(0:00 - 0:26)
Okay, we are ready to convene the budget workshop and the 1st order of business for our budget workshop is the swearing in of our newest region. Who is that Pam Warford. I was about to say, Mr. Rogers, make sure your camera's ready.

(0:26 - 0:37)
Mr. chairman, who is this guy? Yes, sir. Okay. Yes, we're very, we are very, we are very honored.

(0:38 - 1:20)
We are very honored to have our former mayor, Steve Don Carlos, Baytown attorney to swear in Regent Pam Warford at this time. Square firm, which you will pay for this office. I guess he actually is nearby.

(1:23 - 2:04)
I didn't realize it was actually a notary. Anybody, I know I didn't know the key word because I'm just a lot of attorneys. Yes, a lot of the smaller, the office more likely he does either. 

Yeah, either office manager or or you are making that right? No, we have several around the college. I just wanted to give him a hard time. 1 of the picture same 1 picture.

(2:05 - 2:29)
Work for the college. A bill for the camera. Yeah. 

Okay. Yeah. Okay, so at this time, we will start our.

(2:30 - 2:38)
Budget development workshop shop off with a statement from Dr. Vena way. Thank you so much. Mr. Chairman.

(2:39 - 3:56)
I apologize for the voice and I do have to say, Regent Santana. That if I were a hospital employee, I would have violated HIPAA because I disclosed to Regent Warford that I infected you with influenza a and so and now I'm telling everybody. So, walking, walking HR violation, I've been told and a walking HIPAA violation if I were employed at the, at the hospital. 

So, my apologies. Okay, thank you. Thank you. 

So, at previous budget workshop meetings, we have spent time clearly. Expressing the colleges needs the board has been provided with all the rationale and the budget. We are here tonight in order to provide information that you might need to facilitate the board's discussion. 

I need to be clear that the administration is seeking your support for meeting the needs of the college. I need to also be clear that the additional funding we have been allocated through house bill 8. Is very new, and the future is uncertain. We are only guaranteed the funding allocated to us for 1 year.

(3:56 - 4:16)
This increase of over 9Million dollars can be used to address established needs and does not structurally change the budget, giving us flexibility in the future. The 9 and a half Million dollars is not a gift. It is an amazing accomplishment that should be celebrated.

(4:16 - 4:35)
Our Lee college employees. Created the conditions that led to our students achieving the highest level of performance in our state. Having spirited discussions over how to use this funding is a great problem to have.

(4:36 - 4:51)
And I'm just so proud of our amazing college. As a reminder, here are the needs. A 6% race to ensure we attract and retain talented faculty and staff.

(4:51 - 5:07)
An increase in the maintenance budget to 2 to 4% of aggregate replacement value. A fund to ensure the college against damage due to name storms. An increase to our operating reserves and contingency funds.

(5:07 - 5:22)
And to continue to build capacity in our tax rate. For a future bond referendum, lastly. I want to take a moment to commend our amazing CFO.

(5:22 - 5:40)
Annette Ferguson every single year. She works tirelessly to prepare a budget that will meet every 1 of your individual needs. She and her team have led dozens of meetings with everyone.

(5:41 - 5:53)
From budget managers to my college cabinet. And through her leadership, we have cut millions of dollars. And request to arrive at the needs we have presented tonight.

(5:54 - 6:09)
And at previous workshops, Annette Ferguson is indispensable. To this college to this process, and I can never anchor enough. Anything that we can do to facilitate.

(6:09 - 6:18)
Your discussion tonight, and to help you to establish the priorities we're happy to do. And I'm happy to take any questions. Thank you.

(6:18 - 6:38)
Thank you and now at this time, Regent hall would like to read a statement. Following the lead of Regent. Santana a few weeks ago, he had kind of a statement of budget philosophy and so I crafted 1 today after.

(6:40 - 6:49)
Contemplating several of the things that are on the table where. There were a group of 9 and so. I only thought it fitting to go ahead and share my perspective and.

(6:50 - 7:13)
Perspectives are going to be very different, but let me let me read through this as quickly as possible. As elected representatives of the Lee college district, we regions are to ensure that Lee college has adequate resources to accomplish its education mission using the funds provided largely from 3 sources. The state of Texas student tuition charges.

(7:14 - 7:31)
And local ad valorem tax revenue from Lee college district taxpayers, the state of Texas has elected representative. Has elected representatives to advance its interests and set its funding level. The students represent their financial interests.

(7:32 - 7:56)
With the choice of spending their tuition dollars. And we regions elected by the taxpayers are to represent taxpayer interest balanced with our responsibility to Lee college as an institution. That's we often make financial decisions that balance the financial needs and wants of the college against the ability and the responsibility of the district taxpayers.

(7:57 - 8:19)
To subsidize college operations with resource tax revenue we assess. Under force failure to pay tax assessments will ultimately result in loss of property, including even 1's home. Thus, our taxing authority should be treated reverently and applied as lightly as possible.

(8:20 - 8:40)
It is judgment call placed on each individual region to determine a proper balancing of these competing interest and to ultimately reach consensus as a body of 9 regions. As to what policy will be that many times involves compromise. No, 1 region should unilaterally speak for the entire group.

(8:40 - 9:15)
Rather, we should strive to reach consensus within the region body as to the proper financial balance with the administration acting only as an advice in an advisory role. Subsequently, the administration's charge is implementing the board's policy decisions, including its determination. I believe that our board cash reserves at 3 to 4 months is more than adequate to whether any immediate cash need that may be conceived our North main property should be considered.

(9:16 - 9:44)
A reserve source, since the taxpayer has supported the college through an extended period of underfunding from state resources, it is prudent fitting to lower our tax rate to reflect the abundance of new state resources. State funding increase alone represents 5 cents of our tax rate. This will offset the roughly 25% inflation adjusted tax revenue increase.

(9:44 - 9:57)
We have now enjoys realized just from 2017 to 2023. I believe we should and this is this is irrespective of inflation. I've included that figure in there.

(9:58 - 10:13)
I believe we should self fund our name storm insurance coverage with no more than 500,000 per year contributing to the existing insurance reserve. And I say that because that would allow us. If needed, if we had a 15Million dollar.

(10:13 - 10:28)
Loss that would allow us to go out into the bond market and get the resources needed to do damage to repair damage that could reach that level. That's the cap of the insurance that was proposed. So, I support the administration's.

(10:30 - 10:51)
Proposal or recommendation that we sell fund that I just. If we're on the amount a little bit, I support raises that keep us competitive with our industry is for our faculty and employees. I support a reevaluation of our pay model for faculty with extensive experience, but limited advanced degrees.

(10:52 - 11:07)
As is the case of our skilled trade and craft specialist. Who are subject matter experts in their field of discipline? Their pay should be rated using an alternative method to an academic pay model. This group is the driving force for the.

(11:07 - 11:24)
Our additional funding from under the new state formula. I support a reevaluation of our maintenance needs and future campus vision and light of the. Of the changes that have taken place over the last few years and the potential out in Mount Bellevue.

(11:24 - 11:44)
I do not support escalating the tax rate to pay off current lowest low interest debt and a high inflation interest environment. I believe this is unnecessarily squandering of taxpayer Monday money and poor money management. So, that's my philosophy.

(11:45 - 12:04)
All right, thank you. Thank you. Um, all right, we're just general discussion here. 

I'll start off on my thoughts. I fully support the 6% raise. When it comes to facilities, we keep using a range, so I'm going to be specific.

(12:04 - 12:32)
I support a 3% allocation of replacement cost value to the repairs and maintenance budget coming in right in the middle of the range. I support funding the insurance fund with a million dollar annual contribution. Um, am I forgetting? I support, uh, our operating reserves at a 6-month operating reserve.

(12:36 - 12:51)
Not listed as a priority, but it's been mentioned a couple of times. I would also support exploring securing a line of credit secured by the property. I don't think you use property.

(12:53 - 13:14)
You need to have that set up in advance if you expect to use property in the way that Regent Hall has laid out. So, I would be interested in the cost of a line of credit secured by the property and how much that could be. And I think that's it.

(13:14 - 13:48)
So, anyone else? Can I ask a question? Would that line of credit be used kind of as a substitute for, like, the insurance? Well, I'd have to get the data, but a couple of times we have said if we had some type of an emergency, like a hurricane, we would just go out and get a loan. And I know for a fact that's going to take you 30 to 45 days. So, the prudent thing to do is to do that in advance, not wait, you know, after the events happen.

(13:50 - 13:55)
Mr. Chair, I'd like to comment as well. Okay. Go ahead, Mark.

(13:55 - 14:04)
You had the floor. We're just going to say the purpose. Are you saying that would go to general reserve? Yeah, I haven't, I'm saying we need... I'm with you on that.

(14:04 - 14:15)
Right, we, yeah, depending on what it costs, let's, yeah, let's see if we can have a line of credit that's operative out there. And yes, it could be used for the insurance. I'm not saying it would be restricted to just insurance.

(14:15 - 14:18)
No, it would be whatever we want. Exactly. Yes.

(14:19 - 14:22)
Regent Guillory. Yes, sir. Thank you so much.

(14:22 - 14:37)
I'd just like to thank our CFO. She always does an outstanding job of the data that she presents. And as I stated at our last meeting, I think all the priorities that were established are doable.

(14:37 - 14:49)
And I support every single one of them. Just removing the numbers and making them our priorities, what we commit to was my intent. And I still feel the same way.

(14:49 - 15:23)
I am fully supportive of the increases to our faculty, our staff, to ensuring that our campus has the insurance that is needed, whether we do it through funding in order to build up a reserve for it and taking care of our facilities. I think we're in a unique place right now to where we can afford to do the things that we desire, which we have stated are our campus priorities. And so I apologize for not being able to be there.

(15:23 - 15:34)
I'm trying to do a role here because the city of Baytown is doing their budget as well. But I did want to make sure that you know that I'm fully supportive of the administration's recommendation. Thank you.

(15:35 - 15:58)
Thank you. Other comments? Are we happy to see the budget tonight or anything? We're giving guidance to the administration so that Annette can have a budget prepared in just a couple of days based on what we give them tonight. So there is not going to be a presentation from Annette tonight.

(15:58 - 16:22)
We're giving them instructions so that we will have a budget to approve on the 31st. So a question on the raises. Can someone explain where we come up with 6%? And also we just a month or so ago approved the compression change that was mentioned earlier.

(16:22 - 16:46)
And I thought that when we approved that, that brought us up to where we needed to be to be competitive. And the 6% is not part of bringing us up and becoming competitive. And, you know, I know a couple other colleges in the area that I heard, you know, one's 4% raise.

(16:47 - 17:00)
And the other one, they do a performance evaluation, which I don't think that we do. And that is a range from 3.5% to 5%. And, you know, no one that I found is touching anywhere near 6%.

(17:01 - 17:11)
If there is, I'd like to know about it. But just curious to where those numbers came from. So you're right, Regent Hemsel, that the raise has nothing to do with the compression.

(17:12 - 17:52)
And I just want to make sure that we all understand the issue of compression. So compression occurs when an employee who has been at the college for many years is making less than or the same as an incoming employee at the same time. So, for example, take someone and what we have found is that compression is primarily occurring in our lowest bands, which are A and B. Those are the employees that are not exempt and that are having the most difficulty in having a family-sustaining wage.

(17:53 - 18:22)
A few months ago, the board approved, and we were very grateful for the approval that you gave us, to decompress those bands, A and B. There was a little bit of compression issues in band C. There were no compression issues in bands D and E, which relate to directors and executives. We do a salary study. I don't know if that's what you were referring to when you said performance evaluation.

(18:22 - 18:44)
We do annual performance evaluations of our employees, but our evaluations are not based upon merit, if you will. They are based upon, our raises are based upon a different standard. So, the 6 percent comes from labor market demands.

(18:45 - 19:06)
The 6 percent is in place to ensure that we hire and retain the highest qualified faculty and staff. So, when we do the compression, that brought everyone up. No, no, sir.

(19:07 - 19:17)
No, I mean, that brought everyone is up to where they need to be. No, I guess maybe I'm not being very clear about this. I guess I thought when we did it, that brought everybody up.

(19:17 - 19:36)
We have bands A, B, C, D, and E. That's every employee except me. Every employee. When we did the study this year for compression, we only analyzed staff and administration.

