4 Things To Know About City Colleges of Chicago’s Shaky Finances

City Colleges of Chicago generic
Marc Monaghan / WBEZ
City Colleges of Chicago generic
Marc Monaghan / WBEZ

4 Things To Know About City Colleges of Chicago’s Shaky Finances

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The City Colleges of Chicago board of trustees approved the community college systems’ $447 million budget Thursday, despite protests and pleas from employee unions to reinstate 29 non-faculty layoffs included in the budget proposal.

Tensions ran high as faculty and staff criticized administration for increasing the district office budget while laying off clerical staff, library assistants and two part-time college advisers. They also railed against recent changes to the adult education program that cut instructional hours.

Chancellor Juan Salgado was repeatedly interrupted by boos from the crowd as he made his monthly remarks to the board.

The budget watchdog, the Civic Federation, was more sympathetic to the community college system’s financial situation. They ultimately supported the budget but expressed caution about the system’s future financial health as enrollment continues to decline.

Here are four things to know about City Colleges’ financial situation:

Enrollment declines driving a lot of the budget concerns

Enrollment at City Colleges’ seven campuses has dropped overall by nearly one third since 2011. There are many reasons given for the decline, depending on who you ask: a good economy, Chicago’s declining population, the consolidation of programs at specific colleges.

Whatever the answer, the reality is that fewer students not only meant less tuition revenue, but also less money from the state. Illinois determines how much money to give community colleges based on an average enrollment of the previous three years. City Colleges has seen enrollment declines at a higher rate than their peers. This past spring, City Colleges’ enrollment declined slightly more than the state average for community colleges. Salgado has been promising enrollment management plans for each college since he took the helm in 2017. Now that he’s put permanent leadership in place at most of the colleges, he’s expecting to unveil those plans this fall.

Building sale keeping City Colleges in the green

Any financial planner will tell you that balancing the budget on a one-time payment isn’t advisable, but that’s exactly what City Colleges was forced to do this year. They’re putting $12.9 million from the $31 million sale of their district headquarters toward this year’s budget. The sale was delayed for unknown reasons, and the board recently approved a new buyer, Phoenix Development, in June. City Colleges would not comment on what happened with the previous buyer, Zidan Management Group, until the new buyer closed on the property.

The use of one-time funds was a specific concern for the Civic Federation.

“While the Civic Federation supports City Colleges’ budget for the upcoming year, we are disappointed that a significant portion of the proceeds from the sale of the downtown headquarters are being used to balance this year’s operating budget,” Civic Federation President Laurence Msall said in a press release. “Additionally, the ongoing decline in student enrollment is troubling and bears close watch, as it significantly affects the district’s bottom line.”

Salgado told WBEZ he doesn’t want to continue using building sale dollars to balance future budgets, but said it does provide a cushion for the district as it tries to address negative enrollment trends.

Reducing bad debt

In some ways, declining enrollment might be partially out of City Colleges’ control. But this budget includes an multimillion dollar mistake the community college system is now forced to confront. In 2016, City Colleges decided to eliminate payment deadlines that would automatically remove a student from a class if payment wasn’t made. Instead, a student could continue taking the class, but was then prevented from enrolling the following semester. The student also received a hold on their transcript until they paid their debt. When students didn’t pay, the debt was transferred to City Colleges. As a result of this change, the community college saw bad debt increase to $10 million. This budget includes $8 million to finish paying off that debt.

By reinstating the payment deadline, City Colleges’ leadership said it hopes to not only reduce bad debt, but better connect students struggling to pay for college with financial aid services. But Salgado also said they anticipate the reinstatement of the so-called drop clock to negatively affect enrollment.

Tense labor relations continue

City Colleges negotiated contracts with three unions this past year, avoiding strikes with the faculty union and finally coming to an agreement with the clerical union after a one-day strike.

But union leadership and members are frustrated with the current budget. Dolores Withers, president of the union that represents clerical staff, said she feels disrespected by the lack of communication over layoffs. Tony Johnston, president of the faculty union, made a list of demands at Thursday’s board meeting, which included reinstating the 29 positions. He also requested the board decentralize some academic programs, including IT, human science, education and natural sciences, “so that students from all over the city can take advantage of these programs” at their neighborhood community college. These programs were centralized at specific campuses during the City Colleges “reinvention” that began in 2011.

The anger among staff signals that as City Colleges grapples with how to remain financially stable and turn the tide on enrollment, relationships with faculty and staff will continue to be a source of tension.

Kate McGee covers education for WBEZ. Follow her on Twitter at @WBEZeducation and @McGeeReports.