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2011-20122011-2012Budget UpdateBudget Update

Board of Trustees MeetingBoard of Trustees MeetingAugust 22, 2011August 22, 2011

1.1. State Budget UpdateState Budget Update– Latest informationLatest information

2.2. RSCCD Proposed Adopted RSCCD Proposed Adopted Budget highlightsBudget highlights

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State Budget UpdateState Budget UpdateWhat’s newWhat’s new??

Chancellor’s Office Budget WorkshopChancellor’s Office Budget Workshop– ““Blue Book”Blue Book”

Details on apportionmentsDetails on apportionments

Workload measures Workload measures – Apportionment reductionsApportionment reductions– Reduced funded FTES targetsReduced funded FTES targets– Categorical program entitlementsCategorical program entitlements– Trigger 1 and Trigger 2 scenariosTrigger 1 and Trigger 2 scenarios

So far, state revenue collections are well below So far, state revenue collections are well below estimatesestimates– Economy sluggishEconomy sluggish– Bad sign for chances of collecting additional $4 billion in Bad sign for chances of collecting additional $4 billion in

revenue dependent on holding off “trigger” cutsrevenue dependent on holding off “trigger” cuts

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State Budget UpdateState Budget UpdateCommunity CollegesCommunity Colleges

Net $290 million reduction in state apportionment Net $290 million reduction in state apportionment fundingfunding

RSCCD – ($7,961,366)RSCCD – ($7,961,366)

6.21% workload (FTES) reduction (negative growth)6.21% workload (FTES) reduction (negative growth)

Increases student fees from $26 to $36 per unitIncreases student fees from $26 to $36 per unit

Student fee collection shortfall acknowledged to Student fee collection shortfall acknowledged to be $25 million statewide in 2011/2012be $25 million statewide in 2011/2012– Estimate additional RSCCD funding reduction of Estimate additional RSCCD funding reduction of

approximately $800,000approximately $800,000Unique to each district dependent on BOG waiversUnique to each district dependent on BOG waivers

– Will be applied as general apportionment deficitWill be applied as general apportionment deficit

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State Budget UpdateState Budget Update

Mid-year funding cut tiers or “triggers” if certain Mid-year funding cut tiers or “triggers” if certain levels of additional $4 billion in revenue doesn’t levels of additional $4 billion in revenue doesn’t materializematerialize– Trigger 1 and Trigger 2Trigger 1 and Trigger 2

– Automatic as of January 1, 2012Automatic as of January 1, 2012

– Based on lower assessment of DOF or LAOBased on lower assessment of DOF or LAO

Additional apportionment cash deferralsAdditional apportionment cash deferrals– Year end state apportionment deferrals (IOU)Year end state apportionment deferrals (IOU)

– RSCCD = $24,091,280 as of June 30, 2012RSCCD = $24,091,280 as of June 30, 201230.7% of total state general apportionment30.7% of total state general apportionment

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State Budget UpdateState Budget UpdateMid-Year TriggersMid-Year Triggers

Trigger 0Trigger 0 – at least $3 of the $4 billion materializes: No additional funding cutsat least $3 of the $4 billion materializes: No additional funding cuts

Trigger 1Trigger 1 – between $2 and $3 billion of revenue materializes: $30 million between $2 and $3 billion of revenue materializes: $30 million

apportionment cut, backfilled by an increase in fees of $10, from apportionment cut, backfilled by an increase in fees of $10, from $36/unit to $46/unit (January 1, 2012)$36/unit to $46/unit (January 1, 2012)

RSCCD – additional $763,070 funding cutRSCCD – additional $763,070 funding cut

Trigger 2Trigger 2– between $0 and $2 billion of new revenue materializes: Trigger 1 cut between $0 and $2 billion of new revenue materializes: Trigger 1 cut

and fee increase and fee increase PLUSPLUS a $72 million additional apportionment cut a $72 million additional apportionment cut

RSCCD – additional $1,831,368 funding cutRSCCD – additional $1,831,368 funding cut– Combined = $2,594,438 mid-year funding cutCombined = $2,594,438 mid-year funding cut

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Will the Triggers be pulledWill the Triggers be pulled??

