BUTLER TWP — Butler County Community College officials still are evaluating the impact a smaller county contribution will have on the college’s $27 million budget for 2013.

On Dec. 26, the county commissioners approved the $196 million county budget for 2013 that included several cuts to lower the county’s proposed property tax increase to 1 mill, down from 2 mills. Among those reductions was a $333,000 cut to BC3, dropping the 2013 county allocation to $4.71 million.

BC3 President Nick Neupauer said because most of the BC3 staff just returned to work Wednesday from the holidays, they had “not yet evaluated the impact (of the cuts) comprehensively.”

He said college officials met with the commissioners while drafting the BC3 budget and received word over the holiday break that cuts may occur “so it was not a great surprise when we returned.”

“We understand and respect what the county commissioners do, and respect the difficulty of the decisions they make. The allocations we get, we are extremely appreciative of,” Neupauer said.

The cut to BC3 was based on a report by county Controller John McMillin, whose review of BC3’s annual independent audits showed an average of $1 million in annual surpluses since 2002-03, resulting in a BC3 general fund balance today of more than $12.2 million.

In 2001, that balance was $673,233.

McMillin said, “I feel (the accumulated BC3 balance) was directly related to the millage increase, and the non-need for that increase. The original (county) budget showed a 10 percent (about $50,000) increase in the BC3 appropriation.

“The larger point is the county’s budget is showing a fund balance going to zero, with reserve fund balance remaining at the end of 2013. At the same time, the college has been accumulating a disproportionately large reservoir of unrestricted monies.”

Neupauer countered by saying that when BC3’s fund balance is compared with the 13 other community colleges in the state, “we are about smack dab in the middle.”

Since 2001, when the college’s operating budget was $12.46 million, its budget has nearly doubled to $24.61 million in 2012. In that same time, the college’s operating fund balance has grown to nearly 20 times its 2001 level.

Its fund balance now is nearly 50 percent of its operating budget.

By comparison, Westmoreland County Community College had an operating budget of $36.6 million in 2012 and finished the year with about $4.5 million in unrestricted funds, equivalent to just more than 12 percent of its operating budget.

While having a projected $109.5 million operating budget for 2013, Community College of Allegheny County had $14.6 million in unrestricted funds at the end of 2012, the equivalent of 13.3 percent of the college’s budget.

Community College of Beaver County in 2012 had an operating budget of $18.2 million, but finished the year with just $685,569 in unrestricted funds, less than four percent of its operating budget. However, Steve Danik, vice president of finance and operations for Community College of Beaver County, said the trustees would like to bring its unrestricted fund balance up to 10 percent of its operating budget, about $1.8 million.

Talking about BC3’s budget and fund balance, McMillin said, “I’m of the opinion that we could sequester BC3’s full allocation for a full year, and BC3 could survive, and survive comfortably.

“When the college presents its budget to the county, they do not present any of that unrestricted fund balance as an offset (to balance the BC3 budget). The point is, the community college should not be making $1 million a year, and stashing it away, then asking for more each year.”

Jim Hrabosky, finance director for BC3, explained the fund balance has accumulated because of several factors, including enrollment revenue exceeding projections some years or low department spending other years.

“We’ve also been very successful at our off-campus sites, where we charge double tuition,” he said.

McMillin, who has brought up BC3’s growing fund balance at county budget meetings for several years, noted the annual $1 million profits started before BC3 began expanding to branch campuses and before it started charging double tuition outside the county.

Hrabosky said auditors do not allow the BC3 fund balance to be categorized as restricted but, in reality, the money is set aside by the BC3 trustees for capital projects.

“Our ultimate goal is to get a lot of our facility improvements half paid for by the state. It just makes good financial sense,” he said.

“(Having that balance) allows us to have an answer when we apply for a grant and they will ask us, ‘Where is the local match coming from?’” he said.

“Our goal is that we do not have to approach the county for that match.”

Neupauer said such foresight in fiscal planning has allowed BC3 to expand successfully into other counties and will be necessary to fund future projects, such as the college’s Beck Library and upgrades to its Children’s Learning Center, which occupied the former campus bookstore after the former learning center building was damaged by a fallen tree and then demolished.

Neither building project is funded yet.

County Commissioner Bill McCarrier, who is chairman of the commissioners and who also is a BC3 trustee, said, “If the need comes up in the future, which it’s going to for the college’s library renovation, they will have the money in their fund balance and won’t have to approach the county to help with the bonding.”

Nonetheless, at least for 2013, the appropriation cut to BC3 was necessary, McCarrier said.

“It makes fiscal sense for the taxpayers of Butler County. A budget is something that’s never set in stone. It’s a guideline and it’s required by law that the county have a balanced budget,” McCarrier said.

“We really didn’t want to raise county taxes 2 mills. It looked like we were going to have to in the beginning.”

But he added, “I think all three commissioners believe in the college very strongly, and we’re not going to let them flounder out there.”

By comparison with BC3, McMillin said Pennsylvania school districts are required by the state to have no more than eight percent of their operating budget as a reserve, a measure implemented to prevent schools from accumulating exorbitant amounts of money.

He also suggested to the county commissioners to withhold one of BC3’s $1.2 million, quarterly checks each year, reducing the college’s excess fund balance to “a level that is reasonable for an organization of that size and, at the same time, avoid further county tax increases.”

That suggestion was not acted on this year by the commissioners.

Neupauer said, “Any time that we receive cuts in state, federal or local sponsor funding, it hurts. The trustees and the college as a whole always look out for our students.

“We’ve done a great job of not raising tuition over the years. Last year, we raised fees by $4, but we did not raise tuition. We take great pride in that.”