Thursday, December 27, 2012

Revenue Neutral

A recent Daily Herald article, “Waterleaf chef quits amid COD faculty complaints” (12/23/12)chronicles the challenge that College of DuPage faces in operating its auxiliary units, primarily the McAninch Arts Center, WDCB Public Radio, and the new Waterleaf restaurant and Inn at Water’s Edge boutique hotel. I often joke with people that if you were going into business with dreams of big profits, at the top of your list of business prospects would certainly be a jazz radio station, a French restaurant and a performing arts center.

The Daily Herald reveals three operations of the college that cost the taxpayer and the enrolled student $1.6 million to operate. “In 2012…, the MAC lost $519,000…”. I take issue with the Daily Herald’s use of the word “lost”. When the College spends dollars in support of academic learning or the operation of the physical plant those dollars are offset by tuition and tax revenues. Currently auxiliaries contribute to their operation, The MAC generated $1.3 million in earned and contributed income in fiscal 2012. However the balance of the MAC’s operating budget is covered by the college general fund. The College posted no year end deficit and in fact increased the fund balance.

The mandate going forward from the College is that we operate in a “revenue neutral” manner. The term comes from D.C. tax legislation in the 80’s with the idea that spending increases in the federal budget would be offset by increases in revenue. At the College it simply means that auxiliary units do not spend more than we can earn through earned or contributed income. The Daily Herald article continues, “Though college officials expect deficits to continue in the short term, they say they're planning initiatives to try to cut expenses. Breuder said he wants to see the losses reduced, but for now, the college isn't at the point where it would have to give up on enterprises such as the restaurant.”

We have already begun at the MAC. During this time of renovation and a smaller season we have reduced staff and other operating expenses and we are stepping back and taking a hard look at our operation. We have every intention of providing arts experiences upon our return but those experiences will have to be going forward “revenue neutral”.

Be well