MHCC budget blueprint leans on tuition hike, drawing down reserves

A proposed Mt. Hood Community College operating budget for the 2025-26 academic year includes an increase in tuition – but would still exceed expected revenue, pushing the college’s reserves to the limit, according to the college’s budget director.

At the Feb. 19 MHCC District Board of Education meeting, Jennifer DeMent, the vice president of finance and administration, presented the college’s budget assumptions for the upcoming year.

To address rising costs, a tuition increase of around three percent (a $4 per credit hour increase for in-state students) has been recommended for 2025-2026. DeMent informed the Board about the expected increase in expenditures for the upcoming year. Even with a proposed tuition increase included in the proposed budget, the college would still rely on deficit spending. In addition to the ongoing funding obligation to the Oregon PERS System (OPB) and the related pension bonds, the main drivers of increased spending were said to be increased salaries in line with the Consumer Price Index and increases in higher education-specific costs (3.4%) as measured by the Higher Education Price index for 2024.

In an email, DeMent said the college’s preliminary budget plan will further deplete its reserve funds to “the minimum level,” which she put at 10 percent of expenditures for the coming year.

She told the Board she “wouldn’t be comfortable” bringing a proposed budget with less than 10 percent in reserve, which would last the college “maybe three or four months.”

At the beginning of the 2024-2025 academic year, the college had $18 million in reserves, which has since decreased by $5 million.

The 2025-26 budget is projected at using $4.5 million more in spending than estimated revenue will cover. If the budget assumptions presented by DeMent pan out, that would leave the college’s reserves at around $8.5 million – and a line she warns cannot be crossed. She said that, “This is the last year we can maintain this (deficit) spending pattern,” In an email, DeMent said that dipping further into the college’s reserve funds “puts (the college) at risk of having no savings to address emergencies, unforeseen expenses, or declines in resources.”

One of the critical assumptions made in DeMent’s projections is the college receiving an increase in funding from the Oregon Legislature. If that doesn’t happen, a reduction plan would need to be ready.

“We’re assuming that we’re gonna get 6.9 percent from the state,” said DeMent. “(I)f that funding doesn’t come through, we will need to make reductions.” She said the details of a specific reduction plan were still being worked out, to be presented when the college formally presents its budget plan to the Board on April 2.

Leo Fontneau