MCC plans to dip into reserves, again

McHenry County College is planning to dip into its reserves to update its computer system and perform safety upgrades next year.

The proposed operating budget for fiscal year 2012 includes $2.3 million for safety-related improvements identified earlier this year in an analysis done by ISES Corporation, MCC Chief Financial Officer Larry West said at a finance and negotiations committee meeting Thursday.

Planned improvements include replacing the fire alarm system, installing new sprinklers and back flow prevention devices, and performing sidewalk repairs, West said. The list also includes $628,000 to repave parking lot A, but officials will wait for the facilities master plan to be completed by next spring, West said.

“What we could actually afford and was safety related, we put into the budget,” he said.

Funding the safety improvements is “a big move” for the college, Trustee Dennis Adams said. “Every year the cost of fixing is going to go up. The longer we wait the more it is going to be costly to us. This is the prudent thing for us to do.”

The college also wants to spend nearly $2.4 million to update its computer system, which currently uses a 1980s, Cobol-based program. “It's time to get into the 21st Century,” West said.

The college is also setting aside $2.5 million for expansion plans. “We decided to continue funding our savings account,” Trustee Dennis Adams said.

MCC is projecting $44 million in revenues and $47.5 million in expenses in its operating budget for next year.

The college is projecting $19.1 million in operating fund balances plus $7.8 million in its restricted operations and maintenance fund at the end of 2012.

Last year, the college ran a deficit of $3.7 million, West said.

“People look at this and when they don't understand budgeting, they get all anxious,” MCC President Vicky Smith said. “A ‘deficit budget' is not a bad word, because we have money in the fund balance.”

The proposed budget also accounts for $3.5 million to update the culinary program, including building a new culinary lab, and $750,000 to buy 20 acres adjacent to the college, West said. Both expenses will come out of the restricted fund, he said.

The “rule of thumb” says that the college should always have enough reserves to fund at least three months' worth of operating expenses, West said. At the end of 2012, MCC projects it will have enough money to fund six months of operations, he said.