Today, the Forum released the third in its series of financial reports on local taxpayer-funded entities in Metro Milwaukee: a comprehensive fiscal assessment of the Milwaukee Area Technical College (MATC). This report uses the same fiscal monitoring methodology as 2009 reports on Milwaukee County and the City of Milwaukee, which were recognized with an award for "most effective education" earlier this year from the Governmental Research Association.
Like the city and county reports, the report on MATC paints a somewhat alarming picture. It finds a local institution that has taken on increased importance in light of the economic downturn and community-wide efforts to increase the number of college degree-holders, but one that has been hit hard by the recent decline in property values.
Key findings from the MATC fiscal assessment include:
- Property tax revenues comprise roughly 60% of MATC's budget, causing it to rely on the property tax more than most local governments and school districts. MATC's budget has mirrored the ups and downs of the real estate market, with revenues climbing much faster than the rate of inflation from 2005 to 2009, but falling in the next two years.
- MATC has seen a steady decline in revenue from the state. The college was able to weather this decline when overall revenue growth was strong, but faces difficulty doing so in today's revenue climate.
- Student charges have been the college's fastest-growing revenue source of late, with tuition and fees rising nearly 40% since 2005, raising questions about impacts on student access.
- Fringe benefit and salary increases were responsible for about three-quarters of the college's expenditure growth during the five years under review, with health care expenditures rising twice as fast as those at the City of Milwaukee and Milwaukee County.
- A newly developed imbalance between ongoing expenditure needs and revenue capacity will continue to grow without substantive budgetary corrections, reaching a projected $11 million to $62 million within the next five years.
This turbulent financial picture leaves MATC little choice but to examine current levels of employee staffing, pay and benefits, which are quite robust based on comparisons with state and national peers. For example, the report finds that MATC ranks first among a group of 85 national peers in operating expenses, salary expenditures and fringe benefits expenditures per full-time equivalent student.
The report cautions, however, that any significant expenditure reductions must weigh impacts on the college's academic quality and its capacity to meet recent double-digit increases in enrollment. It also suggests that college leaders step up efforts to establish clear performance goals and collect performance data as part of the effort to address difficult budget issues.
Finally, the report offers an opportunity to compare the fiscal practices and condition of MATC - which operates as a local authority and is governed by an unelected board - with local governments operating under traditional elected models. It notes both similarities and differences in the manner in which these entities have responded to common fiscal challenges, and offers insights into what this tells us about the debate over government structure in our region.