(19:37 - 19:59)
We did not look at compression for faculty. Faculty were not considered. So, looking at staff and administration, we evaluated the issue of compression, which again occurs when someone who has been in a position for many years is making the same or less than someone who is just hired.

(20:00 - 20:35)
So, as an example, you might have a custodian who's been here for 15 to 20 years, who is all of a sudden making the same or less than a new custodian that we hired. We addressed with $600,000, that's the amount that we used, $600,000 to address the compression that was in bands A, B, and a little bit, a few employees in C. It has nothing to do with the 6% raise. That is a structural change that would occur after we do those kinds of things.

(20:36 - 21:03)
That's not, but it has nothing to do with compression. But where did the 6% come from? Again, the 6% is based upon ensuring that we are competitive in the labor market to ensure that we are hiring and retaining the best qualified faculty and staff. So, we didn't base it on the economy or cost of living or what other colleges are doing, none of that.

(21:04 - 21:52)
It is based upon our labor market. And that labor market demands that we are competitive to ensure that we are retaining and recruiting the highest quality faculty and staff. Mark, I would, I'd like to share with you that my own research that I did since a couple of budget workshops ago when we first started talking about the 6% is that according to the Bureau of Labor Statistics for the greater Houston metro area, private employer wages for the last two years are up 8.6%. So, we're doing better than that because we did five last year and six this year.

(21:53 - 22:07)
So, that's a lot. I'm not arguing against that. I'm just saying we should kind of pat ourselves on the back a little bit because over the last two years, we're outpacing the labor market in Houston area as far as salary increases.

(22:09 - 22:26)
I'm just concerned we can't continue that. We're not talking about continuing, sir. We're talking about this year and 6% to ensure that we recruit and retain the highest qualified faculty and staff.

(22:29 - 22:53)
And I would just like to add that this is very common and that it is something that you should evaluate if not every year, every other year, just to make sure because the market is always moving. And so, it's not uncommon for this to happen. Well, prior to my arrival, we did not evaluate structures on a regular basis.

(22:54 - 23:12)
We did the year that I began and that began with faculty. And this next year, we will be doing another analysis for faculty because they're next on the rotation. And when we were, we've had evaluations from budgets, salary studies and everything.

(23:12 - 23:27)
They've always told us to keep up with the market. It's a snapshot. When they give us that budget report and recommendation, it is only as good as that particular moment because things do change.

(23:28 - 23:38)
And we want to be competitive. I think I heard many comments tonight with anecdotal notes. You know, we're losing people.

(23:38 - 23:44)
We lost people. We had someone to come back to us. Because of the love of the college.

(23:44 - 23:55)
But we're not always that fortunate. And that's a heartwarming story to hear that story. But the key is, is that we don't want to lose anybody.

(23:56 - 24:16)
And we want to get, we don't, we want to make sure that we are very, very competitive. And I think this is what that does. And the good thing is that that was a proposal when we were first talking about the budget even before we started talking about the $9.5 million.

(24:16 - 24:50)
So we were already looking at the 6% for our employees because we thought it was a good thing to do. And it was the right, not just good, but the right thing to do. And it's, to me, it's a reward for all of the hard work that the faculty and staff have put in as a result of receiving monies from Mackenzie Scott, even the $9.5 million is a result of their efforts and the leadership that we have at the college.

(24:51 - 25:10)
So it's, it speaks volumes to the fact that that's kind of a no brainer for me that we need to do this for our faculty and our staff. Eric, just one comment on that. Just a reminder to everyone, you know, every year that I've been here, we've always talked about wanting to give raises to our employees.

(25:10 - 25:22)
I mean, they're the heartbeat of this institution. They're the ones who deliver on the mission that we have. But a reminder to everyone is we have had years where we didn't give raises because we could not.

(25:22 - 25:37)
It's not an automatic thing that we, you know, it's automatic we want to, but it's not automatic that we can. And I think when we find ourselves in a position where we can, then we should. And we have made small adjustments.

(25:37 - 25:54)
We've made zero adjustments. We've made what we were able to do at the time. And if we're able to do it now, if our financial situation allows us to do this, and I understand the fact that we own it from this day forward, but we've owned every one of them we've given from that day forward and we're in great shape.

(25:54 - 26:09)
So I think that the raise component is because we're able to do it. That's why we're looking at being able to recognize our employees. Might I add that 6% is not excessive.

(26:10 - 26:25)
We have had 6% raises at this college before for all the employees, but there have been lean years when we got nothing for a couple of two or three years in a row. So I think 6% is a reasonable amount. And we have the resources to do it.

(26:26 - 26:29)
So we should do it when we can. We had a couple of years we gave zero. We did.

(26:29 - 26:38)
Yes, since I've been on the board, that's been the case. That I came in, Regent Hensel, we did zero. You've been on the board, we've given two, we've had two years, we've gave zero raises.

(26:39 - 26:53)
There was one year, I think we gave a one-time bonus to everyone and another year where we didn't give anything. So during, when you were chair, we were unable to do it. We were unable, I think we did bonus.

(26:54 - 27:04)
We did bonuses, but they were not a raise. And so in 2020, that was the year that we were unable to provide a raise. It's something mid-year.

(27:05 - 27:20)
I would just, I did go back and look for the last five or six or seven years to make sure we're at least keeping track with inflation. And with this raise, we have been, even though inflation was substantial last year. So we, I think we need to pat ourselves on the back.

(27:20 - 27:40)
I have no problem with the raise. But we have been able to stay at or in front of inflation based on the, you know, consumer price index and the raises we've offered over the last six, seven or eight years. But I have another question if anybody else wants to comment.

(27:41 - 28:12)
Go ahead. The, we had a conversation when Dr. Villanueva first came here about the issue of an alternative salary evaluation structure for non-degreed faculty and staff. I think I used the term here, subject matter experts or something, you know, because we have a lot of faculty that teach in a lot of the departments.

(28:12 - 28:45)
In fact, the departments that are maybe some of our, are helping us with the state algorithm as far as producing high paying jobs. Has there been any more discussion or investigation into that? Because I mean, I look out and know that several of us have talked from time to time and I've talked to you that a lot of those positions are staffed with folks that are at past or whatever retirement age. And so we may have a shortfall.

(28:45 - 29:00)
I know it's one of those things that kind of kept you up at night for, I mean, in discussions. But primarily in the process technology and those trades and in nursing, I know nursing is one. So we do offer, it's a good question.

(29:01 - 29:20)
Thank you, Regent Hall. We do offer a labor market premium in specific areas and we have the authorization to do that. I am certainly sensitive to areas where the terminal degree isn't associates.

(29:20 - 29:47)
So if you're a welder, like your doctorate is the Associate of Applied Science. At least that's the way I look at it. So recently this week, I had a discussion with Dr. Walzers and I indicated that I wanted to look at the competitiveness of our technical areas and we are going to be looking at that.

(29:47 - 29:54)
So thank you for raising that. It's something that is not just done overnight though. We have to collect data and see where we're at.

(29:55 - 30:43)
But a 6% raise, again, would ensure that we have the ability to recruit and retain the highest qualified faculty and staff. It's a move in that direction. As far as being able to track people out of industry, say if they're out, I have no idea what the pace, but as I said, get the pants estimate, how far off are we on that? So well, I don't know if Wally is still here, but I can tell you that our students easily out earn what our faculty make because it would be very difficult to begin paying six figures off the bat to new faculty in technical areas.

(30:43 - 31:05)
I mean, if we wanted to do that, we would be way out of alignment because we're talking about, again, six figures within three to four years of being in the job in process technology and process operations, analyzer tech. So how do we find the balance? Laura's here. Laura, you can speak to that.

(31:05 - 31:25)
You're in. Yeah, so. Starting.

(31:58 - 32:17)
I have no idea what, I have no idea what our faculty that's teaching a course I can get a welding course or whatever. It can offer just a little perspective there. You mentioned the fact that a lot of our faculty in that area are retired folks.

(32:18 - 32:46)
And what I've seen happen in the last, I'm going to say five to eight years has been that a lot of folks who are retiring from our petrochemical industry, when they first retire, they do a little stint that helps me out because they come work for me and they make a whole bunch of money based on what their previous employer used to pay them. But after a while, they realize their value is not all about that big multi hundred thousand dollar paycheck. It's about the value they can bring back to the students.

(32:46 - 33:01)
And I think every educator feels that way, that they're bringing value to the students. And I have watched them transition from working for me, making a whole bunch of money to coming to work at Lee College. And there's several here today that used to work for my company that now work for Lee College.

(33:01 - 33:06)
And they're happy. Now, would they like to make more money? Sure. But they're not working to survive.

(33:06 - 33:18)
They're working to give back their knowledge to the community that supported them and the industry that supported them. So I know some numbers. I'm not going to mention them here.

(33:18 - 33:35)
But I think as Dr. Villanueva mentioned, there are some, what'd you call them? Industry adjustments or whatever. Labor market. Labor market premiums that have been applied to some of these folks to get them to a rate that is, you know, closer to what their skill set is.

(33:35 - 34:07)
A 35 year, 40 year person has got a lot of knowledge equivalent to someone with a higher level of education, right? And so there's not a scale for them. But I would say, I'm not going to say they're all happy with what they're making, but I would say that they are, they have adjusted from the environment that they were in to the educational environment and understand they're not going to make what they make out there. And the goal is to produce students who are going to go out there and make a life sustaining wage.

(34:07 - 34:26)
But as mentioned here, they're making it with 25, 30, 40% overtime as well. It's not the 40 hour standard week that they work. When we talk about process technicians making, you know, six figures, they're on a shift schedule that creates a lot of work hours for them in a 12 month calendar.

(34:26 - 34:40)
So, you know, the money can be made, but it's not made, you know, clocking in at eight and leaving at 4.30. It requires a lot of work. I know our faculty leaves a lot later than 4.30, so I don't want you to get hung with that. No, no, no, no.

(34:40 - 34:55)
I'm talking about the going to work as a new student, you know, it's not an 8 to 5 job. So is there a formal structure to this or is this case by case basis? No, no, no. There is an absolute formal structure.

(34:57 - 35:12)
And Amanda Summers, our Executive Director of Human Resources, is here and she could speak to that as well. Is that a component of our discussion or is that a follow up to? I think it's a follow up. Regent Hall's question about a structure.

(35:13 - 35:19)
Yeah, and it's not part of our recommendation. I didn't ask that to begin. Is it part of the budget proposal? No, no.

(35:20 - 35:23)
I'm sorry. I guess I didn't know that. Then we can talk about it later.

(35:24 - 35:48)
Well, I'm just, I mean, it's great information if we've been here. Is that study something we would want to budget for? What study? Salary study or the ones that we did last year? We have salary studies every year now. So it's in our budget? Well, we budget for it. 

Yes, sir. I'm sorry. Did you have a question? I apologize.

(35:49 - 36:04)
A question if you go ahead and answer is what formal structure is there for this? Labor market premium. Labor market premium. And that's different, though, than the salary studies.

(36:04 - 36:22)
We also get, for example, from TCCTA and others that we use to make sure that we are competitive within the state. But not necessarily within the labor market here locally. So we have our salary structures, right? Faculty salary scales are on our website.

(36:23 - 36:42)
And you'll see on the second page, people don't tend to look on the second page, but there's a second page that has information about our adjunct, our overload rates, and also how we set our starting salary for faculty. And you are right. And it is something that we watch closely because our technical faculty do start with a lower salary.

(36:42 - 37:05)
If you look on that scale, they start on the steps A, B, and C. And that's also outlined again on the second page of our faculty salary scales. And so we recognize that that was an issue or concern. And so I think about, I want to say two years ago, we started doing the labor market premium, basically a stipend to supplement.

(37:05 - 37:15)
And so in 2020 and in 2021, we did a compensation study for our faculty. And we didn't make any changes. Well, let me back up.

(37:16 - 37:26)
And I apologize. Just tell me to stop talking if this is not appropriate for the meeting. In 2020, we did a classification compensation study for our faculty and non-faculty positions.

(37:26 - 37:39)
So we made a pretty big change. To our non-faculty scales in 2021, I believe. So we increased the starting salary a lot.

(37:39 - 37:44)
It was a really good change. It was a change in the right direction. But that was just to the salary structure.

(37:44 - 38:02)
And so kind of talking, speaking to what Dr. Villanueva was saying about the compression issue, we didn't, typically you do this in two steps if you can afford to do it, right? You adjust the salary structure and then you move people along the structure. Well, at that time, we couldn't move people along the structure. And so that caused compression.

