Coping with the Fiscal Crisis

1
Coping with the Fiscal Crisis

• December 10, 2008

2
Overview

• Budget Picture
• Legislative Analysts Office (LAO)
• Impact on Community Colleges
• Budget Reduction Process
• Budget Fundamentals
• Timelines

3
Budget Picture

• State faces a 25 - 28 billion problem over the
  next 20 months
• Governor proposes 9.2 billion budget solution
  for 2008-09
• 4.7 billion in new taxes
• Temporary 1.5 sales tax increase
• Expanding sales tax base to include some services
• Other targeted taxes
• 4.5 billion in budget cuts - 2.5 billion to
  K-14
• Legislature in special session ending November
  30 no action taken
• December 1 Governor declares fiscal emergency

4
Legislative Analysts Office (LAO)

• California Nonpartisan Fiscal and Policy Advisor
• Comments on Governors Budget Plan
• Realistic numbers
• No borrowing
• Long lasting solutions
• Balanced approach no longer just a spending
  problem
• Early Action is Critical
• Maximize options
• Allow agencies to prepare for cuts
• Allow time for necessary ballot measures

5
Impact on Community CollegesGovernors Proposal

• 2008-09 mid-year budget reductions of 332.2
  million
• 39.8 million for the COLA reduction
• 292.4 million reduction for apportionment
• No reduction of workload measures proposed
• Allows districts to backfill apportionment cuts
  by shifting cuts to categorical programs

6
Impact on Community CollegesLAO Proposal

• Weighted less towards mid-year cuts most of the
  cuts occurring in 2009-10
• No reduction to apportionment recommends
  targeted cuts Approximately 100 million
• Fee increases
• 26 dollars per unit effective January 1, 2009
• 30 dollars per unit effective July 1, 2009
• Reduced funding for Certain Courses
• Physical Education
• Enrichment Courses

7
Legislative News

• Previous Special Session fails to reach agreement
• Last vote - 200 million cut to community
  colleges
• 25 new Legislators
• 15 Democrats
• 10 Republican
• Special Session with new Legislators
• 55 to 60 million Property Tax Shortfall
• Joint Legislative Meeting
• Cash flow crisis
• Numbers could be 50 higher - 40 billion
• Senate Budget Committee today

8
Budget Reduction Process

• District will attempt to absorb mid-year cuts
  estimated at 10 million for 2008-09
• Time to make planned reductions and will allow
  time to better evaluate the budget situation
  Things will change!
• Campuses and constituent groups are asked to
  start looking for ways to reduce expenditures
• Things to do now
• Evaluation of all vacant positions
• Review of all expenditures including travel
  non essential exp
• District Planning Council will discuss various
  options and can make recommendations to the
  Chancellor
• Chancellors staff will also provide
  recommendations
• Recommendations involving collective bargaining
  or academic and/or professional matters will go
  to appropriate groups for consultation

9
Budget Fundamentals

• Planned reductions instead of reactionary
  reductions
• Value focus on people
• 5 Board Required Reserve will remain intact
• Everything else is on the table
• Target Reduction of 15 million for 2009-10

10
Current Budget - Ongoing
Personnel 112,979,900 67.0
Retiree Benefits 6,244,520 3.7
Extended Day 26,876,372 16.0
District-wide 6,540,698 3.9
Operating Allocation 11,602,902 6.9
Insurance 1,221,000 0.7
Other salary related benefits 504,000 0.3
Subtotal 165,969,394
Unallocated 538,683 0.3
COLA _at_ 0.68 1,073,811 0.6
Additional Growth 1,048,670 0.6
Total 168,630,558 100.0
11
Carryovers/Reserves
Contingency/Carryovers
- Board Policy Contingency 9,313,751
- Budget Center Carryovers 14,660,536
- District-wide 3,816,059
Subtotal 27,790,346

Other Funds
- Self Insurance Fund - Capital Outlay Fund - Retiree Benefit Fund 23,840,454 17,000,000 47,014,498
12
Budget Timelines

• Meetings with the Campuses
• SCE 11/17/08
• Anaheim Campus 12/2/08
• Cypress 12/4/08
• Fullerton 12/10/08
• District Planning Council (DPC) Meetings
• Input from Constituent Groups 1/9/09
• Governors January Budget expected 1/15/09
• Governors May Revise expected 5/15/09
• Completion of Tentative Budget 6/8/09
• Public Hearing on Proposed Budget 9/8/09

13
DPC

• Recommendations to the Chancellor
• Development of Budget Subcommittee
• Evaluation of Recommendations from Constituent
  Groups
• Recommendations to DPC

14
Areas of Focus

• Enrollments
• Productivity
• Vacant Positions
• Employee Benefits
• Salary Roll Backs