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Cape Girardeau County Extension: A Budget Analysis
This paper will examine the budget and fiscal policy of the Cape Girardeau County Extension using trends in budget formation and execution between FY 2015 and FY 2016. Recommendations for further action will be provided, based on the information collected in this paper. General information about the organization was gathered from the Cape County Extension website and may be viewed here: http://extension.missouri.edu/capegirardeau
History and Purpose
The University of Missouri Extension (MU Extension) was born out of two separate pieces of legislation under the Morrill Act in the 1800’s that created land-grant universities, and the Smith-Lever Act of 1914 that established the system of Cooperative Extension (Comer et al., 2006). According to documents from the Library of Congress, the official title of the Morrill Act is “An Act Donating Public Lands to the Several States and Territories which may provide Colleges for the Benefit of Agriculture and the Mechanic Arts” (www.loc.gov). The original mission of the land-grant university was to extend education to all populations, especially the rural populations, regardless of their income or ability to attend a private college. Cooperative Extension, as is was originally named in the Smith-Lever Act, was the designated vehicle to accomplish that work. The current Extension mission is stated as, “Our distinct land grant mission is to improve lives, communities, and economies by producing relevant, reliable and responsive educational strategies that enhance access to the resources and research of the University of Missouri” (University of Missouri Extension, 2012). As such, the land-grant University of Missouri campus has a mission of service that is fulfilled through extension work.
Through the cooperation of Missouri University and Extension faculty (also alled Specialists) in county offices, services are extended to almost every county in the state. Statewide over 150 programs exists ranging from 4-H to nutrition, soil testing to business development. The programming is designed as a free or low-cost science-based education accessible by any interested party. According to the Through the cooperation of Missouri University and Extension faculty (also called Specialists) in county offices, services are extended to almost every county in the state. Statewide over 150 programs exists ranging from 4-H to nutrition, soil testing to business development. The programming is designed as a free or low-cost science-based education accessible by any interested party. According to the Framework for Excellence, A Blueprint for the Future of University Extension, program management development and guidance falls under the responsibility of five entities. They are, county extension centers and councils, academic departments, continuing education units, task forces and special extension institutes (University of Missouri Extension 1986, 8).
According to MU Extension trainer Tony Delong, the farm and farm family were the original “business unit.” As such, the initial focus of the organization was agricultural related. Over the years with the growing age of technology and resources, the focus has changed to accommodate a larger scope including four areas of emphasis. The areas of emphasis are, increase agricultural profitability, expand economic development statewide, strengthen the family as a social and economic unit, and provide lifelong education for professionals and occupational transition training (University of Missouri Extension 1986, 3). Although the focus has broadened for the organization, the mission has stayed relatively the same throughout its 100+ year history.
The organization for this study, the MU Extension of Cape Girardeau County, is housed within the Extension of the University of Missouri Columbia campus. The Columbia campus together with the campuses in Rolla, Kansas City, and St. Louis represent separate entities that make up the central structure of the University of Missouri system. According to the Missouri Office of Administration, the University of Missouri system is one of 10 public, higher education institutions in Missouri. Together with a county program director, each Extension Council manages the budget for the group of extension specialists housed in their field office. The 28 member Cape County Extension Council is made up of both elected and appointed members. The Cape County Extension budget is predetermined by the laws that established the land-grant appropriations, and the Cape County Commission. Due to budget constraints and varying needs of populations in a given region, specialists evolved into collaborative network arrangements. These networks are utilized to find additional funding and meet goals given to them by the “middle management” that is far removed from the field work.
Through the vast array of services, the purpose of the organization as the arm of the university is direct service, information management, and as a social organization. The Cape County Extension staff and Council are responsible for carrying out the micro level details that support the macro budgeting decisions made at both the University level and the county level. Decision making in the budgetary process tends to be what Katherine Willoughby describes as incremental in nature (Willoughby 2014). Incrementalism is a process that is often based off of the previous year’s budget. Due to the structure of the host organization, the Extension is technically a government agency or a limited purpose government. It feels like a nonprofit entity due to the heavy reliance on direct service programming. Thomas McLaughlin describes the structural components of a nonprofit, and for the Cape County Extension, programming is the “chief means of carrying out its mission” (McLaughlin 2009, 8).
