Budget Information

Budget Information

CCCCO Budget Update - May 31, 2011

 

Colleagues,

 Late last week, the budget subcommittees of both houses acted on the May Revision.  While these actions are not final,  they are significant in that they generally set the parameters for discussion that will result in a final budget agreement.  Aside from the push for tax extensions, our major priority in this process was to have one or both houses recognize and address what appears to be an overestimation of fee revenue in the Gov’s May Revise (which would leave the General Fund apportionment appropriation short). The major actions were as follows:

 The Senate:

  • Agreed to suspend two mandates (Sexual Assault Response Procedures and Student Records) and also changed provisional budget language to require funding from the Student Financial Aid Administration program be used to offset claims for the Enrollment Fee Collections and Enrollment Fee Waivers mandates.
  • Agreed to buy back $347M in deferrals (the Gov had proposed $350M), while shifting $3M to pay for Health Fees mandate claims.
  • Reappropriated $2M in unspent prior year SB 70 (career tech) money back to that program for 11-12.
  • Did not address the fee shortage.

The Assembly: There was much more action in the Assembly, as they diverted $1B (some other one-time funds were found, as well) the Governor had proposed to pay off special fund borrowing for use as one-time Proposition 98 settle-up funding.  A big piece of this ($441.7M) went to restore child care cuts, and $550M went to K-14 for further deferral buybacks.  The total CCC deferral buyback under the Assembly plan would be $410.7M, though it is not clear this $1B diversion will survive budget negotiations.

Other Assembly issues:

  • Rejected the Governor’s proposals on mandates, keeping them all intact for 2011-12.  Mandates were referred to the Assembly Committee on Education for further review.  $8.9M in estimated mandate costs would be paid with one-time funds.
  • Provided $25M to backfill the fee shortage.

We were especially pleased to see that the bulk ($23M) of the fee shortage backfill was funded with ongoing money in the Assembly plan rather than the one-time pot.  This makes keeping at least some of that funding more likely as we enter the final stage of budget negotiations. 

What’s next? The two houses will need to work out their differences in the context of higher level negotiations with the Governor and with Republicans on a final deal that may or may not include tax extensions.  There has been some discussion that the two houses will forego the Conference Committee process to quicken the pace of negotiations on the key budget issues.  Proposition 25 provides that the Legislators will start forfeiting salary if they do not meet long-standing but usually ignored deadlines for submitting a budget to the Governor.  Will that quicken the pace of negotiations?  It’s possible, I suppose, but there are some major threshold issues to sort out before an agreement can be reached – if an agreement is to include tax extensions, that is.  Stay tuned. 

I think it is important to emphasize that while the May Revision, by and large, brought good news for education, we are not yet out of the woods.  Much of the final budget for CCCs remains dependent on the push for tax extensions.  With that tax extension revenue, the CCCs are likely protected from cuts beyond the $400M sustained earlier in the year.  Plus, with the additional revenue, the deferral buyback can be used as a cushion to fund various issues not included in the Governor’s plan such as the fee shortage and mandate claims. 

Without an agreement on tax extensions, however, K-14 education would likely be in store for reductions beyond those sustained in the earlier budget agreement.  Of course, some variations on the Governor’s proposals are also possible, such as an agreement for tax extensions below what the Governor has requested.  Districts should budget with caution until a final agreement is reached. 

 

Sincerely,
Dan Troy
Vice Chancellor for Fiscal Policy
Chancellor’s Office of the California Community Colleges
dtroy@cccco.edu
(916) 445‐0540


Budget Information
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Pippa Gibson
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Last Updated: 5/31/11