(38:03 - 38:14)
And then we weren't able, we did give a raise in 2022. And also I would note that in 2022, we updated the faculty salary structure. And so we gave raises, so we were moving people along.

(38:15 - 38:33)
But it just wasn't enough, right? Because it was two years and that's where the compression analysis came in. And I just want to thank you for that because that was a big help to get us again in the right direction. So part of those studies to wrap this up is that we gather data from national data.

(38:34 - 38:50)
We gather data from all the community colleges. No, as many community colleges as we can, but we look at specific groups, some big colleges, some small colleges, and mainly colleges that are about our size are relevant to us. So, and we, part of that is getting labor market premium data.

(38:50 - 39:49)
You know, what do you, how do you supplement the pay for nursing faculty? How do you supplement the pay for welders, electricians? And so we get that information and we review it and then we determine what we can afford to apply. I'm sorry, does that answer your question? Yeah, I mean, there seems to be a bit more systematic system than I was aware of. It's relation to the budget though, is that if we're looking for guidance here, if there is a pressure there and we're not able to fully fund what she has just laid out, I would much prefer to see resources put there than to, and let me, I'd much prefer to see resources put there than just put into additional reserve because my personal opinion is we're in good shape on reserves and I don't want to starve an area of the college as far as employment is concerned.

(39:50 - 40:13)
That my understanding is, is the driving force and will be the driving force for our increased funding from the state because they produce jobs that are such high paying. Is it, am I understanding the new state funding formula correctly? That it's performance-based? It's performance-based and it's geared towards the jobs that are available. Not necessarily.

(40:14 - 40:31)
Okay. So it's completion of credentials with extra weight for those in high or critical fields. Okay, you're saying that's one factor, another is completion of dual credit classes of 15 credit hours or more.

(40:31 - 40:53)
And then the third is transfer to a university. What? And so there's also additional weight given to non-traditional learners, those who are academically disadvantaged as well. So what was the driving force that got Lee College such a disproportionate share? If this potentially goes away.

(40:53 - 41:12)
All of those things that I just listed were used in the formula to determine our college's allocation. All of those measures. Every single, well, no, not necessarily equally spread.

(41:13 - 41:45)
So again, some are weighted more because if they're in a critical field that gives you more funding and then if some are in a special population, you also get more. But I have shared with the college and I'd be also happy to share with you my address that I gave to the college earlier this week. The area that we have the most opportunity to address is not in the process technology or career and technical education.

(41:46 - 42:04)
I think that's very important to address. It is in the area of transfer, general academic transfer. Over 60% of our students come to Lee College with the sole intention of completing a bachelor's degree at a university.

(42:05 - 42:27)
When given 150% of the time to complete that, only one in eight do. So of the three metrics that we have to look at for our performance, that is the area where we have the highest opportunity to increase. Does that make sense? Yeah, and we have yet to see all of these priorities.

(42:27 - 42:42)
I think we're eventually going to get to understand them more fully. Well, we're all trying to understand them more fully at this point. I can share a spreadsheet with you that has numbers in it with very specific formulas.

(42:43 - 42:52)
And, you know, be happy to share that with the board so that you can look at it. It is very complex. It is very complex.

(42:53 - 43:08)
But I think that we can do our best to try to provide it in a meaningful way. But remember, emergency rules are being drafted right now just to get us through. And those emergency rules by law are only able to be in place for four months.

(43:10 - 43:24)
So all that is guaranteed is the nine and a half million that we've been given for the first year of the biennium. And there will be a correction in the second year. So we just don't know what that will be.

(43:26 - 43:44)
But the biggest area when you look at our performance, I mean, I'm very proud because we did tremendous, as I said in my opening statement. We wouldn't be, I mean, if you take out the 21 colleges that need that base level funding, because we're not one of them. We have a very strong tax base.

(43:44 - 43:52)
And if you remove those colleges, we shoot right way up to the top. We're the top college. We are the top college.

(43:52 - 43:59)
And that's my understanding. And I think we should be proud. Jokingly, I just wondered, did we get the formula ahead of time so we could know? No.

(44:00 - 44:16)
Well, no one knew what the formula was. I do think it's also important to remember or to know that we're not competing against any of the other 49 colleges in the state. We're competing against ourselves.

(44:17 - 44:50)
So no way to game the system, if you will. And in fact, I shared with the faculty and the staff this week that nothing about this system allows us to mess with academic rigor. It's more important than ever that we maintain strong standards of academic rigor to ensure that our students are able to complete the credentials, they're able to transfer, and they're able to earn the 15 semester credit hours of dual credit.

(44:51 - 45:07)
But in those other two areas, we're doing really well. So if I can ask, so the limiting factor, everybody improves all of their scores. Currently, the limiting factor is the $650 million at the legislature.

(45:08 - 46:00)
We're only talking about this biennium though, right? And so here's what I'm going to say it on record now. We've all touted the fact that we have moved away from a pie, from an allocation model, a fixed pie, to what we call a true funding model, right? But I will tell you, if I had to place odds in Vegas, okay? Eventually, we keep performing and we keep performing and we keep performing, we're going to shift back to a fixed pie because there's only so much increase in money that the state of Texas is going to invest in the model. And we must be prepared for when that occurs.

(46:00 - 46:30)
So my hope is that we continue to do well in the performance model and that our legislators continue to allocate at appropriate levels that are commensurate to the increase in our performance because I do expect to see an increase in our performance, but we have to at least meet it and then we want to exceed it. Dr. Villanueva, just a clarification, this new funding model was created with surplus money. Correct.

(46:32 - 46:36)
Surplus money. There's no guarantee. You can go with everyday state money.

(46:36 - 46:48)
It was a surplus they had. They carved out this money and they redistributed based on this performance-based model. So the concern is, where does it come from next time? That is correct.

(46:49 - 46:55)
That's a great point. Where are they going to get it from next time? It was $32 million in the state coffers. Billion.

(46:56 - 47:03)
Billion in the state coffers. And so we got 650... 83. 683 million of that.

(47:04 - 47:15)
So that's not going to happen every time. I mean, we should not count on it. Just as I said, we can't count on anything beyond the year, the first year.

(47:17 - 47:38)
So, I mean, there's just not, you know, it's like I try to tell my son, like, money is like a pie and you only have so much of it. And once you spend it, that's all there is. So we're going to eventually go back to a allocation model that's fixed.

(47:41 - 48:04)
And then what they'll do is based upon our performance, just like they did with student success points, they'll reallocate the dollars and we'll continue to perform, but we'll get less money for our performance. Does that make sense? And that's what's happened to us with our last funding model. We continue to perform, but they reduced the contribution to our student success points.

(48:04 - 48:21)
And that's why we said, this isn't working for us. We need a real funding model and we want to invest in our performance. I would hope these two years show the state of Texas, our legislatures, that we are the mechanism to build a talent strong Texas.

(48:22 - 48:42)
And this investment in community colleges for a couple of years will allow them to see the value in institutionalizing this model as part of the state's budget. And back to like Regent Hall's always said, where the allocation was a greater percent of the overall need. Maybe they're testing us.

(48:42 - 49:02)
I don't know, but I hope that it gives them what they need to say, we need to keep doing this somehow. Find a way to find this $650 million next time or 80 or whatever it is and keep doing this because I think they're going to see it's going to work. And when I got on the board and Susan's been around a good bit longer than I had.

(49:02 - 49:07)
48 years, something like that. She got on when she was 12. I respectfully say that.

(49:08 - 49:21)
But she got on when she was 12. Anyway, but when I got on, I believe the state percentage of our funding was 58% or somewhere in that range. And I watched it drop or the 21 years I've been here to 17%.

(49:21 - 49:29)
Did I see 12 somewhere? No, I believe the lowest that I have seen is 17%. You're not allowed to speak tonight. And I'm on stage tonight.

(49:30 - 49:48)
So the state has not, I'm speaking to the state legislature here, has not upheld their end of the deal. And they have continuously dropped. That's what led to this new funding model, but with a surplus in the budget.

(49:48 - 49:54)
It needs to become a standard part of the budget in my humble opinion. I hope so. I agree.

(49:55 - 50:21)
Offloading this statewide responsibility onto a limited number of abnormal taxpayers, which abnormal taxes are not paid by every person in the state, in fact, the minority. And so there's a fundamental unfairness in its current model, unless state picks up their end of the bargain and relieves a lot of pressure. And right now they're providing us some much needed support.

(50:21 - 50:32)
I'm, there was one additional thing. Susan was around here and you remember this. We were warned that the state, they didn't, they were out of money and they were looking for it.

(50:32 - 50:48)
If you remember about eight, 10 years ago, and they said anybody that had too many reserves, they were gonna raid our reserves or cut back based on our reserves. Now there's an abundance. I would not like to return to that and have exposure.

(50:48 - 51:06)
And so that's why I would caution against carrying too many reserves just as a budget reserves. Because if the state runs out of money, they start looking at anybody, you know, and we could be a target there. So that is actually... So that is actually, can I finish that first? And then I'll, sorry.

(51:07 - 51:32)
But we have something called a financial evaluation system by the Texas Higher Education Coordinating Board called CARET. And they actually evaluate a number of different indicators. And even though sometimes we look at it and we're like, how could you give us a ding for this or that? They do look at our reserves and they actually want them to be strong.

(51:33 - 51:55)
They want them to be healthy. And the four to six months is a golden standard. And remember, just as our budget grows, that we need to then increase the reserves to be commensurate with that growing budget, which is increasing over time with funding from the state.

(51:57 - 52:15)
So... And I think too, that's an excellent explanation of which I was not aware. Well, if you want to spend some time with CARET, we can give you the... The only CARETs I want are the kind you eat. It's C-A-R-E-T.

(52:15 - 52:38)
Oh, where? R-O-T and... Okay, it's... But it's a model is just... But I'm just thinking too, as we think about the big picture, we're talking about reserves, but we're also talking about insurance that we don't have on our buildings that would take away from the reserves. So we have to put all of it. We can't look at it in isolation.

(52:38 - 52:46)
It has to be all looked at at one time. Like the big picture. Because you're, you know, the money has to come from somewhere.

(52:46 - 53:12)
And again, the administration strongly recommends that the board consider that the reserves that the board has in place are not for fixing a building that has been fallen. It is for the continued operating expenses. They're operating expenses, which is fundamentally different than a fallen building.

(53:13 - 53:42)
It affects our operating income. Oh, if we're not able to have classes or so. If a storm, if a named storm comes and we do not have insurance and we don't have... I mean, every time a big storm happens, whether it's at Brazosport College or Lee College, because I've tracked all of the Gulf Coast, every single one of us has had to basically be out of class for at least two to three weeks.

(53:42 - 53:51)
Every single time we've had one of these big storms. And it's because we've had power lines that are out. And so that's one thing.

(53:51 - 54:29)
And by the way, every time that occurs, one thing that we have to do is we have to go to the coordinating board and ask them for permission to continue operating the way we are because we're not operating. And they have to give us permission to continue to do what we're doing without operating. And then, but we... I think, what was the question? But what's the financial impact of what you just described that would rise to the level of, say, 30 million? Well, and if the board doesn't approve for us to be paid, if we're not teaching, that's a huge... I mean, when 70% of your budget is personnel, it's a very big cost.

(54:29 - 54:57)
But when our state funding continues and our local tax funding continues, if we lose the students and they withdraw their tuition, we're talking about, you know, 20%. What impacts us financially? I realize we can have damage to buildings and everything, but what impacts us financially as far as operations? We would need that level of... I think you're talking about what happens to our revenue stream. What happens to... Yeah, revenue stream, not the expense side.

(54:57 - 55:25)
What will shut our revenue stream down to where we would need the four to six months to continue operating? So, if we are not able to operate... So, for example, if we're just shut down because we don't have internet and if we don't have power, then we're not going to be able to continue to collect money. The state will say you only have so much of an extension to continue to operate without anything. I mean, like, without those things.

(55:25 - 55:30)
Okay, I'm still struggling. Because most of our income is not affected. It comes from taxes.

(55:30 - 55:44)
We won't have money continuing to come in if we're not able to offer instructions. I guess what I'm saying. So, that stops if we're completely without power and that goes on through an extended amount of time.

(55:44 - 55:55)
I'm just using power as an example. Then you lose the ability to have instruction online or face-to-face. And you can only do that for so long.