Type of Budget
The $111,411.00 budget that is managed by the Cape County Extension Council is a line item budget. Technically speaking, the primary funding organization (Cape County Commission) issues the funds as a lump sum and only cares about the line item breakdown during the planning phase of the budgetary cycle. The line item form is used to help the council understand expenditures and revenue and to manage the budget process. The specialists operate on a performance base at the University level, and part of their evaluations rest upon the council evaluations of the goals. What is interesting in this regard, is that the council evaluated them on goals that they do not know. Because of this, the council has opted out of performance reviews for the upcoming year. According to the University of Missouri System 2016 appropriation request, the University requires a mix of funding to support programs and participates in performance funding measures that hold the university accountable in performance areas.
Although the fiscal year for the University system begins July 1st, which matches the state of Missouri, the Cape Girardeau County Commission operates on a fiscal year that starts in January. Overlapping fiscal years make for a messy process when there are changes at the University level because they affect the micro processes carried out the Extension level. For instance, the University has decided to cut staff at the field offices to trim the University budget going into the next fiscal year. The trickle-down effect disrupts the county appropriated budget for the last six months of the budget cycle. This is also when the planning stage of the next year’s budget cycle is beginning.
Willoughby indicates four stages to the budget cycle that include, formulation, discussion and approval, execution, and assessment (2014, 310). The county program director begins the formulation stage in August, to be submitted to the Cape County Commission in September. The formulation stage includes a meeting with the Extension Council’s finance committee. After this session, the formal budget request is sent to the commissioners for review. The discussion stage with the county commission can last through December. To counter County pushes for budget reduction, Extension specialists focus emphasis away from the service costs, and towards the Extension impact in the County. Budget execution and micro budgetary decisions are made by the county program director. Assessment and control are handled internally by the Cape County Program Director and the members of the Council, typically on a monthly basis. A member of the Cape County Commission is appointed to the Council. However, the current participation is limited due to schedule constraints.
The largest source of revenue for the Cape County Extension budget comes from the Cape County Commission. The pool of funds that the county can appropriate is based on federal funds that flow to the states on a formula basis that is matched by state money. According to an article on the Pew Charitable Trusts web page, the Extension funding is a mix that includes 10 percent federal, and 90 percent state and local revenue as well as additional grants and gifts (Mercer 2014). The budget request from the Extension to the County has dipped from $117,625 in FY2015 to $111,411 in FY2016, resulting in a decrease of approximately 5 percent. Changes to funding levels are affected by both the county budget and by events that occur on the campus. The University of Missouri at Columbia has recently received bad press over race relations on the campus. As such, the Extension system is facing budget cuts and a hiring freeze due to decreased student enrollments at the campus. The budget cuts and the hiring freeze had a trickle down effect on the specialists statewide. Because the University employs them, this has resulted in a loss of specialists in Cape County. In addition, with a decrease in appropriations by the county the FTEs for the secretarial staff were reduced.
Due to budget cuts at the both the University and county levels, the Extension Council has sought ways to increase other forms of funding over the past two years. Other sources of revenue include rental rooms, rental of livestock weight scales and breeding barn, and soil testing. The ancillary revenue streams, taken together, can net an average of $285.00 per month, or $3,400.00 a year. The primary focus of this has been about how to exploit the rental rooms. The Council has pushed for rate increases. There has been a remarketing effort that has focused on overall marketing and a comprehensive study of the market in general. The remarketing effort includes the decision to amend the bylaws to allow alcohol at events to broaden the competitive base. As it stands, FY2016 rental room revenue is down 31% over the same period in FY2015. In addition, there has also been a push for marketing of the foundation. The foundation provides scholarships and can be used as a receiving fund for grants that specialists go after to support programming goals.
Essentially the primary function of the Extension Council is to manage the secretarial staff and the building expenses. Programming is paid for by outside sources (such as grants), and the University pays specialists. At the macro level, the Cape County Extension budget for operations is up in FY2016, and personnel is down in the same period. Reductions in personnel appear to follow the trend of most public organizations that the staff is expected to reach across more job functions. The decrease of staff has occurred via the loss of full-time equivalents (FTEs) for the secretarial staff from FY2015. This push came from the primary funding organization (Cape County Commission) because they felt that the office was over staffed. The decreased budget also forced the council to consider how to strengthen other forms of revenue such as learn how to market the rental rooms.
