1. Community College Funding: How it works and why it matters
California Community College Leadership Academy (3CLA)
September 21, 2017
Kathy Blackwood, Executive Vice Chancellor, San Mateo County Community College District

2. Student Learning Outcomes (SLOs)
Acquire better understanding of:
How K-14 education is funded in California
How CCC districts are funded
Acquire a working knowledge of:
The basics of FTES/WSCH
The very basics of fund accounting and the BAM
Where to look for CCC fiscal information
Understand where we’re going from here:
New initiatives: Strong Workforce, Guided Pathways, Promise Programs
New funding formula

3. California Public Education Structure
University of California (UC)
California State University (CSU)
K-14 education in California
Proposition 98 – passed in Nov. 1988
K-12, the big dog – why?
Community colleges
Political strengths/Political weaknesses
Prop 98 “share”
UC: 9 campuses, 270,000 students both graduate and undergraduate
CSUs: 23 campuses including the Maritime Academy; 480,000 students
K-12: 1,025 districts with 10,453 schools with 6,227,000 students

4. California Community Colleges 2016-2017
How many districts? 72
How many colleges?
114
Newest – Compton College
How many centers?
76+
Grandfathered - 37
State Approved - 39
Newest – Rancho Cordoba Education Center
Los Rios CCD
March 2016

5. California Community Colleges 2017-2018
Total system-wide budget
Approximately $7 billion
Community Supported (Basic Aid) Districts
How can you tell they’re community supported? Aren’t we all?
Nine districts as of P
Mira Costa, South Orange, Marin, San Mateo, San Jose-Evergreen and West Valley-Mission
In as of 16/17 (P2) – Napa College, San Luis Obispo, Sierra College
But they were in at 15/16 P2 and out by 15/16 Recalc

6. Funding Rates 2016-2017 UC - $26,391 270,000 students 10 colleges
CSU - $14,723
480,000 students
23 colleges
K-12 - $11,601
6,227,000 students
10,453 schools
CCC - $7,949*
2,127,000 students
1,186,000 FTES
* - includes state GF, property taxes, student fee revenue and unrestricted lottery funds – source CCLC

7. Review of the CCCCO Organization
Structure –
BOG
1102 Q Street
Appointments
State Agency
New Chancellor!
Eloy Ortiz Oakley of LBCC
Power compared to UC & CSU?
Governance Structures
CCC division of the state government
Loose confederation
Compare to structure of a district
Power of the chancellor – only the Bully pulpit

8. How California Funds K-14 Education
Proposition 98
Passed by voters in November 1988
K-14 receives a share of state revenues collected
Minimum funding guaranteed by formula
Three “tests”
Community college system receives approximately 11% share of Prop 98 revenues
Minimum guarantee percentage of Prop %
However, not a guarantee…
Legislature can suspend to fund at a lower level
Minimum guarantee has also become maximum guarantee
Funding follows state economy
When economy is good, increases in funding
When economy is poor, decreases in funding
What’s wrong with this reality for our colleges and students?

9. How the CCCCO Funds the Districts
Unrestricted General Fund
Principal Apportionment process – Exhibit C
Becomes Exhibit E once final recalculated certification (R1)
Eight months after close of fiscal year (Feb P1)
SB361 Funding Allocation Model
Replaced Program Based Funding from AB1725
Differences of SB361 methodology compared to Program Based Funding formula
Other CC District source of Funds
Categorical program entitlements (SSSP, DSPS, Student Equity, BFAP),competitive grants, regional grants (SBDC), regional collaborative (adult ed), Economic Development, special purpose funds, etc.
More often based on FTES counts and students served counts as well as Pell grants, unemployment, etc.