(55:56 - 56:11)
What revenue do we lose during that time? I think it's the same question we'd ask the city of Baytown or the school board. You know, everyone has a cash reserve for emergency operations. And it's based on losing your revenue stream.

(56:11 - 56:19)
Not the fact that you got to keep we're paying money whether we're operating or not. We're still paying money. But our taxpayers going to quit paying their taxes.

(56:19 - 56:29)
The state going to quit giving us money. Our students going to quit paying tuition and fees. Because that's to supplement our revenue stream, right? And I don't think it's a question for right now.

(56:29 - 56:35)
But because we may not be able to answer it. You know, everybody has an emergency reserve. Everybody.

(56:35 - 56:44)
Just like at home. You know, we all have our emergency reserves hopefully of some level. But it's typically based on losing your income.

(56:45 - 56:56)
And so our operational reserves are loss of income support. Correct. And it's 75 days.

(56:57 - 57:14)
Yeah, so for 75 days they wouldn't be able to they'd have to operate for 75 days because they didn't have 75 days of income. But if you look at what happened during the last major flood, what was it, Hurricane Harvey? The taxes were impacted considerably. The tax appraisals went down.

(57:14 - 57:21)
Tax collections went down. People just didn't pay their taxes because they couldn't do it. They were trying to rebuild their houses.

(57:21 - 57:27)
So tax collections and everything happened. So we had to supplement that. We were in a good position.

(57:27 - 57:56)
But that's what I think of when you have some ongoing thing. We have a hurricane come through that takes out two or three of our buildings that we use specifically for that. What are we going to do? How are we going to continue to pay the people that should be in those buildings? So I shudder to use this example and in front of Laura in particular, but let's get away from storms for just a minute.

(57:58 - 58:19)
We have a wonderful partnership that are subsidized strongly by our industry partners. If there's a chemical explosion that shuts the college down for months, that's where your loss of revenue will occur. That is the best example that I can give right now without thinking about a storm.

(58:20 - 58:31)
And heaven forbid that would happen, but that has the ability to shut the college down for months. I'll stop and look at something that happens there. A chemical plant explosion.

(58:31 - 58:38)
Absolutely. That's going to affect the whole community. But that would certainly affect us as well.

(58:38 - 58:50)
You have federal government coming in and stopping offshore drilling. They shut down the amount of crude that's available. You have Aramco.

(58:50 - 58:59)
They decide if we can't get enough crude in here, the plants can't continue to run. They mothball. Their ad valorem taxes go down.

(59:00 - 59:16)
I mean, there's so many things that you can think of, all of them catastrophic. Not all of them are controllable by us. But yeah, I think it behooves us to have a healthy, what healthy is, is a definition.

(59:16 - 59:32)
Yeah, but if something like that happened, we couldn't sustain anyway for very many months. Or even, we couldn't go a year. If someone like those companies closed down permanently, I mean, if it was that big of an impact.

(59:32 - 59:48)
But we would have the ability to coast down to a different level instead of shutting off. Correct, correct. But we typically get our taxes in advance, right? So we got, we get our money ahead.

(59:48 - 1:00:04)
No, we get our taxes in arrears. Yeah. Well, we get checks in January that we used throughout the entire year, right? Yeah, and remember though too, that with the new funding model, we're going from a, we're not going to be paid the same number of times.

(1:00:04 - 1:00:16)
Three times now a year, only. But what's your recommendation? Yeah, she got one. Yeah, I mean.

(1:00:17 - 1:00:29)
6% raise. Increase in the maintenance budget to 2 to 4%. What is that? What is that in dollars? And what does that mean? I didn't want to ask you.

(1:00:29 - 1:00:52)
What would 3% be? For 3%? But that also, we didn't cover the budget. So a million and a half over what we did last year, which was how much? So two and a half, two and a half, two and a half to three million. Okay.

(1:00:53 - 1:01:08)
What's our deferred maintenance? The amount that we're at right now? 370 million dollars. Come on and say. But that depends upon, that depends upon which analysis that you look at.

(1:01:23 - 1:01:41)
You have that you can send to us. You received from SLEDGE Engineering back in 2018 when we hired SLEDGE, or you hired SLEDGE to come in and do an analysis on all the buildings on campus. Not address some of the need.

(1:01:41 - 1:01:46)
Yeah, we SLEDGE, I mean. Well, yeah, we have, but. I don't know what impact that has.

(1:01:49 - 1:01:57)
We have addressed needs as they have come up. You know, we've had water mains break. We've had roofs fail.

(1:01:57 - 1:02:09)
We've had HVAC systems fail. And so we have to address those, obviously. I think we should have a workshop that is touring the facilities.

(1:02:09 - 1:02:16)
Don't you think? I think that's a good idea. So one of the things is when we get through. Really? Budget, we'll have a building committee.

(1:02:16 - 1:02:30)
When we get through this budget process, we will fire up the building committee and begin to look at all of these very specific needs, short term, long term. We'll revisit the SLEDGE report. I hope it's been updated, you know, as we talked about before.

(1:02:30 - 1:02:45)
But, you know, that was a roadmap that was put together, you know, five years ago. And it's what helped us identify our critical infrastructure need bond that we put together in 2018. And in that and in that document were a lot of options.

(1:02:45 - 1:02:59)
That's why I never disagree with the total. I never agree with the total number because that was an option to fix these buildings or tear them down and build a new one. Different, different, right? And so the total number are all these options together.

(1:02:59 - 1:03:16)
They're not in anyway. So we just need to revisit that. So I think that what we're talking about from a maintenance budget is just consistent with if we were putting the money into our facilities annually to do routine, preventive maintenance, and address some of our needs.

(1:03:16 - 1:03:27)
That's the number we're talking about. We're not talking about fixing major issues, you know, roofing, HVAC, electrical systems, replacing buildings. That's not what a normal maintenance budget does.

(1:03:27 - 1:03:40)
It's not what a normal maintenance budget does, I agree. But it's what ours does do currently when we have things break. Because we have to spend money when it when it breaks, right? So for example, we haven't done the maintenance.

(1:03:41 - 1:04:23)
And so for example, TB8 right now, I am waiting for data from Dr. Walters to tell us whether or not we can accommodate the classes that are in that building somewhere else because our recommendation is to tear that building down instead of putting because we have an air conditioning, not air conditioning, but an air quality issue there. And we are out of code there. And instead of spending, instead of throwing good money after bad, we would like to recommend that we tear down the building and move the classes from TB8.

(1:04:23 - 1:04:34)
That's where we're faced at right now as an example. Yeah, keeping in mind the recommendations, the analysis we received in 2018 did show some of this happening in five or six or seven years. And we're there.

(1:04:34 - 1:04:39)
And here we are. It showed end of life for some of these facilities. And we're there.

(1:04:39 - 1:04:59)
And it just so happens TB8 was one of those that was slated that would need to be torn down. And also, just to mention, when that process started, it was initially to help us prepare for a general obligation bond. OK, that was the whole purpose of that analysis.

(1:05:00 - 1:05:20)
And we just took the critical parts and about $11 million that we do a revenue bond to start with. We derailed the GEO bond progress because of all the things that were happening, like finances, COVID, everything else. And so, you know, I don't know.

(1:05:20 - 1:05:25)
GEO bonds seems to be a bad word these days. I don't know why. It's been 10 years since we've had a GEO bond.

(1:05:26 - 1:05:53)
And, you know, cycle wise, we typically have these GEO bonds, you know, six, seven, eight years to handle these large mechanical system replacements, roof replacements, HVAC, et cetera, and new building constructions were needed. So, you know, we just got off cycle because of circumstances. And the biggest one was finances, right? So we've been focused on a lot of other things and done well, despite the fact that we've been limping along with our facilities.

(1:05:54 - 1:06:12)
And this component, I see the maintenance budget as a component of starting to take care of our maintenance needs. It's not going to fix it all in one annual budget, but it's certainly going to make a significant improvement. Dr. Villanueva, I think a walkthrough would be great for all of us.

(1:06:13 - 1:06:46)
And I think that until you have sat in that that office where your desk is, that you work from every single solitary day or you're in a classroom that is old and rundown and dingy looking and the air doesn't smell very good and probably there's asbestos and you sit in that every single day. If you think about it from that perspective, you might have a different view of how we should spend our money. We're giving us your.

(1:06:48 - 1:06:59)
Could you let us go over your priorities again? We were at maintenance. We were just defining what to that. So that was number two, a fund to ensure the college against damage due to named storms.

(1:07:00 - 1:07:14)
So let's talk on that one a second. What are we talking about doing? Putting how much? Our recommendation. Our recommendation was to create a self-insurance fund because right now, premiums are just.

(1:07:15 - 1:07:18)
That's your recommendation. Yes, sir. That's what we wrote.

(1:07:18 - 1:07:32)
One million dollars a year was the recommendation, correct? To take the insurance premium and deposit a million dollars a year into an insurance fund. Yes. So we're going to budget a million dollars for insurance.

(1:07:32 - 1:07:41)
Self-insurance. It's either put it, give it to an insurance company who has a ridiculous. Okay, yeah.

(1:07:42 - 1:07:49)
Yeah. Our current insurance reserve is. Okay, so.

(1:07:49 - 1:08:02)
1.2 to 3 million. Right. So adding to that fund that 1.2 million got there by adding $300,000 a year for the last four years.

(1:08:02 - 1:08:17)
And so we're talking about now adding a million dollars a year to that. And I think that's roughly 12 to 15 years to get to where the insurance would have would pass. When we didn't max that at 15 million.

(1:08:18 - 1:08:22)
Roughly. Really, but it depends upon the policy. It depends upon.

(1:08:22 - 1:08:47)
So, and I've just sent Annette some more data to review because I asked for all of my colleagues in the Gulf Coast Consortium to send me everything they have about named storm coverage. We are the only one thing I will say is we are the only Gulf Coast College that does not have named storm coverage. Not one of the other eight do not just.

(1:08:47 - 1:09:09)
I'm just giving you that information, but we also have premium information and other information that I'm giving to Annette to evaluate. But you're still recommending. At this point, we are at this point, we are recommending that we self-insure to the tune of what we would pay in our premium that was given us.

(1:09:09 - 1:09:18)
And it'll take us 12 to 15 years to get up to where we would equal. We totally self-insured equal to insurance. It would.

(1:09:18 - 1:09:22)
And that's a moving target. Yeah, I was going to say. Yeah, but based on today's number.

(1:09:23 - 1:09:27)
That's a moving target, 15 million. We got to lay it in the deductible. Right, right.

(1:09:27 - 1:09:30)
It's based on. I said 12 to 15. We can get a bond if we need it.

(1:09:30 - 1:09:34)
The premium is 15 million. Right. So, I mean, is a million enough to.

(1:09:34 - 1:09:46)
I mean, it's well, I think it's a long time to get there. It does. But that's why I also recommend that we explore a line of credit on on the land that, you know, you brought up a couple of times.

(1:09:46 - 1:10:02)
I think you have to have that that instrument in place. If we budget a million dollars and we have a 15 million dollar loss, we can go into the market and borrow money for less than the million dollars to cover the entire loss. We could, we could do that.

(1:10:02 - 1:10:24)
So we would be, we could literally go in and add that to a bond or get a revenue bond or something at the current interest rate and cover that total 15 million. And I think that's why the administration is saying the premium for the insurance is not just viable. And also, though, going to the bond market takes time.

(1:10:25 - 1:10:40)
When, you know, a hurricane hits, you're looking for relief immediately to get back on. So that's, that's why I'm recommending what I'm recommending, that we, you know, you need a line of credit in place. You can pay it off when you get the bond money, et cetera.

(1:10:40 - 1:10:51)
But a line of credit for a circumstance like that is what you would do. In my opinion, it would be the prudent thing to do. I'm just the opposite.

(1:10:51 - 1:10:58)
I think paying for a line of credit that you may never use. Well, that's why I want to know what's it going to cost. I, you know, I don't, we've never explored it.

(1:10:58 - 1:11:14)
So what does it cost? The size of the line of credit that we would need. To me, just looking at the line of credit that my clients have, what they have to pay for it would be burdensome to the college. To me, it'd just be money thrown away, like a million dollar insurance policy.

(1:11:14 - 1:11:33)
And that may be the conclusion we come to, but I'd like to know what. Yeah, and that's what, you know, Chase or something like that recommends what, what, what they would charge. What, what have we had to pay in the last five years for named storm damage? We don't have named storm damage coverage.

