1 Budget Development & Issues & Dr. Constance M. Carroll Chancellor San Diego Community College District Terry Davis Vice Chancellor, Business Services CAMPUS FORUMS

2 California Community Colleges Budget Process State Budget - Proposition 98 Governor - Legislature State Board of Governors & System Local Boards of Trustees & Districts Federal & Special Funds Allocations Allocations San Diego Community College District 72 Districts 109 Colleges

3 Governor’s Budget (January 10, 2008) DEFICIT OF $14.5 BILLION STRATEGIES: COMPONENTS: Zero COLA 1% Growth 10% Across-the-Board Cuts Categorical Program Cuts No Increase in Student Enrollment Fee Mid-Year Cuts ($40 Million for CCC) 1.Reduce Expenditures 2.Align Expenditures/Revenue 3.Enhance/Restructure Revenue

4 Legislative Analyst’s Office DEFICIT HAS GROWN TO $16+ BILLION RECOMMENDATIONS: BREAKING NEWS: Zero COLA 1.5% Growth Categorical Block Grants “Student Success” ($430 Million) “Faculty Support” ($60 Million) No Mid-Year Cuts Increase in Student Enrollment Fee (Back to $26 per unit) Property Tax Shortfall ($76-80 Million) In Current Year ( ) Projected for Budget Year ( )

5 San Diego Community College District 1.Avoid Negative Impact on Contract Faculty/Staff 2.Maintain Sufficient Classes & Services for Students 3.Increase FTES Revenue 4.Increase Average Class Size 5.Enact Cost-Containment Measures PROCESS: VALUES & GOALS: Broad Consultation & Participation Board of Trustees Chancellor’s Cabinet District Governance Council (DGC) District Budget Committee Colleges/CE Shared Governance Groups Campus Forums

6 San Diego Community College District Preliminary Budget General Fund Unrestricted Only

7 Preliminary Budget is based on the Governor’s initial budget proposals: Reductions that range from 3.62 % to % in Categorical Programs (Loss of $266,000 in GFU) No COLA in (Normal inflationary costs = $3M-$4M) 1 % maximum growth (Restricts our revenue options) Assumes no Mid-year cuts of $1.4 million Does not include loss due to Property Tax Shortfall (Potential loss of $2.8M) A roll forward of budgets plus inflationary costs to selected operating expense accounts such as utilities and maintenance contracts Employee class and step advance costs $1.78 million in supplemental funding for additional class sections so campuses are funded at the same FTEF level in as in (Budget Model FTEF plus Supplemental FTEF) - Budgeted annual FTEF in : City = 677 FTEFMesa = 931 FTEFMiramar = 395 FTEF In addition, the Preliminary Budget includes the following:

Budget Model FTEF Allocations Pro-rating the FTEF reduction to Colleges results in FTEF Allocations as follows : Note: Total reflects minimum FTEF funding levels if no other funds or budget savings are used to pay for additional class sections. Total FTEF Used in (Ex. Academies)2, Total FTEF Funded (Ex. Academies)1, FTEF Reduction below CityMesaMiramarTotal FTEF Used , % of Total34.029%46.088%19.883%100.00% Share of 172 Reduction Total FTEF to be Funded , Final Budget (Per Model Formula) , FTEF Increase for Final Total FTEF Funded , Total FTEF Funded ,988.13

Preliminary Budget General Fund Unrestricted Only Continuous Revenue Adjusted Budget Preliminary Budget Changes Over/Under Apportionment Allocation190,687,672190,885,712198,040 Other State Funds8,799,2668,233,027(566,239) Other Funds7,728,9357,305,737(423,198) Incoming Transfers1,797,900 0 Total Continuous Revenue209,013,773208,222,376(791,397) Continuous Expenses Reserves & Set Asides13,686,17512,518,513(1,167,662) Campus Allocations139,716,344142,375,8762,659,532 Districtwide Support47,924,80550,091,9352,167,130 District Offices17,623,78718,370,808747,021 Total Continuous Expenses218,951,111223,357,1324,406,021 Continuous Expenses (over) Revenue9,937,33815,134,7565,197,418 (Reliance on one-time funds)

10 Reserves and Set Asides Set Aside to cover remaining RAF4,959,894* District's 50% share of RAF mandated benefits434,209* Set Aside for RAF POA116,055* Set Aside for RAF POA83,664* Classified reclassifications150,000 Set Aside to fill Contract Faculty Positions987,685 Set Aside from for Potential Growth Distribution in RAF344,096* Set Aside for Equalization Benefit Reserve (Out Years)3,386,652 Balance of Set Aside for Prop S per Docket #890 8/25/20051,399,552 Balance of Set Aside for Prop N per Docket #892 3/22/ ,706 Total Reserves and Set Asides12,518,513 * Budget items that should be fully allocated by June 30, 2008