CCLC has advised district’s to prepare for Trigger 2 CCLC has advised district’s to prepare for Trigger 2 mid-year funding reductionsmid-year funding reductions

State Chancellor’s Office is not providing any advice State Chancellor’s Office is not providing any advice or direction for districtsor direction for districts– Each district has unique set of circumstancesEach district has unique set of circumstances

K-12 districts are being advised to prepare for Trigger K-12 districts are being advised to prepare for Trigger 2 reductions2 reductions– Seven days less instructional school yearSeven days less instructional school year

Prudent to at least prepare for Trigger 1Prudent to at least prepare for Trigger 1– RSCCD recommendation in Budget AssumptionsRSCCD recommendation in Budget Assumptions

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What is included in RSCCD Proposed What is included in RSCCD Proposed Adopted BudgetAdopted Budget??

Workload measures funding reductionWorkload measures funding reduction– $7,961,366 apportionment reduction$7,961,366 apportionment reduction

Partially offset by $7.5 million reduction already Partially offset by $7.5 million reduction already budgeted last yearbudgeted last year

– 6.21% reduction in funded FTES (1,893.61)6.21% reduction in funded FTES (1,893.61)

Employee health benefit cost increases, Employee health benefit cost increases, Unemployment Insurance increases, PERS Unemployment Insurance increases, PERS increasesincreases– Approximately $2.5 million in additional ongoing Approximately $2.5 million in additional ongoing

costscosts

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RSCCD BudgetRSCCD Budget

Therefore, additional $3.5 million in Therefore, additional $3.5 million in ongoing cost reductions are necessary for ongoing cost reductions are necessary for Proposed Adopted BudgetProposed Adopted Budget– $2.5 million for additional new ongoing $2.5 million for additional new ongoing

expendituresexpenditures– $1.0 million in anticipation of Trigger 1 mid-$1.0 million in anticipation of Trigger 1 mid-

year reductionyear reduction

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RSCCD BudgetRSCCD Budget

Campuses/Centers and District Operations have Campuses/Centers and District Operations have identified the required $3.5 million in additional identified the required $3.5 million in additional reductions for the Proposed Adopted Budgetreductions for the Proposed Adopted Budget– Santa Ana College - $2,005,500 Santa Ana College - $2,005,500

57.30% share of combined fixed/discretionary costs57.30% share of combined fixed/discretionary costs

– Santiago Canyon College - $917,700Santiago Canyon College - $917,70026.22% share of combined fixed/discretionary costs26.22% share of combined fixed/discretionary costs

– District Operations - $576,800District Operations - $576,80016.48% share of combined fixed/discretionary costs16.48% share of combined fixed/discretionary costs

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2010-2011 Ending Fund Balance2010-2011 Ending Fund Balance

Approximately $46 million as of June 30, 2011Approximately $46 million as of June 30, 2011– June 30, 2010 - $32 millionJune 30, 2010 - $32 million

Increase of approximately $14 millionIncrease of approximately $14 million– $7.5 million budgeted expected mid-year reduction that didn’t $7.5 million budgeted expected mid-year reduction that didn’t

materializematerialize– $3.1 million - funded 2.21% growth$3.1 million - funded 2.21% growth– $2.2 million - two years OEC center funding$2.2 million - two years OEC center funding– Approximately $1.2 million in cost savings primarily due to funded Approximately $1.2 million in cost savings primarily due to funded

vacant positionsvacant positions

Ending balance funds are Ending balance funds are one timeone time funds funds– Proposed Adopted Budget spends down approximately $7 million Proposed Adopted Budget spends down approximately $7 million

(estimate)(estimate)– Trigger 2 implementation will spend down an additional $1.8 millionTrigger 2 implementation will spend down an additional $1.8 million

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Ongoing ConcernsOngoing ConcernsState and National economies not performing to state State and National economies not performing to state revenue expectationsrevenue expectations

If Trigger 2 is implementedIf Trigger 2 is implemented– An additional reduction in RSCCD state fundingAn additional reduction in RSCCD state funding– Additional $1.8 million mid-year reductionAdditional $1.8 million mid-year reduction– Further encroachment on ending balanceFurther encroachment on ending balance– Too soon to tell…Too soon to tell…

Cash deferral concernsCash deferral concerns– $24 million as of June 30, 2012$24 million as of June 30, 2012– Additional new deferrals?Additional new deferrals?

Additional Prop 98 tinkering?Additional Prop 98 tinkering?

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Proposed Adopted Budget TimelineProposed Adopted Budget Timeline

Adopted Budget Assumptions Adopted Budget Assumptions recommendationsrecommendations– On tonight’s docket for approvalOn tonight’s docket for approval– Includes anticipated Trigger 1 reductions Includes anticipated Trigger 1 reductions

Proposed Adopted Budget approvalProposed Adopted Budget approval– September 12September 12thth Board meeting Board meeting– September 15September 15thth Adopted Budget due date Adopted Budget due date

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