FY2016 travel expenditures are up with the addition of a part-time specialist and the need for some specialists to cover a larger service area. The organization moved to cut personnel expenses by 13 percent to accommodate the FY2016 budget reduction, in conjunction with the eight percent rise in total operation expenditures. Expenditures on office supplies are down 23 percent in FY2016. The reduction balances out the increase in all other non-personnel categories including travel, communications, building maintenance and utilities, other expenses, and a more than double increase in equipment maintenance and replacements. The expense and expenditures appear to reflect a trend of building and technology over personnel. Overall FY2015 spending was 95.5 percent of budget, FY2016 spending is currently 93.5 percent of budget.
The organization does engage in capital projects. These are typically improvements to the building, not any new building per say. Items in this category could include items such as parking lot striping, upgrades to exterior door lock mechanisms, gutter repairs and the like. Other than replacing a failed air-conditioning unit, the capital projects do not seem to fit the examples provided by McLaughlin such as buildings and equipment. Nevertheless, funding for the capital category capital is raised through the revenue generated by rental room income.
The Cape County Extension Council that governs the use of funds for the local Extension programming is at the mercy of decisions made at the University and county levels. Even if their policy were to increase programming or reach in the area, without additional revenue for staff, they would be unable to achieve that goal. At this point, extra funds are placed in the capital reserve to be used for building expenses. A snapshot of the organization’s financial health for the month of June, including all checking and savings accounts, shows that 40 percent of total funds are restricted, 35 percent are designated capital. The remaining 25 percent could be used to pay monthly expenses twice over if necessitated by an emergency. The organization does not have debt, nor would they most likely need to incur debt considering they own the building outright.
McLaughlin mentions that your biggest asset controls your organization (2009, 128). The same could be said of Cape County Extensions funding sources. Clearly, when the bulk of funding comes from one source, it often comes with strings. These can be in the form of budgetary control over how much is appropriated, and how to spend those dollars. Recommendations based on this scenario include:
- Do nothing. If the organization chooses this route, it could possibly continue to lose funding from the Cape County Commissioners. Once an organization can be shown to manage with less, it becomes a politically weak power broker.
- Work with the finance committee and local Extension leadership to commission a study of the organizational mission and strategic plan of the University to see if the goals between the two are aligned.
- If the University is not expecting to expand programming or create any other changes that would cause a greater expense the Cape County Extension, the FY2017 budget should adequately fund planned programming.
- If the University is expecting to expand programming or increase expenses at the local level, the Extension Council will need to strategize ways to maximize revenue. This could include:
- Look for the means to diversify their revenue sources, including greater marketing of the rental rooms, sales training for the staff, and procurement of grants.
- Engage in a political campaign or marketing campaign in an attempt to make cutting the Extension budget politically infeasible for the commissioners.
- Create a greater reliance on technology resources such as webinars or information available via web 1.0 and 2.0 technologies.
Comer, Marcus, Thasya Campbell, Kelvin Edwards, and John Hillison. (2006). Cooperative Extension and the 1890 Land-Grant Institution: The Real Story. Journal of Extension, 44 (3), 1-6.
Delong, Tony. Personal interview. 15 Apr. 2014.
Library of Congress website.www.loc.gov. Primary Documents in American History, n.d.
McLaughlin, Thomas A. (2009). Streetsmart Financial Basics for Nonprofit Managers. John Wiley & Sons, Inc.: Hoboken, New Jersey.
Mercer, Marsha. 2014. “Cooperative Extension Reinvents Itself for the 21st Century”. http://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2014/09/09/cooperative- extension-reinvents-itself-for-the-21st-century
Missouri Office of Administration. 2015. “Missouri Budget Fiscal Year 2016”. https://oa.mo.gov/sites/default/ files/FY_2016_Executive_Budget_Download.pdf (Accessed July 26, 2016).
University of Missouri Extension. 1986. Framework for Excellence A Blueprint for the Future of University Extension. Columbia: University of Missouri
University of Missouri Extension. 2012. “Strategic Plan”. http://extension.missouri.edu/about /strategic-plan.aspx March (Accessed January 23, 2016).
University of Missouri System. 2015. “University of Missouri System Fiscal Year 2016 Appropriations”. https://www.umsystem.edu/media/fa/budget/2016AppropriationsBook.pdf (Accessed July 26, 2016).
Willoughby, Katherine G. (2014). Public Budgeting in Context: Structure, Law, Reform, and Results. Jossey-Bass: San Francisco, Ca.