(1:11:34 - 1:11:42)
No, no. How much, how much money have we paid out due to named storm damage? Not insurance policy. I know we don't have the coverage.

(1:11:42 - 1:11:49)
Not, not much from what I understand. Well, very little. Everything's a gamble, but this sounds like a pretty good gamble for us.

(1:11:50 - 1:11:59)
Right. Which is why we're recommending that we self-insure. Which means we still have the money, right? We still have the money.

(1:12:00 - 1:12:22)
And if we have, oh, boy. Well, but I still would like to understand the FEMA piece on, on what, what do we lose? All we know, again, on that one is all, all we know is that if we don't have named storm coverage, we are not guaranteed that we would receive any FEMA support. That's all we know.

(1:12:23 - 1:12:39)
We're not guaranteed that. The question is, what support would FEMA give us? We, and we don't know, but we just know that if we don't have named storm coverage, that we couldn't seek their support. I mean, I'm just a little concerned that every other college has, has this.

(1:12:40 - 1:12:53)
And we don't know all the answers, i.e. the FEMA answer. And we, it appears like we have a consultant that we're talking to. And maybe we need to drag that person up here and ask them these questions.

(1:12:53 - 1:13:13)
Before we make that final decision, we haven't already, because I'd like to know what the, what is the benefit of FEMA? Because does it help our students possibly that they may not get? I don't know. I think that would only help them with their individual homes. Well, it's very well made, but there may be something that, that's so.

(1:13:14 - 1:13:24)
Does anybody know? My question would be, we can't apply to FEMA or they may not, they may turn us down if we apply to FEMA. They will turn us down. It's not what I heard.

(1:13:25 - 1:13:36)
Yeah, we're not, no, no, it's not guaranteed. It's not guaranteed. We may not be able to be, we may not be able to be eligible to receive FEMA funds.

(1:13:37 - 1:14:02)
It doesn't mean that they wouldn't, but it's possible that they would not. But again, what we do know is that right now we have between 1.2 and 1.3 million dollars allocated to a fund for a named storm. And what we are recommending is that we add self-insurance to the tune of 1 million dollars a year.

(1:14:03 - 1:14:26)
For now, unless the board would like to change its strategy and have more data, which we'd be happy to provide. If I'm the one concerned about FEMA, then no, I think we can move on. I think in our situation today, we could do more than a million.

(1:14:26 - 1:14:36)
Because I think we need to build faster than we're thinking because. We're happy to allocate more than a million dollars if that's the board's pleasure. That's just my thought.

(1:14:39 - 1:14:47)
I don't think that's allocated just for a named storm. That could be any kind of disaster. It could be a fire or a tornado.

(1:14:47 - 1:14:51)
It could. Yeah, but our casualty insurance. That would cover that.

(1:14:51 - 1:14:53)
Yeah. But we're covered for those things. Yeah, yeah.

(1:14:53 - 1:15:05)
And we approved that at the last meeting. And that was a lot less, it was 750,000, I believe. So it's only a tornado that is associated with a named storm that we wouldn't be covered for.

(1:15:08 - 1:15:22)
And over the life of the college, we've never had any substantial loss. I'm not sure, Alicia, I don't know. Do you go back all the way to the Alicia days? Okay, you're just.

(1:15:25 - 1:15:33)
1983. Who would you say? 1983 was her. I would never, even though I'm not required by law and have never been.

(1:15:34 - 1:15:45)
Although my husband may be of a different note differently. I'm going to pay for flood insurance every single year. So, like, there are just some things that we do.

(1:15:46 - 1:16:03)
So, but again, given what we know today and the data that we've been given, we recommend a self-insurance fund of a million dollars a year to start. Given the surplus that we have, that's the amount that we recommend. The amount that we would pay to insurance.

(1:16:04 - 1:16:13)
And I accept the recommendation of the administration. You did the research. If you're telling me a million is what you recommend, I support what the administration is recommending.

(1:16:14 - 1:16:28)
The next thing that we recommend is an increase to our operating reserves and contingency funds. Our recommendation is six, two more months, two more months. That's a recommendation for the board reserves.

(1:16:29 - 1:16:40)
And our recommendation is to have between two and a half to $3 million of contingency. Or an emergency. Right now, we currently have 1 million.

(1:16:41 - 1:17:00)
So we're not vastly off, but we don't have the size of contingency that a college of our budget is supposed to have. We have collected that data as well. And that money is used when we don't have something that we haven't budgeted.

(1:17:00 - 1:17:10)
We have something to break down that we haven't budgeted for. So for example, Annette came to me today and we were talking about TVA. And I said, we didn't plan for that.

(1:17:12 - 1:17:20)
Let's take it out of contingency if we have to. Did I not say that? But you said, no, we can call that an emergency. Anyways, don't answer, don't answer.

(1:17:21 - 1:17:28)
But reserves can only be taken out. That's not reserve. It's contingency and it's at my discretion.

(1:17:28 - 1:17:36)
We're talking about reserve though, right? It's not contingency. Both actually. So one is operating reserves, which are board reserves.

(1:17:36 - 1:18:01)
And our policy, the board's policy is four to six months. The administration recommends that we have six months, which will improve our financial stability. And our recommendation is that we increase our contingency or emergency funds for the college separate from the reserves from a million to two and a half to three million a year.

(1:18:02 - 1:18:13)
And just when we don't use it, it just falls right back to the bottom line. We haven't had to use it since I've been here. Since I started, I asked Annette to create a contingency fund.

(1:18:13 - 1:18:23)
She did to the tune of a million dollars. And we have not had to use one red penny. And I hope that we never have to.

(1:18:24 - 1:18:48)
But if we need to, I hope that we're protected. And I think a clarification is we have done some things that were not budgeted, but it was absorbed by other parts of the board, right? Where normally had everything budgeted been used, we would have used contingency to handle some of those non-budgeted items. And when we don't use it, it can just fall back to the bottom line and go back into our surplus.

(1:18:48 - 1:19:03)
So the four to six months, we're adding a couple of months. And then we also need to add in the additional increase in budget, right? Because our budget's gone up or will go up. Correct.

(1:19:03 - 1:19:36)
So what is the timeline for getting there? Are we going to do a million a year or we're going to do it all in one year? Or how do we get to where you want to be? This budget, the recommendations that we are asking the board to consider would get us there now. So you're saying we're going to go from four, five years to six years? We're going to do it all in one year? Five to six months. We're going to do it all in one year? No, no, no.

(1:19:36 - 1:20:29)
We're suggesting that we move in that direction and that the board tell us what their pleasure is towards that. I mean, is there any address if we remain revenue neutral on our ad home taxes that would require a rate reduction just to stay revenue neutral? No, we are proposing a tax rate that is below the no new revenue tax rate. Was 0.2207. Our current rate is 0.2201. So our current rate is below the no new revenue tax.

(1:20:29 - 1:20:44)
Help me understand when a house and 97% of the houses in Harris County are capped. That means they're going up by 10%. I'm going to have to refer you to the tax assessor collector if you want to know all the details of that calculation.

(1:20:45 - 1:21:25)
I can just share with you the information that we've been provided, which is our no new revenue tax rate is 0.2207. And our voter approved rate, which is the highest rate that we can go to without having to hold an election is 0.2369. So I guess I'm baffled. Are we losing industrial base here? Or because every my concern is 97% of the houses are capped. That means they're going up to the cap 10% this year, every year.

(1:21:25 - 1:21:37)
In fact, many of them are so far under their taxable value so far under their market value. They're going to be paying a 10% more every year in ad valorem taxes. That's real dollars.

(1:21:38 - 1:21:57)
And so we are actually raising the burden if we keep the rate the same on our taxpayers. I know I understand what you're saying, but the rate is valuation times our rate. And so those are real dollar increases that are hitting our taxpayers.

(1:22:07 - 1:22:31)
But to our homeowners, but to our homeowners, they're experiencing a 10% rise in their taxes because their houses, the vast majority, 97% of them are capped. That's a fact. Now we may be losing some other industrial base or something, but our homeowners are getting hit and they're getting hit year after year is my point.

(1:22:31 - 1:22:55)
And that can't be ignored. You go to the Harris County website and it tells you that those houses, everybody's house is going up 10%. Is there any relief that we can give to our taxpayers? We did increase the exemptions for our over 65 and disabled residents this year.

(1:22:55 - 1:23:08)
And we raised that significantly so that we could give relief to the most vulnerable of our taxpayers. And we thank you. We appreciate it so much.

(1:23:08 - 1:23:17)
Thank you very much. And we thank you, but I will note personally, that gets wiped out in two years for me. I mean, it just, it gets wiped out entirely a little over two years.

(1:23:17 - 1:23:34)
And so, but the vast majority of our homeowners are not over 65 and they're young working class families and their house notes are going up. But back to your question, she didn't set that maximum rate. She was given that.

(1:23:34 - 1:23:40)
So that's the rate we're supposed to do. I mean, we can't do anything with that. I'm afraid.

(1:23:40 - 1:23:50)
What are you talking about? The 0.22, whatever that number was, she said about eight times. 0.2207. No new revenue rate. Right, the no new revenue rate.

(1:23:50 - 1:23:58)
It's set by the county. But that doesn't address what's happening to our homeowners. And that's a different argument though.

(1:23:58 - 1:24:05)
It's a different argument. Regent Hall, like, I guess I can only speak for my own home note. Mine's actually decreased.

(1:24:06 - 1:24:18)
I just, I don't know, but I'm not paying. Don't tell anybody, okay? Your taxes went down? Something's wrong. No, my just note has gone down compared to what we, maybe because we've adjusted our property taxes.

(1:24:19 - 1:24:48)
Yeah, and part of it, although it has to do with the way the legislature jimmied with the tax calculations. It's so convoluted and complex now. So back to my question, the board, if we go to six months, how quickly are we going to do that? I mean, how much are you allocating for this budget year just for that line item? I mean, we need to know that, right? We need to know from the board how much that, how much we could put towards that.

(1:24:49 - 1:25:11)
That's what we're asking in this discussion. That's a good question because I think the numbers are what we're trying to get. What did you put in there? Well, typically we have allocated the operating surplus back to the operating reserve, which right now we're estimating that we're going to have about somewhere close to 5 million operating surplus this year.

(1:25:12 - 1:25:47)
And so we will be coming to you to ask that you allocate a portion of that to the operating reserves and potentially allocate a portion of that. Back to facilities as well. But you're talking about last year, I'm talking about the, for the budget, what the line item for reserves, which is now four to six, how much are you going to put in that cubby hole? We're not going to budget it as a line item in the budget as we did back in years past.

(1:25:48 - 1:26:23)
We are asking that it, that operating surplus be allocated to that. So a moving target. Right. 

It's a moving target. My question would be, what, what is, what's the delta between our current reserves and what it takes to get to six months? We were at, yeah, we were at just a little over four months and our operating expenses are running somewhere between four and five million a month. So we're about eight to 10 million off.

(1:26:24 - 1:26:35)
Okay. Okay. Was the estimate to make that up the eight, eight to 10 million all in one year? No.

(1:26:36 - 1:26:50)
Okay. So, so, so I'm seeing this clear now. So when the books are closed, we're going to have approximately five million of surplus and, and, and you're going to ask for some portion of that.

(1:26:50 - 1:27:08)
Okay. Let's say $2 million. Okay. 

To go towards operating surplus and the three million to go towards facilities. And we here need to decide a dollar amount that goes in the budget to add to that number. If you wish to do that.

(1:27:08 - 1:27:16)
If we wish to. Okay. So we've got 2 million of the 10 million we need to get to that number.

(1:27:16 - 1:28:04)
I'm not suggesting that we need to tackle the whole thing all at once. We're putting a million dollars into insurance reserve. Are we good with a million dollars towards operating reserve in the budget? Or do we want to go higher than that? How much we don't have left over? I mean, after the next year, I mean, what's your, what's your projected budget show us for revenue, excessive revenue? Well, our, we always present to you a balanced budget and surplus is created when we when we operate, when we bring in more revenue than what we budgeted, which is what happened this year.

(1:28:05 - 1:28:24)
We brought in close to a million dollars more in tuition and fees. We brought in close to a million dollars additional in taxes in lieu. And so until we get into the year, that's kind of a difficult question to answer.

