Wednesday, July 6, 2011

A dramatic resolution for California's budget

Dear Colleagues,
Usually the drama in California comes from Hollywood movies, but one high-profile production playing out in Sacramento came to an end last week with the passage of the 2011-12 state budget. This spectacle featured elevated emotions, backroom deals that fell apart, and even a bit of fisticuffs on the floor of the Legislature.
In approving the budget, Gov. Jerry Brown gave up on his proposal for tax extensions when he was unable to get the Republican votes needed to put the measure on the ballot. Instead, legislators are hoping that the economy is recovering and additional tax revenues will pay the bills.
While it’s good to get the state budget passed, the triggers put in place if the revenue projections aren’t met means that the financial future for community colleges is still up in the air. According to the original January budget estimates for 2011-12, California community colleges would be cut by $400 million, with that amount partially offset by $110 million in additional money from increasing student fees from $26 to $36 per unit. Community colleges will also have to deal with state payment deferrals of $129 million. But this budget proposal, as you may recall, depended on $12 billion in state revenues from tax extensions. 


The state budget passed last week starts with the same level of cuts as the January proposal, but depends on a very optimistic projection of $4 billion in additional tax revenue to avoid deeper midyear cuts if the projected state revenue does not come in. Here’s how this plays out for community colleges:
·         Tier 0 ($4 billion in new tax revenue comes in): $400 million cuts; increase in student fees to $36 per unit to help offset some of the costs.
·         Tier 1 (between $2 and $3 billion in revenue): An additional $30 million midyear cut; student fees go up to $46 per unit, with additional fee revenue used to backfill some of the cuts. Imagine the chaos for our registration systems and our students, who would have already enrolled for spring when the fee increase would kick in.
·         Tier 2 (less than $2 billion in new tax revenue): On top of the Tier 1 cuts and student fee increase, an additional $72 million midyear cut for community colleges.
Unlike Sacramento, our Governing Board approved a $173 million tentative budget on June 21 with no drama, prudently planning as best we can for the uncertainties ahead. The District’s budget reflects an $8.1 million cut in funds from the state, and calls for eliminating 800 course sections. This comes on top of the $15 million in cuts we’ve already had that forced us to eliminate over 1,000 course sections and cut our workforce by 60 full-time and more than 400 part-time employees in the past two years.
The new budget numbers we now have from the state indicate we can expect a cut between $5.1 million under Tier 0 and $6.3 million under the Tier 2 scenario. We’re a little bit better off than we projected in our tentative budget, but the state is making some idealistic revenue assumptions, so don’t leave the theater to buy popcorn just yet.
Our Districtwide Strategic Planning & Budget Council will continue to analyze the financial information as it becomes available and develop strategies for our 2011-12 adoption budget this summer.
The plot continues to unfold on our budget situation, but I’m still hoping for a happy ending to this tragedy. We don’t have Julia Roberts on our staff (she plays a community college teacher in the movie Larry Crowne and Tom Hanks plays the role of a laid-off worker coming to college for the first time).  But we do have the best cast of employees who always do their best for our students! Thanks, as always, for making this crazy show work so well despite our returns at the state budget box office. 
Cheers—
Cindy L. Miles, Ph.D.
Chancellor, Grossmont–Cuyamaca Community College District