10. SB361 Funding Formula Equalized FTES marginal funding rates
Credit FTES - $5, (17/18)
6 districts grandfathered base rate is higher
Ex.- West Kern = $6,766,65/cr. FTES
Non-credit - $3,097,58 (17/18)
Career Development/College Prep – CDCP - $5, (17/18)
Old “non-credit enhanced”
Now equalized with credit rate
Base Allocations for colleges and centers based on size
Acknowledges economies of scale
Minimum level of service to operate a college
Acknowledges rural (small) district funding need/support

11. SB361 Funding Formula Challenges
Large recent state investment in specialized programs
Categorically funded
That’s great for our targeted student needs
Declining support for core funding for unrestricted general funds
Cost of Living Allowance (COLA)
Growth/Access (earned)
Base Augmentations
Budget challenges for district’s unrestricted general funds due to state primarily investing new Prop 98 funds for CC’s in new Categorical Programs
Small or no COLAs in the foreseeable future
Implicit Price Deflator formula
New Growth/Access Model
Constrains many districts to miniscule growth opportunities regardless of unfunded FTES and actually serving more students

12. What are budgets? Authorization to spend Approved by Board of Trustees
Estimate of revenues and expenditures
Salaries & benefits
Other expenses
Allocation of resources

13. What are Budgets?
Maximum amount that can be spent in a major classification
Transfers and revisions must be approved by a 2/3 majority of the board
This includes transfers from contingency
Title V 58307

14. Budget Calendar
On or before the 15th day of September of each year the governing board of each community college district shall prepare and keep on file for public inspection a statement of all receipts and expenditures of the district for the preceding fiscal year and a statement of the estimated total expenses for the district for the current fiscal year.
Title V 58300

15. Budget Calendar Jan. 10: Governor’s Budget
May 15: Revised Governor’s Budget
June 30: District Tentative Budget
June 30: State Budget
Sept 15: District Final Budget

16. Common Budget Builders
COLA
Deficit factor
Growth/Decline in FTES (impacts categorical, lottery, and adjunct budget)
Interest
Lottery
Compensation settlements
Productivity
Benefits
Utilities
Supplies/equipment
Other operating
Reserves for contingency

17. Common Differences Redevelopment funds Bonds/other debt
Contract education
Leased space revenue
Farms/other industries
Capital construction
Debt payments
Contract instruction
Leased space costs
Golden Handshakes

18. Budget Cuts Personnel: Productivity/Growth Operations Increase revenue
Hiring freeze
Managed hiring
No OT/Comp time
Productivity/Growth
Increase class size
Grow – where?
Eliminate low performing programs
Operations
Utilities
Conference/travel
Renegotiate contracts
Increase revenue
What are you no longer going to do?

19. Building Blocks: Adjunct Budget
Definition of FTES
One Full Time Equivalent Student is defined as 525 contact hours over an academic year
An academic year is defined as 35 weeks
525 hours per year / 35 weeks per year means that a FT student is in class 15 hours a week
One Weekly Student Contact Hour (WSCH) is one student in class one hour per week for 35 weeks

20. Building Blocks: Adjunct Budget
Definition of Productivity or Load – Weekly Student Contact Hours per Full Time Equivalent Faculty (some use FTES/FTEF)
One full time faculty teaching 15 hours per week with 35 students in each class is generating 525 WSCH/FTEF
Note that the formula needs to be adjusted for quarter system schools.

21. 16/17 Hourly teaching budget development model
Projecting Costs
16/17 Hourly teaching budget development model
FTES
WSCH
Prod Target
FTEF Needed
FT FTE Available
Hourly FTE Needed
Average Cost per FTE
Budget Needed
6,867
103,005
500
206.01
118.67
87.35
$62,885
$5,492,747
This represents over 14% of CSM’s Fund 1 site allocation. Salaries and benefits for regular employees represents about 82% of CSM’s Fund 1 site allocation. 4% left for everything else.

22. Communicating FTES WSCH Prod Target FTEF Needed FT FTE Available
Hourly FTE Needed
Average Cost per FTE
Budget Needed
6,867
103,005
500
206.01
118.67
87.35
$62,885
$5,492,747
510
201.97
83.31
$5,238,727
525
196.20
77.54
$4,875,842
490
210.22
91.55
$5,757,134
480
214.59
95.93
$6,032,538
Calculations reflect current year numbers. Each change in 10 points is approximately $250K.

