Yavapai College funding in Verde Valley
Questions regarding how much of the revenues generated in the Verde Valley by Yavapai College are being spent on post-secondary education opportunities in our region have been concerning local citizens for years.
Recently, the committee formed by the College's District Governing Board to advise them on Verde Valley issues requested that financial information. The simple answer received recently is 87 percdent. A more accurate answer gained after closer review suggests that while 87 percent might be a satisfactory goal to strive for, it has not been the case historically.
At the Verde Valley Board Advisory Committee's Oct. 7 meeting, Yavapai College's Dr. Clint Ewell, Vice President of Finance and Administration, provided the long-awaited information on tax revenue and expenses attributable to the Verde side of the county.
Some of these expenses and revenues were based on agreed-upon reasonable assumptions, since the college's accounting methods do not keep that specific data. The Committee expressed its appreciation to Dr. Ewell and the College for the opportunity to receive and review this information.
In its June 2015 Recommendation report to the Yavapai College District Governing Board, our Committee made the following statement ". . . it can be assumed that there is a segment of Verde Valley students who have the resources available to them to take advantage of the facilities and programs available on the Prescott, Prescott Valley, and Chino Valley campuses. Accordingly, some allocation of the resources generated in the Verde Valley are justifiably applied there. At issue for Verde Valley residents is the percentage of locally generated revenues being allocated for programs and facilities outside of our region. We recommend that a far greater percentage be allocated within the Verde Valley." The question then is: What should that percentage be?
The revenue and expenses report provided to the Committee by Dr. Ewell revealed that for the past five years, fiscal year 2010-11 though fiscal year 2014-15, 87 percent of the revenues generated from the Verde Valley (defining the Verde Valley as our five school districts) from primary property taxes, tuition and fees, state appropriations, and investments were returned to us as direct, allocated, and capital expenses. It would seem that 87 percent is a pretty high number and one that we could be very satisfied with. Accepting the College's financial assumptions as accurate enough for this study, the next question might be: Are the five fiscal years being studied representative of a typical five-year period? In answering this question, a different financial picture begins to emerge. To better understand that picture, let's step back to the year 2000.
In 2000, the voters of Yavapai County approved a general obligation (GO) bond measure for $69.5 million. The wording of the ballot question left open the specific uses, but did include references to:
. . . Sedona Center for Arts & Technology: a new or expanded building for the expansion of multimedia and skill development programs;
the Verde Valley campus in Clarkdale, a Northern Arizona Regional Skills Center; and
a new building with classrooms, community meeting space, student support services, labs and training facilities."
From that GO bond issue, the Verde Valley campuses received approximately $9.6 million in capital improvements. Those improvements include the new Building M and the renovation of Building L into a skills development program for nursing on the campus in Clarkdale. The GO bonds are paid for by a secondary property tax on properties throughout Yavapai County. It is estimated that the Verde Valley's share of the debt service on that secondary property tax is about $1.6 million per year. If we assume that this figure has been assessed for each of the past 15 years, the Verde Valley has paid approximately $24 million of that debt. That is $24 million for $9.6 million in capital improvements and we are not done paying those bonds off yet.
The financial data provided by the College Oct. 1, shows that over the five-year period mentioned above, approximately $26.3 million in capital improvements were made to the Verde Valley and Sedona campuses. That is a lot of money! It would appear though that this pattern of spending is not typical of the years prior to the five-year period being used in their assumptions. Also, the recently developed and adopted 10-Year Plan for the College does not indicate that this pattern of spending will continue during the 10-year time span going forward.
So, if one makes some assumptions about backing out these non-typical capital expenses, the average excess of revenues to expenses ranges from somewhere between $5.5 million and $7.1 million in a typical year. That is the amount in a typical year of revenues generated in the Verde Valley that are not spent in the Verde Valley.
In other words, $5.5 million times 5 years equals $27.5 million. That means during the five-year period of data provided, the Verde Valley provided $27.5 million dollars for $26.3 million of capital improvements. That doesn't seem too bad until you start to look at what is being planned for the next 10 years.
The College's recently adopted 10-Year Plan was originally set at $104 million. Of that $104 million, the Verde Valley was scheduled for about $3.5 million in capital improvements. Since its adoption, the Plan amount has risen to approximately $111 million with about $6 million coming to the Verde Valley and Sedona campuses. Using a conservative assumption at $5.5 million of excess revenues per year, the Verde Valley tax payers would be funding $55 million dollars over 10 years in order to receive about $6 million in return.
If one looks back to the year 2000 and the GO bonding measure and looks ahead to the projects in the 10 years of current planning, the Verde Valley tax payers are providing approximately $65 million dollars to finance debt, fund programs, and build buildings that will provide post-secondary education to a small portion of Verde Valley residents who can travel to or live in Prescott, Prescott Valley, and Chino Valley. These numbers are assumptions and very likely leave out some on-going capital improvements or other costs. They are, however, conservative in their estimate; intended to provide a general picture, and derived from the assumptions provided by the College.
So it seems we may need to ask ourselves some important questions regarding taxpayer funded post-secondary education in the Verde Valley.
First, are we OK with sending approximately 40 percent of our primary property tax dollars and approximately 60% of our secondary property tax dollars each year to fund post-secondary education outside of our region?
Second, what is the right percentage?
We might take it even further and wonder what we could do with somewhere between $5.5 million and $7.1 million every year of excess revenues to create and sustain programs and facilities for our local students of every age.
We don't know about you, but an average of 87 percent of our revenues staying here in the Verde Valley sounds like the right amount to us. That is 87 percent on average each year and every year.
The Verde Valley Board Advisory Committee would really like to know your thoughts on these issues and what programs and facilities you think are needed in the Verde Valley. We want to know whether this issue is important to you or not because if it isn't, that will make our job much easier. If it is, we will keep working on your behalf. We are planning the first in what we hope will be a series of town halls in our region.
Please consider joining us to share and listen in Sedona on Oct. 21 at 5:30 p.m. at the Sedona Yavapai College Campus, Room 34, 4215 Arts Village Drive.
Bill Regner, Clarkdale, and Carolyn Fisher, Village of Oak Creek, are members of the VerdeValley Board Advisory Committee.