Board of Trustees Presentation April 5, 2010 Budget update

FY 09/10 reductions that have been implemented: (in August 2009) $6.7M has already been eliminated from 09/10 operating expenses: 68 filled/vacant positions eliminated (escrow funds were set aside to cover 35 positions through 6/30/10) Funding for 16 positions reduced or reassigned to different funding sources - Categorical Programs (Fund 121), Self-Sustaining (Fund 115) or Measure C (Fund 400) 4 positions restructured/reorganized due to retirement $312,655 in “B” budget reductions $200,000 reduction in faculty reassigned time funding $2.6M in part-time faculty costs reduced due to workload reduction (5%)

Even after the reductions we still had a deficit we were carrying with one time reserves

Early look at budget ( in November 2009) IncomeExpenses $3.8M Existing Deficit $4.3M Step, Column, Benefits $7.9M Cuts to Categoricals Enrollment

What other changes do we know of at this point? (in December 2009) Probable agreement on benefit restructuring to reduce our 2010/11 expenses by $5.3 million (remember, our last estimate for our 10/11 deficit without further state reductions and other operating cost increases is $8.1 million) Probable loss of about $1 million this year due to FTES audit, statewide recalculation of growth for last year and a slight shortfall in non-resident revenue Cover the cost of part-time faculty equity, office hours and health benefits payments for 09/10 due to the loss of categorical funding … approximately $1 million

Revised estimate of deficit, after benefit settlement (in mid December)

Distribution of estimated cuts needed for 10-11

What has been done to address the cuts for (in March 2010) Further B Budget reductions where possible Redirecting salaries to bond program, categorical programs, and self sustaining funds where legally and fiscally possible. (Not necessarily a long term solution) Re-organized services and departments (for example: De Anza reorganized their student success program which eliminated 43 filled and vacant positions (mostly part time positions), while creating 6 new full time positions) Identified filled positions that would have to be eliminated to bring operating revenue in line with operating expenses About 34 positions were identified for elimination on 6/30/10 15 positions are filled and 19 are vacant as of 3/22/10 Created “Escrow II” that would carry 27 filled positions to 6/30/11 l IF… no deep cuts in state revenues and, l To allow time to absorb these positions back into the general fund

Strategic Plan for Use of Fund Balance and Reserves (est. as of second qtr) General Fund Maintain 5% reserves ($10.3M) Continue to allow for colleges and Central Services restricted carryover ($4.4M) Restrict District-Wide carryover for EIS implementation, union negotiated items, election costs ($1.6M) Restrict portion of Stability Funding for Escrow II ($2.0 M) Maintain any remaining Stability Funding for any potential state cuts ($6.4M) or to carry Escrow II positions through the fiscal year.

Strategic Plan for Use of Fund Balance and Reserves (est. as of second qtr) Internal Service Fund/Benefit Fund Maintain $2.0M operating reserve Reserve $500,000 for negotiated post-97 Health Benefit Reserve for FA and ACE Restrict $273,000 for Extended Sick leave and Vacation Payout reserve Maintain any remaining unrestricted funding for rate stabilization (goal to retain approximately $5.0M)

Reserves and unrestricted fund balance ( estimates based on second qtr end report )

New revenue strategies Board may hire a “polling company” to test for feasibility of a parcel tax Staff is creating a stronger grants office to try to secure additional state, local and federal funding. Funding for these expenses are to be covered from new grants and or redirecting existing staff. Foundation Board is actively engaged to raise money in light of this fiscal crisis

Cost savings measures Photovoltaic installations At the March 8 Board meeting, the trustees authorized staff to proceed with the installation of the PV expansion project, funded from bond money, at Foothill in the summer of In addition to conserving natural resources, we anticipate an annual savings of $250,000 upon project completion About ½ of these savings may accrue in the year. Future plans include a similar size project at De Anza in the summer of 2011.

Next milestones The Governor’s “May Revise” may provide more information about health of the economy, and potential cuts to Community Colleges. August, the district will close its books and have a final number on carryover and unrestricted reserves Sometime between June and September, the Governor will sign a new State budget for

Risks Will the state cut our budget for next year. Best case scenario: No additional cuts to state revenue Worst case scenario: ???--The only reference point is that last year we received a cut of $5.4 million in the general fund and $7.9 in the categorical fund. We received this news on July 28, 2009 for the fiscal year that already started When will we know our state revenues for ???????

Medical benefit risks Through our agreements with the unions, we are committed to covering the costs of benefits for and without further changes to our benefit program We have estimated that we would have about $5 million in the medical benefit fund in July 2010 to fund these increases. Hopefully this will be enough money to cover two years of the medical benefits increases through June 2012, BUT This is only one time money so ongoing solutions would have to be found prior to June Unknown effect of pending federal health insurance