23. Communicating = Changing
What is the difference between 525 and 535?
525 WSCH per FTEF is a class size of 35.
535 WSCH per FTEF is a class size of 35 ⅔.
Take 1 more student -- NO!!
Cañada average enrollment/section for 16/17 is 29

24. Communicating = Changing
SIMPLY KEEP EVERY STUDENT THAT SHOWS UP ON THE FIRST DAY OF CLASSES!
But if Canada wants to get to 525, need to add an average of 6 more students in every class to take your average class size from 29 to 35. If you could get to the statewide norm of 525, you would save approximately $600K.

25. Budget and Accounting Manual (BAM) Basics
You need to know the basics of Fund Accounting (the BAM) to
Read and understand the CCFS 311
Understand district account codes
Chart of accounts
The Basics
Fund
Program – source of funds
Activity – where spent
Object – for what?

26. BAM Fund Accounting General Fund Special Revenue Fund
Unrestricted
Restricted
Special Revenue Fund
Child Care Centers
Parcel Tax
Capital Projects Fund
General Obligation Bonds
Scheduled Maintenance
Debt Service
Payment for General Obligation Bonds
Enterprise Fund
Bookstore, Cafeteria, Fitness Center, Copy Shop, Farm, etc.
Internal Service Fund
Self-Insurance
Trust Funds
Financial Aid
Student Body

27. Fund
Budget
% of Total
Unrestricted General Fund
$177,330,818
42.58%
Restricted General Fund
48,185,039
11.57%
Child Development Fund
1,269,697
0.30%
Capital Projects Fund
98,296,552
23.60%
Debt Service Fund
54,369,200
13.05%
Bookstore Fund
7,693,000
1.85%
Cafeteria Fund
289,000
0.07%
San Mateo Athletic Club (SMAC)
3,940,000
0.95%
Community, Continuing, and Corp Ed
1,391,000
0.33%
Self-Insurance Fund
1,566,330
0.38%
Trust Funds (Financial Aid)
17,942,178
4.31%
Reserve for Post-Retirement Benefits
4,200,000
1.01%
TOTAL
$416,472,814
100.00%

28. Unrestricted General Fund
Revenue 1
Federal Revenue 2
State Revenue
9,927,904 3
Local Revenue
167,402,914 4
Total Revenue
177,330,818
Revenues start with 8xxx

29. Expenses 5
Cost of Sales 6
Certificated Salaries
71,177,060 7
Classified Salaries
38,719,695 8
Employee Benefits
41,477,136 9
Materials & Supplies
7,777,026 10
Operating Expenses
23,857,604 11
Capital Outlay
385,042 12
Total Expenses
183,393,563

30. Transfers & Other 13
Transfers In 14
Other Sources 15
Transfers out
(4,683,407) 16
Contingency/Deficit
(83,627) 17
Other Out Go 18
Total Transfers/Other
(4,767,034)
Fund Balance 19
Net Change in Fund Balance
(10,829,780) 20
Beginning Balance, July 1
33,882,785 21
Adjustments to Beginning Balance 22
Net Fund Balance, 6/30
23,053,006

31. Where to Find Additional Budget and Fiscal Information
Chancellor’s Office Website cccco.edu
Community College League of California ccleague.org
Association of California Community College Administrators accca.org
Association of Chief Business Officials acbo.org
Academic Senate for California Community Colleges (glossary) asccc.org/glossary
Calif. Dept. of Finance (state budget) ebudget.ca.gov

32. New Inititatives Guided Pathways:
$150M - $15M goes to the CO off the top
Remainder takes each college from where they are to the next step in implementing the pathways
Strong Workforce:
CTE funding
Based regionally
Integrated Planning:
Basic Skills, Equity and SSSP funding to be integrated
Possibility of a single mega block grant

33. New Funding Formula Chancellor’s Task Force on Fiscal Affairs
Same group (more or less) developed SB years ago
Looking at outcomes based funding
Reviewing other state models – successes and failures
Proposal will be vetted through state governance processes

34. Questions?
Kathy Blackwood