1. 1 State Budget Crisis John Morton Vice President for Community Colleges Fall 2008

2. 2 The State Budget Deficit (in millions of dollars) FY 2007FY 2008FY 2009FY 2010FY 2011 Revenue5,142.05,244.85,155.15,300.55,506.2 Expenses5,381.05,406.95,716.35,822.85,924.7 Revenue over Expend -238.9-162.2-561.2-522.3-418.5 Carry-over Begin Bal 732.3493.4331.2-230.0-752.3 Ending Balance 493.4331.2-230.0-752.3-1,170.8 Based on 10/29/08 Council of Revenues revised forecast

3. 3 State Tax Revenue Projections (in millions of dollars)

4. 4 Bottom Line Current State budget cannot be maintained Likely to get even worse No choice but to cut - the budget cannot be in deficit

5. 5 Steps to Solution Step 1 - Legislature reduced FY 2009 general funds by 4% of “discretionary” budget  Discretionary means all funds used for administration, operations, and public service  CC budget reduced by $1,373,087

6. 6 Steps to Solution Step 1 (continued)  CC System reduced equipment fund by $820,000  Balance of $553,087 distributed to campuses based on new money (GF+TFSF increases)

7. 7 Steps to Solution FY 2009 Legislative Reduction Equipment FY 2009 Budget ReductionTotal Honolulu78,460 Kapi‘olani128,364 Leeward90,456 Windward40,690 Hawai‘i75,416 Maui91,082 Kaua‘i48,619 CCSWS820,000 Total820,000553,0871,373,087

8. 8 Steps to Solution FY 2009 Legislative Reduction

9. 9 Steps to Solution Step 2 - Governor restricted additional 4% of discretionary budget  CC share was $1,019,547  CC System restricted $500,000 of enrollment growth money  Balance of $519,547 was distributed to campuses based on A 25% - GF Apprn + TFSF Revenue B 25% - Adjusted Cash Balance C 25% - Vacancy Savings (Delay filling to 01/01/09) D 25% - Vacancy Savings (2 year old vacancies)

10. 10 Steps to Solution FY 2009 Executive Restriction Enrollment Growth CC System FY 2009 Budget RestrictionTotal Honolulu86,071 Kapi ‘ olani 48,745 Leeward79,772 Windward25,413 Hawai ‘ i 83,179 Maui59,070 Kaua ‘ i 71,319 CCSWS500,00065,978565,978 Total500,000519,5471,019,547

11. 11 Steps to Solution FY 2009 Reduction & Restriction

12. 12 Steps to Solution Step 3 - Governor orders FY 2009 Budget Execution Policy Constraints  No filling of positions without permission, except for teaching faculty  No out-of-state travel without permission  No personal services contracts in excess of $10,000 without permission  No equipment purchases in excess of $10,000 without permission  No motor vehicle purchases without permission

13. 13 Steps to Solution Step 3 (continued)  UH limits Governor’s policy constraints to general funds  Chancellors may grant mission critical exceptions  Weekly reports on exceptions required to be submitted to the President

14. 14 Steps to Solution Step 4 - Governor asks UH to plan for FB 2009-11 reductions of:  $13.5M based on 10% of discretionary budget and 1% of non-discretionary budget  $22.0M based on 15% of discretionary budget and 2% of non-discretionary budget  $30.6M based on 20% of discretionary budget and 3% of non-discretionary budget

15. 15 Steps to Solution UH plans at the 10% Reduction Level  $9.0M from the general fund budget  Shift $4.5M from general funds to tuition and fee funds  CC share is $2,338,830 of general funds $1,166,287 of tuition and fee funds

16. 16 Steps to Solution For the General Fund Reductions CC System Office reduces:  $500,000 in enrollment growth funding  $285,946 through eliminating 5.75 vacant positions Mandated electricity savings of $854,446 Balance of $698,438 is allocated to the campuses based on General Fund/TFSF budget

17. 17 Steps to Solution FB 2009-11 Budget Reduction – 10% Level Enrollment Growth/ 5.75 PositionsElectricityCampusTotal Honolulu127,428 Kapi ‘ olani 161,829 Leeward120,867 Windward56,917 Hawai ‘ i 85,807 Maui91,329 Kaua ‘ i 54,261 CCSWS785,946854,4461,640,392 Total785,946854,446698,4382,338,830

18. 18 Steps to Solution Windward CC elects to reduce budget by  Counselor Vacancy for Vocational & Continuing Education/Employment Training Center - $56,917

19. 19 Steps to Solution Tuition increases UH will generate approximately $20.0M in new money each year at constant enrollment Windward CC projects to generate an additional $229,987 in tuition revenue in FY 2010

20. 20 Steps to Solution Windward CC Additional TFSF Revenue vs Funding Requirements

21. 21 Steps to Solution Windward CC Additional TFSF Revenue vs Funding Requirements

22. 22 Steps to Solution Windward CC Additional TFSF Revenue vs Budget Reductions at 15% and 20% Levels

23. 23 Steps to Solution Special and Revolving Fund Cash Carry forward balances  CC system has $18,098,301 as of June 30, 2008  Reserve requirement is $9,680,361 (4% of unrestricted fund E&E + working capital)  Windward CC has $819,559 ending cash balance  Reserve requirement range is $604,709-$739,612 (3-4%)  Available to spend $79,947

24. 24 Steps to Solution General Fund Unbudgeted Temporary Positions – 9/19/08 FY 2008 GF + TFSF Casual Payroll and Student Assistant E&E

25. 25 Steps to Solution Transfer temporary appointments to permanent positions

26. 26 Steps to Solution General Fund Permanent Position Vacancies – 9/30/08

27. 27 Steps to Solution FB 2009-11 Capital Improvements Program (CIP) BOR Budget (General Obligation Bond – Thousands of dollars)

28. 28 Steps to Solution FB 2009-11 Capital Renewal and Deferred R&M Request (Thousands of dollars)

29. 29 Steps to Solution FB 2009-11 Capital Renewal and Deferred R&M Request (Thousands of dollars)

30. 30 Steps to Solution Follow the strategic plan No change in commitment to goals of strategic plan; cut elsewhere Repair and maintenance and equipment replacement remains a priority Balance of new tuition dollars should go to repair, replacement, and renovation, PCRs

31. 31 State Budget Crisis Fall 2008