Chancellor Thor: 2011-12 FHDA Budget Cuts - April 4, 2011
As you may have heard, it now appears that the governor’s proposed tax extensions won’t make it to the statewide ballot in June. This takes off the table
the possibility of $14 billion in tax proceeds that Gov. Brown had hoped to use
in combination with $12.5 billion in budget cuts to close California’s $25.4 billion
Without those tax revenues, there is a strong possibility California will have
to enact an all-cuts budget for 2011-12. We don’t know if this would mean a
doubling of the $400 million in cuts the Legislature has approved for community
colleges, but it is possible. We do know it will take some months for the
Legislature to work out a budget-reduction plan of that magnitude.
As distressing as an all-cuts state budget is, the district has decided to plan
for this worst-case scenario, knowing that we can pull back from it if other
solutions are found at the state level. For example, discussions are under way
about placing a statewide initiative for targeted tax increases on the ballot
in November 2011 or 2012. The Legislature also may realize that California
community colleges cannot sustain a doubling of the $400 million budget cut
without dire consequences.
The bottom line is that we are preparing for possibly having to reduce our
operating expenses by approximately $30 million. This is due to a possible 16
percent funding reduction from the state under an all-cuts budget and the loss
of 4 percent of our current apportionment revenue based on projections that the
district’s enrollment will be down 4 percent in the current year. The result is
that we will have to reduce the number of students we serve by approximately
10,000 and cut our instructional costs by $10 million for 2011-12. Even after
reducing our instructional budget by $10 million, we will still have a deficit
of approximately $20.3 million in expenses to reduce on a permanent basis.
Fortunately, the district can draw down one-time dollars set aside in its
“stability fund” to offset at least some of the budget cuts on a temporary
basis. We currently project having $14 million in the stability fund by the end
of this fiscal year, although there are several factors that could result in a
Unfortunately, the stability fund is only a temporary solution. A $20.3 million
deficit for Foothill-De Anza — or whatever the final amount turns out to be —
would carry forward annually into the foreseeable future, until the state
realizes increased revenues through tax increases, economic growth or some
combination of both.
Our current projections show that a offsetting a deficit of $20.3 million for
the fiscal year starting July 1 would exhaust the district’s stability fund by
December 2011. That means we would need to make the full $20.3 million reduction
beginning Jan. 1, 2012, unless we take additional steps to augment the
I want to share with you some of our initial thoughts about how to prepare for
and implement the coming budget reductions. I wish I had better news, but I
think it is important to let you know what we are up against:
- A deficit of $20.3 million in 2011-12 would require an overall 20 percent
downsizing of the district that could be delayed until January 2012 or possibly
later by using the stability fund.
Discussions about how to do this will be made through the shared governance
process at the campuses and through a collaborative process with input from
stakeholders in Central Services.
While the district currently plans to use some of the stability fund to back
fill budget cuts in 2011-12, we intend to reserve some balance for use in
The next rounds of cuts are expected to include consolidation and elimination
of programs and services, and the loss of administrative, full-time faculty,
part-time faculty and classified staff positions.
The district’s fixed operating expenses are expected to increase by about $3
million in 2011-12. We are looking for ways to reduce those costs.
The district will explore options for salary and benefit savings with all
groups at the bargaining table.
There is no question that an all-cuts state budget would bring dramatic changes
for every community college in the state, ours included. This is an unprecedented
situation, the compounding of multiple years of significant and successive
state funding cuts. While I know that Foothill-De Anza will continue to do
outstanding work educating our students, the sad reality is that we will be
able to serve far few students. This will surely come back to haunt California
in terms of having a well-educated and highly skilled workforce, which has
always been the key to our state’s economic vitality.
While it looks like California’s political gridlock will keep the tax extensions
off the June ballot, the truth is that most polling showed the extensions would
not win voter approval.
Although we have some very difficult times ahead, now there will be some time
for Californians to absorb the painful realities of an all-cuts budget and how
it affects the quality of life in our state. In the meantime, we will do all we
can to influence the best possible outcome in the Legislature for California
As always, I thank you for your dedication and passion in making Foothill-De
Anza such an outstanding institution, and for your service to our students.
Linda Thor, Chancellor