from fiscal 2017 while seeking to rebuild reserves tapped to manage through the state’s record budget impasse.
“By making operational efficiencies and prioritizing investments in students and communities, this budget gives us the means to enhance the quality and relevance of our programs while remaining affordable to students,” Chancellor Juan Salgado said in a statement.
The system intends to sell its downtown headquarters and will move staff closer to individual schools It also will cut its senior leadership compensation by 10% as well as trim 120 administrative positions, a 2.5% cut. CCC which is formally known as Community College District 508 is the largest community college system in the state serving 90,000 students annually at seven colleges and five satellite sites city-wide.
While the new state budget includes a 10% cut in higher education funding from fiscal 2015 levels, the budget provides more certainty for planning.
“Following a time of brutal uncertainty for Illinois’ local governments, City Colleges continues to show restraint and thoughtful planning in order to balance its budget and ensure sustainability,” Chicago Civic Federation President Laurence Msall said in a review of the budget.
The federation remains concerned about the long-term impact of financial practices, including reserve use and delayed capital work that were “necessarily” implemented by the district in 2016 and 2017 to weather the state budget delays.
“While we remain concerned about reduced liquidity and backlogged capital investments, we recognize that the 2018 budget is a strong first step to strengthen the district’s position and reestablish reserves,” Msall said.
The system intends to use the proceeds from land sales to rebuild reserves, although it does not have a projection on how much might be raised. The district had carried a healthy fund balance of 48% until 2015 when it was drawn down to 28% to fund construction costs. The fund balance has since dropped to a narrow 4.8% due to a $59 draw to manage through the state budget impasse.
The impasse dragged the system’s once high-grade ratings down. Fitch Ratings earlier this year dropped the district's issuer default credit rating and rating on $242 million of general obligation/alternate revenue bonds from a 2013 issue to A-plus from AA-minus. The alternate revenues pledged include tuition and fees and state grants.
The downgrade "reflects the financial deterioration that has been brought on by a prolonged revenue stress," Fitch wrote.
The district relies on state aid for 30% of its funding. Various property related taxes account for 33% of its revenues and federal grants make up 20%. Tuition revenues, net of scholarship allowances, make up 14%.
S&P Global Ratings last year hit the district with a two-notch downgrade to A-plus from AA and socked it again in April with a four notch hit that lowered it BBB.