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The 2012-13 Budget - After A Good Night's Sleep - Jan. 6, 2012
January 6, 2012
Some of my best mentors have reminded me to "sleep on it" before responding. After a few hours of shuteye, here is a little more information on the state budget and its impact on community colleges.
The big picture
The state's economy is improving, and much work has been done to reduce the structure deficit. Instead of a double-digit structural shortfall, we are down to $5.1 billion. Additionally, we are carrying into 2012-13 a $4.1 billion deficit from the 2011-12 (current) fiscal year. So, the starting point deficit for next year is $9.2 billion. Absent policy changes, that deficit dwindles to $1.9 billion by 2015-16.
The spending plan has $2 billion in combined cuts to CalWORKs, Medi-Cal and In-home Supportive Services, as well as deep cuts ($300 million) to Cal Grants, mostly to students attending proprietary and nonprofit colleges.
The governor's tax plan
To address the structural deficit, the governor has proposed a temporary increase in the sales tax and personal income tax rates on higher income earners. According to the governor, this would bring in $6.9 billion in 2012-13. While earmarked for the "Education Protection Account," the increased revenue will only increase the Proposition 98 guarantee by $2.4 billion. The remainder of the new tax revenue will supplant existing Proposition 98 general fund dollars, making them available for new purposes.
The tax increases would be considered by the voters at the November 2012 general election.
If the voters do not approve the tax plan, the governor proposes $5.4 billion in automatic cuts. Of these, $4.8 billion would be to Proposition 98 funding for schools and community colleges. While the guarantee would only drop by $2.4 billion, the governor proposes an additional back-door cut by shifting $2.6 billion in non-Proposition 98 general obligation bond debt service for schools and community colleges into the guarantee. This would allow for an additional $2.6 billion in cuts to schools and community colleges.
The community college budget
The governor proposes the following budget increases for community colleges, if the tax package passes:
The governor proposes a massive overhaul of K-12 and community college categorical programs. For community colleges, this would take all eighteen categorical programs--from the smallest, the statewide Academic Senate, to the largest, EOPS--and place them in one block grant of $411.6 million.
Now, before you jump on the bandwagon, jump up and down screaming, or jump off a cliff--based on your perspective--we have not seen the language to implement this flexibility. Since the budget was released early, the budget bill language that we ordinarily see the day after budget introduction is not yet available. The governor's budget summary provides:
The Budget proposes to consolidate nearly all categorical programs and provide flexibility to CCC to use “flexed” funds for any categorical program purpose. This proposal will improve student access and success and will provide the colleges with more local control, flexibility, and decision‑making authority. The Administration will review the recommendations of the forthcoming Student Success Task Force report and explore other possibilities for expanding flexibility—including fee policy changes and loosening operational restrictions—for inclusion in the May Revision.
The triggers and community colleges
If the voters do not approve the temporary taxes, the community college budget would likely change as follows:
Thus, the total "at stake" for community colleges in the November tax plan is essentially 11% of $4.8 billion, or over $525 million.
*While the governor's documents discuss the $2.6 billion cut as "equating" to a three-week reduction in the K-12 school year, it is very likely that community colleges will be expected to share in the reduction proportionate to their share of the guarantee.
Where are we?
This is my eighteenth state budget and I know to neither panic nor get too excited upon the opening salvo. The governor has met the legal responsibility of proposing a balanced budget. He has done with fewer gimmicks than we have been accustomed to and now it will be considered by the Legislature.
Republicans are going to balk at the tax assumptions in this budget and Democrats will be hard-pressed to support the deep cuts to health and human services programs, particularly given the election year.
Clearly, elements of this plan are problematic for community colleges. Does it really make sense to send the $338,000 used to support the statewide Academic Senate to 72 districts and then ask them to send it back up to maintain the state office, which has many legal functions? What about categoricals that make us eligible for matching funds or are locked up in district-specific contracts? Does it make sense to use almost all of the new money to "buy down" an accounting deferral, or would voters be more interested in supporting the temporary taxes if they new community colleges would be able to serve more students?
There are lots of questions, and we will have time to have a dialog and advocate for the smartest plan possible for community colleges.
Community College League of California