(1:28:24 - 1:29:07)
However, I will say, as Dr. V mentioned earlier, with increasing the contingency to two and a half to three million, I would feel very confident that there's going to be a portion of that that will definitely fall to the bottom line. And so, you know, as Regent Fontenot, maybe suggested, you know, looking at somewhere if you want to budget a million or so, I think it's very realistic that we will have excess funds to allocate to that reserve. You're going to bring us a balanced budget and you've got to work in the extra nine and a half million.

(1:29:08 - 1:29:19)
You got to put that in a cubbyhole somewhere to get us a balanced budget, right? You got to stick it somewhere. No, well, we didn't stick it in cubbyholes. We, we did.

(1:29:20 - 1:29:41)
We, we allocated it to some of the needs that Dr. V has shared with you on increasing repairs and maintenance, increasing insurance reserves. I can't remember. The raise was, the raise was before the nine and a half million.

(1:29:41 - 1:29:45)
We had that back in June. Yes, sir. That's true.

(1:29:46 - 1:30:01)
And then we also had the, the increasing the contingency, which was about two million or so increase. I'm sorry, I'm working up my memory here. So I'm having trouble detailing it all out.

(1:30:01 - 1:30:11)
Yeah, me too. Because we don't have anything to look at. But our job tonight, our job tonight is to give them guidance on what to bring us.

(1:30:11 - 1:30:18)
Well, that's what I'm saying. You'll have it ready and in total. We got more money than we have places to put it.

(1:30:18 - 1:30:20)
It sounds like. Oh, no. Not a great problem to have.

(1:30:23 - 1:30:53)
I think if we continue our philosophy of excess revenue going to our cash reserve, then I think we can, I think we can feel comfortable that we'll continue growing that cash reserve and not have to fund it all with the annual budget. Right. And so, you know, if we're looking at approximately five million and hopefully we'll, we'll take a philosophy we've done the last two years and share that between facility needs and our cash reserve.

(1:30:53 - 1:31:03)
We could be looking at two and a half million, you know, going both ways. We definitely have facility needs out there. Two and a half million to the cash reserve.

(1:31:03 - 1:31:13)
We budget some nominal amount if it's available to help grow that cash reserve. You know, I never was about getting all there at one time. Right.

(1:31:13 - 1:31:21)
I was about continuing to consider growing it to the six month number, but not like all in one big swoop. Right. And it is a moving target.

(1:31:21 - 1:31:44)
So I'm comfortable with if, if we as a board are accepting of what we deal with excess revenue, to look at a number in it that we can, that's available. I mean, obviously, if we, if we run out of money, putting it everywhere else, but if we have a million dollars, I think it's a good solid number to continue growing our cash reserves. It's my opinion.

(1:31:46 - 1:31:56)
Budget a million dollars in the budget and then excess revenue. That'd be a potential three and a half million dollars for our cash reserve from where it currently sits. Right.

(1:31:57 - 1:32:28)
Which should get us closer to the five month, you know. Linda, are you very comfortable or somewhat comfortable with your recommendation for how we spend money for the budget for, for, for the next time? Or am I comfortable with the recommendations that I'm bringing to the board? I'm very comfortable, extremely comfortable with the recommendations. And it sounds like it's been based on data.

(1:32:29 - 1:32:32)
Correct. You've done a lot of research. Correct.

(1:32:35 - 1:32:58)
And I think we need to support the administration and their recommendation. That's my opinion. My opinion is if there is a recommendation that all of our spending needs are met, we're going to have this amount of money left over and the taxpayers are not brought into the equation.

(1:32:59 - 1:33:04)
I can't, I can't support that. We've had surpluses. We have almost five million.

(1:33:04 - 1:33:13)
That's over two cents in tax, two and a half cents. This year, we had a surplus last year, similar. We had a $9 million surplus the year before that.

(1:33:13 - 1:33:25)
We've had tremendous surpluses. And the taxpayers, we got one cent. I think we've had a 16% reduction on top of a 61% value increase for our, for our taxable district.

(1:33:25 - 1:33:46)
I think it's time that we consider the taxpayers because the, the financial burden on them, even adjusted for inflation has risen 25%. That's a substantial increase. Mark, I wish we could, I wish we could set aside something, even when we can't identify a spending priority.

(1:33:46 - 1:34:25)
I mean, we're, we're spending on every single thing and we still can't come back and give the taxpayers a break. I have not seen the data that you're referencing to be able to feel comfortable with the numbers that you are positing to this conversation. But what I will say is that we have lots of unmet needs that we should not feel as though we have excess money because we have money to be able to think about meeting the unmet needs.

(1:34:25 - 1:35:03)
And until we no longer have unmet needs, then we would have excess in my opinion. So I'm not comfortable with the language that we have excess because we've already talked about our deferred maintenance that we have and we've gone everywhere from $248 million to $325 as the high. That's, we haven't met, we haven't used any excess funding for that yet for it to be excess.

(1:35:03 - 1:35:12)
We've had the money every year and we haven't, we haven't used it for that. We think we've spent money on facilities every year for the last couple of years. I'm pulling a Gina.

(1:35:12 - 1:35:17)
Yes. Yes, Regent Santana. Regent Hall.

(1:35:17 - 1:35:31)
Yes. I think during all the conversations we've had, it always appears that you and I are at opposite ends from when it comes to the taxpayers. I have stated from the very beginning that we have taken care of the taxpayers.

(1:35:32 - 1:35:50)
We consider the taxpayers with every decision we've ever made in every budget. Um, I completely agree that when the opportunity has presented itself, we have given the taxpayers a break. Can we keep up with the inflation and the, the HCAD appraisal values? We cannot do that.

(1:35:50 - 1:36:03)
It's not within our ability to do that. I never said the taxpayers were last when we talked about our philosophical statements. I just said we don't blindly go in and cut the tax rate just because.

(1:36:03 - 1:36:30)
I said we should consider all these other areas along with the tax rate. So based on that statement and the conversation we've had tonight, I'm not opposed to looking at a tax rate reduction as part of this whole process because as long as we look at all these other areas and not just blindly say cut the tax rate just because, that's the problem I've had. But we've had good discussion on raises.

(1:36:30 - 1:36:42)
I think we all agree that we want to take care of our employees. We've had great discussion on how to get to this six month, whether you agree it's too much or not. We're not one fell swoop doing it.

(1:36:42 - 1:36:51)
We've had great conversation about building a self-insured fund over the course of years. Regent Hemsel thinks we ought to do it faster. I'm glad to hear that.

(1:36:52 - 1:37:00)
We've had a lot of good conversation about all these other areas of need, growing our maintenance budget. That's always big. We're on the building committee.

(1:37:00 - 1:37:13)
We know the needs there. So my whole point the whole time was that we just don't blindly say cut the tax rate because we have money. I agree with what Regent Morfano said about need.

(1:37:14 - 1:37:21)
We will always have need. We are never going to get rid of need. So we can't say we'll never cut the tax rate until we meet all our needs.

(1:37:22 - 1:37:26)
Our needs are going to continue to change. They're going to grow. We can have a hundred million GO bond.

(1:37:27 - 1:37:32)
We're still going to have needs. Nobody ever takes care of all the needs all at one time. We will never get caught up.

(1:37:33 - 1:37:55)
But as long as we're doing our due diligence at staying financially strong, keeping our employees competitively paid, insuring ourselves, our maintenance is appropriate to the level of facilities we have as far as value, and we're doing the best we can there. We need to be cutting the tax rate as well. That's all consideration.

(1:37:55 - 1:38:05)
I never intended to say we don't cut the tax rate until everything else is done. We're never going to be done. Our cash reserve is a moving target.

(1:38:05 - 1:38:22)
So I think you and I agree in a lot of ways. We agree. I just wonder where I'm looking for the limit, the stop limit, because I think we've had five healthy years of financial leftover and reserve building and all of that stuff.

(1:38:22 - 1:38:56)
And now we have cut the taxes in the last five years. I think a couple of meetings ago, we very transparently communicated what we have done with all of that excess revenue to the benefit of this institution and the taxpayer. Because along with building our cash reserves from zero to over 21 and a half just in the cash reserve, to building an insurance reserve, to still giving raises when we could, to growing our maintenance budget, to doubling it.

(1:38:57 - 1:39:06)
Okay. And we have also cut the tax rate 12%. I can't compare to the 61% number you're throwing, but we have done more than any other taxing entity in our local community.

(1:39:07 - 1:39:14)
We have taken care of every part of our business. Everything we're charged to do as regents. And I'm very proud of that.

(1:39:14 - 1:39:29)
And so as long as we continue looking at all the needs, which includes the taxpayer, I think we're doing what we're supposed to be doing. But what I was opposed to was just saying, we got nine and a half million dollars to cut the tax rate five cents. That's not a reasonable way to look at things.

(1:39:30 - 1:39:40)
We are giving the taxpayer all the relief we are capable of giving them. Every dollar we spent in excess revenue was necessary. It was necessary.

(1:39:40 - 1:40:10)
Now, maybe had we gone out for a GEO bond in 2018, we wouldn't have needed all that money, right? And we could have cut the other side of the tax rate, but we didn't have that available to us. So I'm just saying that I think we agree on a lot of things, but it sounds like, you know, you think we haven't done anything for the taxpayers and over collected, but we have used that over collection to their benefit. But you mentioned the word relief, and even with the one cent reduction we did, there's been no relief every year.

(1:40:10 - 1:40:17)
We can't, it's like trying to fight inflation. We don't control that. It's like trying to get raises ahead of inflation.

(1:40:17 - 1:40:33)
Not very many organizations can do that. You know, we're chasing something we don't control. We are benefiting from an extraordinary increase in property values, which the data that we got the other day in June said was 61% growth from where we were in 2017.

(1:40:33 - 1:40:46)
That's data that Annette provided to us. We've only offered, what, 16% to offset the 60. Well, because a lot of that other growth we've experienced as an institution as well.

(1:40:46 - 1:40:51)
Well, and we've delivered on that. We have delivered on it. Look at what we have done as an institution.

(1:40:51 - 1:41:19)
It's a simple calculation. I take the inflation out and allow, but it's because our student population growth has been somewhat minimal, but we've still taken a larger share of the pie, if you want to say. If there's only a fixed amount of money, we're getting, we've had a 25% increase in our funding from Avalon taxpayers over this- But in that 60% number that you referenced is growth of the tax base.

(1:41:19 - 1:41:36)
It's not all just increasing in tax value. There are new houses and new businesses coming on to the tax roll. So a good, we live in an area that is growing, okay? So a large part of that 60% is from growth of the tax base.

(1:41:36 - 1:41:57)
It is not just our tax value, our appraised values. But I just want to summarize- The values aren't going up, I'm just- No, I just want to say that I believe when it comes right down to looking at this, I'm looking, I personally am looking at some tax rate reduction as part of this process. Okay, that I may communicate- I don't know what it is.

(1:41:58 - 1:42:12)
Well, I don't know what it is. I said it in my priorities. I stated tax appropriately, consider the tax rate when considering all, I said after, but that was an attempt to say, don't do this first.

(1:42:12 - 1:42:26)
It's always been part of the priority. We have always considered the tax rate in every budget session we've gone through, and we've reduced it 12%. I know your number and I get all that, but we have reduced our tax rate more than any other taxing entity around us.

(1:42:27 - 1:42:36)
And so, you know, I'm proud of that. I don't know, people who are challenging our tax rate, tell us what we haven't done for the money that we're collecting. We've delivered.

(1:42:36 - 1:42:47)
We're on the national stage. We're on the cover of magazines. They're after Dr. Villanueva to go share what we have done here throughout the state, so other community college can benefit like we have.

(1:42:47 - 1:42:58)
We have, I believe, appropriately used what we've been given to deliver the mission of this institution. And I'm proud of it. I'm also proud of the fact that we've cut the tax rate as much as we could.

(1:42:58 - 1:43:09)
And could we have cut it more? Yes, but we wouldn't have done all the things that we've done, right? We wouldn't have put all the money into the maintenance. We're talking about next year. We're not talking about what's happened in the past.

(1:43:09 - 1:43:18)
We are talking about- But the past is an example of what we've always done. We're doing no different. We've always considered all six of these items.

(1:43:18 - 1:43:35)
I'll stop at the fact that we just, the bond capacity just came up last year. But all these other items we've done every year since I've been here, we've talked about every one of those every year, including the tax rate. And we have lowered it significantly in a short five years.

