The College's 2019-2020 adopted budget predicts a negative end fund balance of -$6.7 million. But this number actually belies the severity of Palomar’s fiscal crisis.
Per the adopted 2019-2020 budget, the College anticipates spending $11.7 million more than it will receive in revenue for its general fund.
To offset an eight-digit deficit, $5 million will be borrowed from Fund 69 (retirees benefits fund) and transferred to the general fund to reduce the deficit. The math is as follows:
The -$11.7 million loss was acknowledged publicly to attendees at the September 11th, 2019 Budget Workshop, yet two trustees independently confirmed they never heard that number during budget presentations.
How is this even possible?
Governing boards are in place to provide oversight and accountability, to ensure fiscal solvency, and to allow governance of public agencies “by the people”. Yet, Palomar’s trustees are routinely denied full, complete or accurate information regarding the expenses and finances of our College.
The Financial Crisis Management Assistance Team (FCMAT) will be on our campus this week to conduct a thorough evaluation of Palomar’s risk for fiscal insolvency. This timely visit includes a presentation to the Governing Board on Tuesday, September 24th. FCMAT’s presentation to the Governing Board identifies risk factors for insolvency, including the following:
“frequent turnover in the chief business official..... position”
“budget revisions not……..communicated to the Board regularly”
Regarding the first bullet point, four vice presidents have departed Palomar College in the past 16 months, including respected former Vice President of Finance – Ron Perez – who left five months ago in unceremonious fashion. Losing experienced vice presidents disrupts the workflow and efficiency of the affected department and this disruption can percolate throughout a college. According to several sources familiar with the situation, the loss of VP Perez’s institutional expertise and leadership, combined with the instability and increased workload experienced across campus, has left the Finance department spread very thin.
For the second bullet point, consider the events that occurred at the 9/10/2019 Governing Board meeting. The 153 page 2019-2020 Budget was not provided 72 hours in advance to the trustees as required by the Brown Act. Instead, the trustees found a hard copy of the '19-'20 Budget on their chairs at at the start of meeting. The trustees were then asked to approve the budget, without reviewing it.
Trustee Miyamoto – apparently recognizing that the Fiscal staff are overextended (due in part to the loss of former VP Perez) – publicly thanked Carmen Coniglio and Brandi Taveuveu for their careful work on the budget document even while expressing disappointment that the trustees were not given time to review the document. Trustee Deerfield abstained from voting on the budget entirely.
The trustees were told they must approve the budget at this Board meeting or risk being penalized by the Chancellor’s Office for not submitting an approved budget by September 15, 2019. I think this is a false choice. President Blake should have recognized that coercing the Board to approve a 153-page Budget that they did not have a chance to review strips the Board of their power to perform their fiduciary duties.
Any leader who respected transparency and the important role the trustees play in oversight would have suggested reconvening later in the week (e.g. 9/12 or 9/13) to vote on the budget. A subsequent emergency meeting would have provided trustees an opportunity to review the document, exercise their duty, and still allow the College to meeting the Chancellor's Office deadline.
It is worth revisiting this blog post documenting how the Fiscal Recovery Plan was hidden from our trustees, even though one of the Board’s goals is to, “Monitor implementation of the College’s Fiscal Recovery Plan which ensures that College remains fiscally viable and meets fiscal standards.”. Given our current fiscal crisis, shouldn't a deep dive into the Fiscal Recovery Plan be an obvious component of fiscal stewardship?
Another prior blog post analyzes President Blake’s pattern of hiding excessive expenditures on the consent agenda, another stunning example of how President Blake denies the trustees of their ability to evaluate expenditures and ensure that the college is spending prudently.
Without complete and accurate information, the trustees cannot provide true oversight, and thus have little actual power. Frankly, it renders our Board a rubber-stamp agency, and makes a mockery of our trustees’ roles in governance.
President Joi Lin Blake has repeatedly told the trustees that they should get all of their information from her. If President Blake insists that trustees rely solely on her for information (which in and of itself is undemocratic in principle, as trustees are publicly elected officials), then the responsibility to fully and accurately inform the trustees is exclusively hers as well.
To me, it is clear where the blame lies in this fiscal mess.