SRJC Budget UpdateBoard Presentation (February 10, 2014)

Clarifications on Governor’s January 2015-16 Budget

• The Governor presented his 2015-16 budget proposal on January 9, 2015.

• The initial presentation to the Board was given on Tuesday January 13, 2015.

Clarifications on Governor’s January 2015-16 Budget

• A Workshop on the Governor’s Budget was given by the Chancellor’s Office on Wednesday, January 14, 2015.

• During that Workshop, certain clarifications were made that do change the estimated amounts that the District will receive.

What Hasn’t Changed

• There were no changes to total State-wide increase, of $316.7 Million, in Restricted Program Funding …

• Nor, was there any change to the State-wide amount, of $94.5 Million, to retire the remaining “deferred revenues” owed by the State to the Community College System.

What Hasn’t Changed - (Restricted Funds)

• It is still estimated that SRJC’s Student Success Programs will receive approximately $3.0 Million …

• evenly split between …

• the Student Success and Support Program (SSSP), and …

• Student Equity Plan Program

• (There is still no word on the level of “matching funds” will be required)

What Hasn’t Changed - (Restricted Funds)

• The District’s share of the Prop 39 funds will bring in $447,000.

• And … it is still not known exactly how the distribution will be made for the Career Tech and Apprenticeship Programs.

What Hasn’t Changed - (Unrestricted Funds)

• It is still anticipated that SRJC’s share of the $125.0 Million increase to “Base Funding” will be approximately $2.0 Million,

• It is still anticipated that the $49.0 Million increase, in the funding rate for CDCP-FTES, will bring the District approximately $800,000, and …

• Although the State is making $106.9 Million to provide 2.0% Growth funding, given the District’s flat-to-negative enrollment-trend, it is currently perceived that the District will not be in a position to receive any of this money.

What Hasn’t Changed - (Unrestricted Funds)

• Because the District is on Stability (for 2014-15) and whatever we report for 2015-16 FTES will determine the actual FTES-funding that we will receive for 2015-16 …

• And, given that the current enrollment trend is a 1.3% reduction from what we reported in 2013-14 (which is the “FTES base” for FTES-apportionment in 2014-15) …

• Unless we “grow” in 2015-16 … we could be looking at a 1.3% reduction in apportionment revenues … and that would translate into a loss close to $1.2 Million … (and that’s if we stay “flat” going from 2014-15 to 2015-16)

What Has Changed - (Unrestricted Funds)

• Recalculating the 1.58% COLA, across the District’s actual apportionment numbers, the amount that SRJC will receive will be a little less than $1.5 Million (… a small reduction from the $1.6 Million presented on 1-13-15).

• The State-wide funding being made available in “One-time” Mandated Cost funding will be $353.1 Million … (Not the $353.3 Million originally published in the Governor’s Budget)

• And, although this above change in “total amount” is not significant … clarification by the Chancellor’s Office just how the money will be distributed has a major impact.

What Has Changed - (Unrestricted Funds)

• Per the State Chancellor’s Office, the distribution of the One-time, Mandated Cost money will most likely be based on the FTES reported at P-2 for 2014-15 … and not the FTES reported for 2015-16.

• This has a huge impact on the amount that will be received by SRJC!

What Has Changed - (Unrestricted Funds)

• Because of the “shift” of summer 2014 FTES, into 2013-14 … (so as not to lose $5 Million in funding for 2013-14 and 2014-15) …the District will be reporting closer to 17,500 FTES for 2014-15 …

• And if this is the number used by the Chancellor’s Office … (instead of the potential reportable 19,700 FTES 2015-16) … the change would reduce the District’s funding receipt from $6.2 Million (as presented 1-13-15, and based upon 19,700 FTES) to $5.5 Million.

To Summarize …

Revenue Change Best Case Worst Case Probable Case

On-going RevenueCOLA 1.5 1.5 1.5 Base 2.0 2.0 2.0 CDCP Rate Change 0.8 0.8 0.8 Growth 1.0 (1.3) - Total 5.3 3.0 4.3

One-Time RevenueMandated Cost 6.2 5.5 5.8

Total 11.5 8.5 10.1

(In Millions)

2015-16 Governor's Budget - (Impact on SRJC)

Anticipated Expenditure Increases for 2015-16

For 2015-16, the following expenditure increases are anticipated

PERS & STRS published Increases $ 0.9 MillionHealth Benefit Costs $ 0.6 MillionNon-discretionary Costs $ 0.1 MillionTotal $ 1.6 Million

… And, we still have an on-going structural imbalance of $5.0 - $6.0 Million.

Net Effect Revenue and Expenditures

Best Case Worst Case Probable Case

Governor's Revenue 11.5 8.5 10.1

Expenditure Increases (1.6) (1.6) (1.6)

Structural Deficit (5.0) (6.0) (5.5)

Net Effect 4.9 0.9 3.0

(Without One-Time Money) (1.3) (4.6) (2.8)

(In Millions)

2015-16 Net Increase/Decrease Projection

The Starting Point for 2015-16

2014-15 2014-15 2014-15REVENUES Adopted Projected Differences

Federal 32,000$ 63,621$ 31,621$ Apportionment Calculation 94,628,046 94,529,661 (98,385) Other State 4,604,155 5,694,781 1,090,626 Other Local 4,218,724 4,192,809 (25,915) Transfers 465,080 3,869 (461,211)

Total Revenue 103,948,005$ 104,484,741$ 536,736$

REVENUES AND EXPENSESUnrestricted General Fund

The Starting Point for 2015-16

2014-15 2014-15 2014-15EXPENSES Adopted Projected Differences

Faculty 1XXX 50,221,509$ 50,841,676$ 620,167$ CLASSIFIED 2XXX 23,814,239 23,894,981 80,742 BENEFITS 3XXX 21,426,565 21,283,760 (142,805) 4XXX 1,676,444 2,173,562 497,118 5XXX 9,820,889 9,396,881 (424,008) 6XXX 150,693 341,164 190,471 7XXX 3,048,480 2,846,404 (202,076)

Total Expenses 110,158,819$ 110,778,428$ 619,609$

Surplus/(Deficit) (6,210,814)$ (6,293,687)$ (619,609)$

REVENUES AND EXPENSESUnrestricted General Fund

The Starting Point for 2015-16 The Starting Point of budgeting for 2015-16 will be the

projected 2015-16 beginning fund balance

Which is the same at the 2014-15 projected ending fund balance

Applying the net decrease in fund balance of $6.3 Million to the 2014-15 beginning fund balance of $12.3 Million leaves the District with an ending fund balance of $6.0 Million…

Which is right at 5%

Looking Long Term Thanks to the large “One-time” funding that the District will be

receiving in 2015-16 …

… the District is on-track to end 2015-16 with a fund balance/reserve … prior to any negotiations changes … of somewhere between $6.9 and $10.9 Million.

However, unless the District begins to address its $5 -$6 Million structural imbalance …

Unabated, and without any more one-time funding, the District could find itself at … or below … the State Chancellor’s mandated 5% reserve by the end of 2016-17.

Questions?