(1:43:36 - 1:43:46)
I disagree that we- So are you asking, Annette, to bring it back to a reduction? I don't think we need, Annette, to give us an example. We know what a penny is. We know what a half a penny is.

(1:43:46 - 1:43:50)
It's a penny. A penny is a million dollars. A half a penny is a million.

(1:43:50 - 1:44:05)
If somebody says we want to reduce it a penny, we go, well, find two million dollars and take it out of the budget. It's not a hard calculation, right? Give it any direction to the administration, to that effect. They always bring examples of what a half a penny, a penny is.

(1:44:05 - 1:44:11)
And we're prepared as soon as we know. So different than we've always done. Exactly.

(1:44:11 - 1:44:34)
The only difference is the final recommendation, which is to create, to pay down bond debt early, as we already did last year. And we're prepared to insert the numbers with whatever tax rate effect you want us to insert. We have a recommendation.

(1:44:34 - 1:44:45)
We'd be happy to share it, but we are looking for direction from the board instead. So I looked today, and we have the lowest tax rate we've had since 2008. The lowest tax rate, that's correct.

(1:44:45 - 1:44:51)
Yes, Lee College does. I know, but we have one of the highest tax rates in the area. But that's not going to matter.

(1:44:51 - 1:44:55)
It's not going to matter. Because values have gone up. That's, yeah.

(1:44:56 - 1:45:26)
The funds on, and you just mentioned the prepayment of, we're leaving a tax rate that allows us to pay off a debt that we have currently. We're carrying it 3.61 to pay that off early. Is that correct? And I'm opposing that philosophically, but even monetarily, we're not providing that money from the college.

(1:45:26 - 1:45:32)
We're taking it from the taxpayer. And that tax, we are taking it from the taxpayer. Completely agree with you.

(1:45:32 - 1:45:45)
Okay, and your position hasn't changed in the last 4 meetings. All we're saving the taxpayer is 3.61% of interest debt. But they can't go anywhere else.

(1:45:45 - 1:45:52)
It's a low interest loan, very low interest. We've gone through that with the expert you disagreed with. I know exactly where you stand there.

(1:45:52 - 1:46:18)
That's the 1 item probably in all this that we probably have significant opposing opinions on. And we'll get to that when it comes time to raise your hand, right? If we are paying 3% roughly on the bond and we could earn 4% in the market, maybe. What do we have to go earn in the market? What money do we have to go earn in the market? Whatever you're going to pay down the bond.

(1:46:18 - 1:46:25)
The $1.7 million, let's go earn more money in the market than pay down debt. It's the taxpayer. We're taking money from the taxpayer.

(1:46:25 - 1:47:01)
Okay, I need to interject for just a moment, if I may, please. It's very important for me to convey that the board insists that the college use data and be an evidence-based institution to drive decisions. My team and anyone that works with me at this college will tell you that I insist that data and evidence be used to drive decisions.

(1:47:01 - 1:47:43)
I rely on the expertise of my team and when we don't have that subject matter expertise internal, we bring it in externally as we did with our bond advisor and our bond counsel. I would respectfully ask that the board also apply that principle of using data-based decision-making. So if there's data that you'd like to use to refute actual data that refutes the expertise of the bond advisors and bond counsel, but Regent Hall, I'm just... You say I haven't presented, it's very simple.

(1:47:43 - 1:48:03)
No, I understand your philosophy. I do understand your philosophy, but it is counter to what, let me finish, to what the bond advisor, who is the expert fiduciary told us. We have adjusted, his calculations have adjusted for inflation.

(1:48:04 - 1:48:58)
It has been adjusted for inflation. It has been adjusted for inflation and using his calculation, we are saving the taxpayers money by paying off a bond early. You sought a legal opinion on the legality of the decision and we got an affirmative legal opinion on this stating that we were legally in the right to do this, that we are not violating any law by doing this and that it is in fact a best practice according to the legal expert in bond advising and bond counsel, who are the lawyers for bonds.

(1:48:59 - 1:49:09)
But those are the ones that we pay to do this. They're paid by myriad institutions to do this work. We pay them a pretty penny to redo all this for us.

(1:49:09 - 1:49:21)
And even doing so, we save the taxpayers. That is not a true statement. What's not a true statement? That we're saving the taxpayer money.

(1:49:21 - 1:49:26)
Let's, we're going down this path. We're going down this path. That's the one item.

(1:49:28 - 1:49:36)
But that's one of your, but that was your item on the list to discuss. Wasn't my item. We discussed this a year ago and we voted on it and we did it.

(1:49:37 - 1:49:48)
Yes, I mean, I hope we're talking about thumbs or thumbs up or thumbs down on any individual item at this point. We did the same thing last year and the disagreement was there last year and we voted and we moved on. That's how it works.

(1:49:48 - 1:49:53)
But some things have changed in the last year. Rates are up. So let me ask you.

(1:49:53 - 1:50:01)
In our bond counsel. But that only affects us if we're going out and borrowing more money. We're talking about building capacity to go out for a bond in five years.

(1:50:01 - 1:50:08)
With somebody else's money. But if, if we're paying three and a half percent on the bond. Somebody else.

(1:50:09 - 1:50:16)
If we're paying three and a half percent on the bond, right? That's our interest rate on the bond. Our expert explained it. I accept it.

(1:50:17 - 1:50:21)
You telling me all this stuff. I'm asking you a question. I don't know.

(1:50:21 - 1:50:25)
It's not the bond advisor here. You're asking. Bond advisor was here and he presented the data.

(1:50:26 - 1:50:42)
I mean, if you want, I can ask Annette to repeat what the bond advisor, Terrell gave us information a year ago. It's not selling us a bill of goods, Regent Hensel. He's telling, he has a legal responsibility.

(1:50:43 - 1:50:56)
Do not break the law as it relates to the advisement of our bonds. Nobody's talking about legal stuff. I absolutely am talking about legal stuff because he cannot break the law.

(1:50:56 - 1:50:59)
I don't doubt that. And advising us. And he has to provide the best advice.

(1:51:00 - 1:51:09)
So if we are paying three and a half percent. And we can earn five and a half percent on a CD. That's.

(1:51:09 - 1:51:17)
Well, why would you, why would you pay your. Our bond advisor told us why that does not make any rationale, rational sense. It does to me personally.

(1:51:17 - 1:51:21)
I accept that. So the bond advisor. No, I trust.

(1:51:21 - 1:51:27)
I know. I agree with what the bond advisor said. Okay, you're mixing apples and oranges.

(1:51:28 - 1:51:41)
So can I just make one point? The bond advisor was talking about the college. But the college is not the source of the funds. The taxpayer is with extra taxes that we're talking about keeping the rate high.

(1:51:42 - 1:51:47)
So we have, we don't look at what the. That's a philosophical difference. You keep saying that it's extra.

(1:51:48 - 1:51:54)
I don't agree that it's that it's extra. Okay, it's not a tax. You're spending something as a tax increase.

(1:51:55 - 1:52:07)
And it's not okay. It's like, it's like the gentleman said earlier, the fact that I don't lose 10 pounds doesn't mean I gained 10 pounds. Can I ask a question, please? Taking taxpayer money.

(1:52:07 - 1:52:19)
Okay, so back on track here. Okay, are we going to get to discuss this or not? What have we been? Is my mic on? Yeah, we've discussed it. Hold on.

(1:52:19 - 1:52:24)
Hey, hey, hold on. Hold on new voice weighing in. Regent Guillory has something to say.

(1:52:25 - 1:52:36)
I would just like to ask a couple of questions. But it's about the same thing. So our meeting and our discussions about the budget.

(1:52:37 - 1:52:46)
That includes us talking about the tax rate. Those meetings are made public. They're posted and the citizens.

(1:52:52 - 1:53:03)
I don't know if you can hear us. You froze up. You heard her lips.

(1:53:04 - 1:53:18)
I think she was saying that the citizens of Baytowns have every opportunity. If I can see that. Okay, are you back? Yes, so that are those meetings posted publicly? Yes, ma'am.

(1:53:18 - 1:53:28)
Okay, so the meetings are posted publicly. So those taxpayers who we represent. Who know every year that we're going to be.

(1:53:28 - 1:53:35)
Voting on a budget that includes the tax rate. They are aware. Correct.

(1:53:36 - 1:53:55)
Okay, so we had a public hearing. Earlier, which all of those people who feel like we are mismanaging their tax dollars. Had the opportunity to come and speak on their own behalf.

(1:53:55 - 1:54:10)
Today, and I think there were approximately 15 people or so. But I would say that. Not that they have to be present to be heard because we represent them.

(1:54:11 - 1:54:31)
But I think it's unfair that we're making a statement as if all the taxpayers have an issue with the way that we are governing the college. I don't think that's fair and I don't think it's true. And so we continue to have the same conversation and it's okay for us to agree or disagree.

(1:54:32 - 1:54:46)
But I don't think it should come to this every single year. Everyone has their own opinion. We've heard it and then we should be able to provide some guidance and move to the next thing so we can get through the process.

(1:54:46 - 1:54:59)
So that's all I had. Okay, I appreciate her comments. I would just ask, as far as the public is concerned, we still haven't seen a budget, public seen a budget, it's not been posted.

(1:55:00 - 1:55:29)
And so they have no idea whether to come or not because it's not been posted. We're just waiting for you to tell us what to put in the budget in terms of a tax rate and approval or disapproval of any aspect of the recommendations that we have given. And we're ready to, within two days, not over the weekend though, have the budget to the board and be ready to vote next Thursday.

(1:55:30 - 1:55:47)
And even without having an actual document, it's been in the paper. So it's common information that we are having the discussion. So I do, I realize we should have a document that they tangibly could read, touch, feel, just as we should.

(1:55:48 - 1:56:09)
However, that doesn't mean they shouldn't be here to speak. They know we're talking about it just as we've had speakers show up tonight. I would like to see where we have a budget, the recommendation for the needs of the college presented to us by, at the latest, July 31st or something in future years.

(1:56:09 - 1:56:24)
We have always had budget proposals. We've never come to this late stage and not had a hard number budget proposal. We've talked about philosophies and everything else, but the administration is the one that knows the needs.

(1:56:24 - 1:56:38)
And generally the administration will present, this is what we would like to see. So that we have something to work off of dollars and cents. And we even haven't seen a complete budget.

(1:56:39 - 1:56:48)
We don't know exactly what it looks like. And we're, and this is August the 25th. I just think we should have seen this a lot earlier than that.

(1:56:50 - 1:57:00)
I'll say one more thing. I would agree that we should bring it earlier. However, the policy that governs our budget does not require.

(1:57:00 - 1:57:22)
It just says that we will receive it in August. And so if we want to change it to where we want it earlier, then that means we would have to change our own policy to state that because granted, a week ahead of time is not okay. But the policy that we currently have states that it will be presented to us in August.

(1:57:22 - 1:57:27)
Knowing how fast, here's my question. I have a question. I have a question for Annette.

(1:57:28 - 1:57:40)
Based on the input you have received here tonight, producing a budget with the tax rate flat. So that that is the variable that gets discussed next week. Okay.

(1:57:41 - 1:58:04)
How fast can you have something in our hands on that? The one missing component is. Do we continue the strategy of prepaying debt? I think we need to see the budget with it and without it. And then we can we can make our choice.

(1:58:05 - 1:58:11)
There's a dollar amount to that. How much is the million? $2 million of debt payment is what we're what we're talking to. For debt payment.

(1:58:12 - 1:58:17)
Yeah, a 2 minute. Yeah, so it's a line item in the budget. $2 million of debt payment.

(1:58:17 - 1:58:26)
So I would say put 1 with $2 million and 1 with $1 million. Give us 2 options. Give us 2 options.

(1:58:27 - 1:58:34)
Regent Santana. I would like to say that I believe we are the reason we haven't seen a budget. Yes.

(1:58:34 - 1:58:44)
This is our 3rd time to try to give direction. We had a philosophy meeting August 3rd. And we couldn't come to any conclusion there.

(1:58:44 - 1:59:01)
Our next meeting, we delivered a resolution to try to firm up those criteria to give the CFO some direction. And this is the 3rd attempt they're asking for direction. We're the ones that have caused the fact we don't have a budget.

(1:59:01 - 1:59:20)
And I will interject too that a district that I work for, we only received our tax rolls less than 2 weeks ago. So we didn't know what we had to deal with. I don't know when the district got theirs, but I know that it doesn't come before the 1st of August.