11 Revenue and Expense Projections Continuous Revenue vs. Expenses Summary Preliminary: Total Projected Continuous Allocations: Campus Allocations142,375,876 Districtwide Support Allocations50,091,935 District Office Allocations18,370,808 Reserves and Set Asides12,518,513 Total Continuous Allocations 223,357,132 Total Projected Continuous Revenue: State199,118,739 Local7,305,737 Transfers1,797,900 Total Continuous Revenue 208,222,376 Projected Continuous Expenses (Over) Under Revenue (15,134,756)

12 Revenue and Expense Projections (cont.) Projected Continuous Expenses (Over) Under Revenue(15,134,756) Use of One-Time Resources: Projected Ending Balance14,148,713 One-Time Allocation To Balance GFU Continuous Operating Budget15,134,756 Reserve for Economic Uncertainty ( and )2,000,000 Prior Year Encumbrances950,000 Permanent Records Conversion128,485 Holding Accounts - AFT (Computer Loan)40,000 Holding Accounts - Risk Management572,630 Campus Carryforward One-Time Ending Balance Reserves1,376,030 Advertising - Districtwide325,000 Total Funding Required20,526,901 Adjustments Required to Balance Budget(6,378,188)

13 Reduce Continuous Costs Reduce or eliminate programs or services, maintenance agreements or contracts, professional service agreements, etc. Eliminate vacant positions (86 % of Districtwide expenses in in General Fund Unrestricted was for salaries and benefits). Implement hiring delays and cost containment procedures. But there is an easier and more permanent way to balance continuous costs and continuous revenue …

14 Impact of Average Class Size on Funding Requirements Campus Ending Balances Campus Ending Balances Based on Budget Model Funding Only2,558,495(6,370,378) Funding for Supplemental Class Sections05,520,138 Transfers to Basic Skills0644,146 Transfers to Prop 20 Lottery0206,094 Adjusted Ending Balance2,558,4950 Average Class Size 3428

15 Result of Lower Class Size Revenue Change Due to Class Size ($28,120,000) 5.6 students per class x 1100 FTES per 1.0 student increase above 28.4 per class x $4,565 per credit FTES = $28,120,000 Note: 1.0 student increase above an average of 28.4 students in every class will generate 1100 FTES, or $5 million in credit apportionment revenue. Solution: Reduce number of class sections to stay within funding provided through the Budget Model formulas, while increasing average class size to maintain FTES base or to grow in FTES.

16 Distribute New Revenue to Cover all Current and Future Increasing Costs 12 Economic improvements for employees Eliminate structural budget problem and reduce reliance on one-time funds Provide funds to cover $13.1 million (today’s dollars) in Proposition S & N continuous costs Improve both academic and non-academic permanent staffing levels Any issues not addressed at least in part from new revenue sources will become more difficult to solve in the future. As new continuous revenue is received, it needs to be allocated to address several issues such as …

17 Summary Based on the Governor’s initial budget proposal, a roll forward of the budget to , and a potential “deficit factor”, requires $10.1 million in budget “adjustments” that need to be made between the Preliminary Budget (February) and the Tentative Budget (June). Adjustments need to be made in both continuous costs and one-time costs to balance the budget and address the structural budget problem and reduce reliance on one-time funds. How the budget issues are resolved will impact the magnitude of the budget challenges in Class schedules need to continue to be adjusted to bring costs in line with Budget Model funding formulas, and increase average class size back to levels. Future revenue needs to be allocated in such a way that all budget requirements are addressed.

18 Proposed Budget Adjustment Plan 1. Adjustments to Preliminary to Balance Budget6,378, Additional Adjustments to Reduce Structural Budget Problem1,000, Increase to Cover Potential 1.33% Deficit Factor in due to Property Tax Shortfall2,800, Total Adjustment Goal10,178, Summer 08 Roll to Grow 254 Credit and 300 Non-Credit FTES for 1.34% Total Growth (2-Year Total Revenue).(4,258,220) 6. Growth of 1.0% in (210 Credit and 210 CDCP Non-Credit)(1,637,370) 7. Savings from Delay in Hiring Vacant Academic Positions (28.04 positions)(867,937) 8. Savings from Delay in Hiring Vacant District Classified Positions (Non-campus staff)(519,057) 9. GFU Offset from Basic Skills(719,310) 10. Eliminate Scheduled Maintenance Matching Funds(451,247) 11. Remaining Budget Adjustment Required1,725,047