(1:59:21 - 1:59:33)
And I don't know if we, do we officially have the official roll right now? We've received the official roll from Chambers County. Right. Not from Harris County.

(1:59:34 - 1:59:52)
Because at City, we still don't have ours. No, we won't. Which means we probably will be coming back to you in September to actually adopt or have a firm proposed tax rate.

(1:59:52 - 2:00:27)
So any tax rate or strategy that we discuss tonight is purely going to be proposed because we don't have the final numbers to calculate. So once again, can you get us a draft budget with the $2 million of debt prepayment and one with, without, one with none? And Annette could, just for my own benefit. I think we can extrapolate in between.

(2:00:28 - 2:00:41)
The $2 million, we're paying $3.5 and we could earn $5.5 or $5.25. Give us those numbers. No. We can't earn it.

(2:00:41 - 2:00:55)
We couldn't earn. Why can't you put it into a CD? Because the bond advisor told us why we couldn't. You can only collect the amount of money that you're going to actually use to pay for the debt.

(2:00:55 - 2:01:17)
You can't collect money and say, I'm going to save it and then earn interest on it and then maybe pay off debt later. You have to set, you have to state the amount of debt that you're going to be paying when you set the tax rate. There's a M&O rate and then there's an INS rate.

(2:01:17 - 2:01:33)
And whatever you set as your INS rate is the amount that you have to pay on that debt for that year. So we have no choice but to put the $3 million, $2 million on the bond. Is that what you're saying? No.

(2:01:34 - 2:01:36)
No, I'm saying. Pay down. Pay down the bond.

(2:01:37 - 2:01:40)
Pay down. You have no choice. No, that's not what I'm saying.

(2:01:40 - 2:01:44)
If we collect the money, we have to pay it down. Yes. Right.

(2:01:44 - 2:01:57)
Yes. Everything that's collected gets paid towards the bond. They're asking to take $2 million of non-INS money and apply to pay it down.

(2:01:57 - 2:02:04)
That's what's being. So you're saying that $2 million, we cannot invest that somewhere else. That's what I'm saying.

(2:02:04 - 2:02:07)
You cannot do that. That is correct, sir. But I remember.

(2:02:09 - 2:02:31)
Now, we're asking her to do two budgets for that and then give also do a budget in each circumstance for a zero based cut on our taxes and another one for a half a cent and another one for possibly a one cent tax. Well, what I was. We know that a lot of variables.

(2:02:32 - 2:02:34)
Right. And that's not what I'm asking. What I'm asking.

(2:02:34 - 2:02:42)
We know that a one cent is $2 million. I'm saying present us a budget that's flat. And then you can do the math.

(2:02:42 - 2:02:50)
It's going to be $2 million less if we reduce. The revenue side is going to be reduced by $2 million. We can do that math.

(2:02:51 - 2:02:57)
It's. Yeah, but I think what she's referring to. We used to get a booklet early on and they had all the options in it.

(2:02:57 - 2:03:00)
It showed he did this. Here's what it would be had three columns. Yeah.

(2:03:00 - 2:03:04)
And I think if we could have told her that a month ago, we would have had. We always get it. We never asked for that.

(2:03:04 - 2:03:31)
We have to be told that the priorities that we are recommending are in line with the board's direction. And so so, for example, if if at the board's pleasure. The recommendations that we have given, we could put together a flat tax rate, a half a penny tax rate reduction or a penny reduction with all of those variables in place.

(2:03:33 - 2:03:49)
I just, which, which, in essence, for me is that. This is the 1st time that I remember. The administration ever coming and saying, what are your priorities? They used to come give us a budget and then say, okay, now tell us what we did wrong.

(2:03:50 - 2:04:00)
Yeah, and then then we would be then then Annette was bashed on the head. And told no, we tell you what the priorities are. And then in January.

(2:04:01 - 2:04:11)
Regent cotton, we began asking. What are the board's priorities? To which we did not. To this day, receive a response.

(2:04:14 - 2:04:27)
So we're doing what we have been instructed to do. And so, again, we would be happy to prepare. A hard copy or an electronic copy a spreadsheet with some numbers in it.

(2:04:28 - 2:04:40)
That would represent our recommendations. That would include a no tax rate. 3 different reduction, a half a cent reduction and a full penny.

(2:04:41 - 2:04:55)
Can I can I suggest though that. When that is done, though, who's going to decide what gets cut? I believe that if we see a flat, tell us here's our revenue here, our needs. The recommendation of the administration.

(2:04:56 - 2:05:03)
If we want to cut a half a cent, we know it's a million dollars. We then can discuss where we pulled a million dollars from. Correct.

(2:05:03 - 2:05:11)
Right? We, I don't think we expect the net to tell us. Take this million out of here, this 2 million out of there. We have a recommendation.

(2:05:11 - 2:05:20)
We know you can recommend. I, I've got my thoughts if and if we. Don't want as a board to pay this additional.

(2:05:21 - 2:05:33)
Payment, we know it'll drop the INS tax, right? We know that that's a simple math calculation as well. So, I, I don't think it's that complicated. Bring us here's here's the revenue.

(2:05:33 - 2:05:38)
Here are the needs. If you, if we needed to cut a million dollars out, tell us what you recommend. We'll agree to it or not.

(2:05:39 - 2:05:42)
2 million cut out. Tell us what you recommend. We agree or not.

(2:05:44 - 2:05:55)
I don't think it's that complicated once we get the numbers, right? The part of the problem this year was we got an extra 9 and a half million or more. And we had no place that we got to figure out where to put it at. But we don't have I won't use it anymore.

(2:05:56 - 2:06:13)
Don't use it anymore. And you don't have to spend all of it just because you just got that was what changed a lot of it when we had to find the area an opportunity just like we did with cares funding. That we weren't expecting, right? And so we all agree.

(2:06:16 - 2:06:32)
Do you feel like you've got proper direction? Please hold on to that thing. Please say yes. So, what I think I'm hearing is you want to see a budget with.

(2:06:32 - 2:06:48)
A 2Million dollar pay down on debt. And a budget without a 2Million dollar pay down on debt. And you want to see a. A budget that will reflect.

(2:06:50 - 2:07:03)
The current rate, a reduction of a half penny, and a reduction of a penny. I don't think we don't need that. We need that.

(2:07:03 - 2:07:13)
I think I kind of agree with Gilbert. We get the budget and we look at it and say, okay, we want to take a 1Million dollars out. I'm going to take 100 from here, 100 from here, 100 here and 500 there.

(2:07:13 - 2:07:20)
Well, I'm going to say straight up. Linda may not like this, but if we're going to cut a 1Million or 2, it's coming out of the contention. Right, exactly.

(2:07:20 - 2:07:27)
It's going to come straight out of contingency. That doesn't structurally affect anything. You know, and I'm not saying it's easy to take it out.

(2:07:27 - 2:07:35)
But if we had to, that's the least impactful. Well, I'm really sorry about the HIPAA violation. I'm getting her back for that.

(2:07:35 - 2:07:47)
That's what you get for violating my privacy. That is the administration's recommendation that if we had to cut, it would be in the area of contingency. Makes sense.

(2:07:47 - 2:08:02)
Regent Guillory has a question or a comment. Yeah, I was just going to echo that. I don't think she needs to prepare three different ones on the tax rate because we already know that it's, what, 2Million for a penny.

(2:08:03 - 2:08:06)
I agree. We want to do half. We just say, okay, take 1,000 off.

(2:08:07 - 2:08:14)
So, I don't think she needs to know. And if we want to add it, you just add a 1Million to it. So, I don't think she needs to do three different ones.

(2:08:14 - 2:08:30)
You can do one that includes whatever the recommendation is. And if that recommendation doesn't include a tax reduction, you still know how much more money that would be. It would be $1M, it would be $2M, or it would be zero.

(2:08:31 - 2:08:56)
So, bring the recommendation, and then we know the numbers where we can add in to see if we want to go up or stay flat. I appreciate everybody's feedback on this. One question that I would have, because obviously if we're not going to do the early pay down on the debt, that's $2M.

(2:08:57 - 2:09:19)
That's one penny. That's the answer, if that's your answer. And so, we might be able to save ourselves some trouble if I have a better understanding of whether or not that is a strategy that we want to continue.

(2:09:22 - 2:09:31)
I think we've not been able to firm up that long-term strategy. We attempted, but I appreciate that option. We know that's an option.

(2:09:31 - 2:09:54)
$2M is a penny, whether it's the INS side or the M&O side. So, if Regent Hall can somehow find a way to impress upon me to agree with him that we should cut that and add another penny somewhere else. But I'm just saying that we've got options, and we know what they are.

(2:09:54 - 2:10:05)
I don't think we can answer that philosophical question right now. And I think you can take that amount and do the possibility to do both. I'm not saying that's what we need to do.

(2:10:06 - 2:10:27)
But if you needed to just bring another option, you got $2.5M, whatever the magic number is for the debt, you can split the baby. You can take $1M of it and reduce your tax rate by a half cent and take the rest and pay the debt down. So, at the end of the day, I'll just reiterate that Annette only needs one budget.

(2:10:27 - 2:10:31)
That is correct. And we only can approve one. Yeah.

(2:10:32 - 2:10:41)
But you may have to bring us a couple options to get to the one that we need. Well, I think she can bring us one. I think, yeah, I think I heard one.

(2:10:41 - 2:10:55)
And then we can tell her what our priorities are. And if nothing else, we can get a consensus of the board as whether it's going to pass or not and whether she really needs to go to all that much trouble. Well, I think it has to pass next time, right? Only if we want to meet.

(2:10:55 - 2:11:00)
I think so. Yeah, and the motion would include whatever adjustments. We have to do something next week.

(2:11:00 - 2:11:04)
Yes, and we can pass an amended. We have to do something. We will do something.

(2:11:04 - 2:11:09)
We will do something next week. We can pass an amended budget. She's not, I mean, we'll make changes to it at next week's meeting.

(2:11:10 - 2:11:26)
Well, you can pass the budget and then you can make amendments to it later if, you know, something changes, but. After our tax rolls come back. And then you have 60 days from the adoption of the tax or from the budget to set the tax rate.

(2:11:27 - 2:11:38)
Okay, so. You have the guidance you were looking for? Okay, great. So, there's nothing further.

(2:11:38 - 2:11:48)
The next item on the agenda is executive session. Do we have? Thank God. Matters of concern for future agenda.

(2:11:48 - 2:12:07)
Do we have any matters of concern for future agenda? Yes, yes, regional. Hi, region mentioned time frame for a budget proposal. The chairman of the policy committee that that would be something we should.

(2:12:10 - 2:12:33)
Oh, are you talking about the comment? I made about the policy about. Saying that the budget comes in August, right? Well, I can just tell you that the policy committee is already mentioned looking at our board policies right now. And so we will be happy to bring that doesn't necessarily mean we have to change it.

(2:12:33 - 2:12:45)
But if there is an interest in doing so, then we can bring it up and review it. But we're looking at the board policies anyway. So that could be 1 of them, but it's simple.

(2:12:45 - 2:12:51)
I mean, it currently says. August. But, yeah, we can bring it.

(2:12:51 - 2:13:04)
But we don't have to, we'll bring it to the policy committee 1st. And then if it makes it out of the committee, then it comes to the full board. And 1 of the things in that process region hall is that when we.

(2:13:04 - 2:13:17)
If we choose to make a change, it has to go before TASB. Their legal review and then our with John with our legal review as well. Before it actually gets to the board.

(2:13:17 - 2:13:24)
That process takes several months. Is that correct? This depends on. Yeah, okay.

(2:13:25 - 2:13:33)
And that's the same process for every policy that we bring to you. So that's not unique to this 1. That's the same process for everyone. Got it.

(2:13:34 - 2:13:44)
Okay, my future agenda item would be the campus tour that was talked about earlier. I think that's a terrific idea. And I'd like to after the budget after it pulls down a little bit.

(2:13:44 - 2:13:52)
Yes, so in the next. Several weeks, let's, let's look at doing that. I think that would be great.

(2:13:52 - 2:13:59)
And it rains twice. Does anybody else have any matters of concern for future agenda? I move for adjournment. All right.

(2:13:59 - 2:14:02)
2nd. This meeting is adjourned. 3rd.

(2:14:04 - 2:14:11)
Welcome Pam. All right. That would be a great.