Budget Information

Budget Information

Senate Committee Adopts Budget Plan - June 13, 2012

 

 

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Dear Colleagues,

The Senate Budget Committee just adjourned, having acted on most parts of the state budget today. This sets the stage for floor consideration by the Senate and Assembly on Friday, which is the deadline by which lawmakers either pass a budget or don't get paid.

In an unexpected twist, the Assembly Budget Committee held an "information only" hearing and declared that no votes would be taken. While nothing official has been released, most observers believe that the Assembly will wait for the Senate to send over its bills and pass it, rather than having separate versions of the budget that must be reconciled by a conference committee.

Governor Jerry Brown sent an email statement to reporters this afternoon saying that, while Democrats had agreed to many of the cuts he proposed, they had not reached agreement with him yet. Specifically, he cited the rejection by legislative Democrats of significant cuts to the CalWORKs welfare-to-work program. However, the actions by the Senate today for community colleges are very likely to reflect the final budget for community colleges.

Here are the major components:

Current year (2011-2012)

  • Student Fee Revenue Shortfall: The Senate took no action on our request to backfill the estimated student fee revenue shortfall of $100 million in the current year.
  • Redevelopment: The Senate adopted the governor's reduction of $116.1 million General Fund for assumed redevelopment revenues, but only with a commitment by Department of Finance that community colleges will be protected "dollar for dollar" and that no more General Funds will be taken than are actually received by communtiy colleges from redirected redevelopment property tax revenues.

Budget year (2012-2013)

  • Overall: The Senate adopted the proposed use of proceeds of the November tax measure for deferral buydown of $283.8 million (this has fallen from $313m). While we had previously supported a "positive trigger" with programmatic spending, the revelation over the last week of a huge cash flow shift and associated risk suggested that the deferral buydown is the best option for community college districts.
  • Redevelopment: The Senate adopted the governor's reduction of $116.1 million General Fund for assumed redevelopment revenues, but only with a commitment by Department of Finance that community colleges will be protected "dollar for dollar" and that no more General Funds will be taken than are actually received by communtiy colleges from redirected redevelopment property tax revenues.
  • Apportionment flexibility: The Senate rejected language to repeal the SB 361 per-student funding formula.
  • Categorical flexibility: The Senate rejected language to provide increased flexibility among categorical programs.
  • Mandates: The Senate adopted a compromise mandates block grant, under which districts could opt to either 1) receive $28/FTES and opt out of claims or 2) use the existing claims process.
  • Cal Grants: The Senate rejected the proposal to increase GPA requirements for Cal Grants, but accepted the governor's proposal to repeal the recent Student Aid Commission decision to allow community college transfer entitlements to students who don't transfer immediately from a community college to a four-year institution.

The Bottom Line

  • If the November tax measure passes, the community college budget increases $283.8 million, and the money will be used for deferral buydown.
  • If the November tax measure fails, the community college budget will be cut the $283.8 million added to next year's budget for deferral buydown, plus an additional $286.5 million workload reduction cut, for a total of $570.3 million trigger cut.
  • Under both scenarios, a large amount of cash will be deferred from July-November until later in the year as the state manages a significant cash flow problem. In 2011-12, community colleges received $1.7 billion from July through January. In 2012-13, community colleges will receive either $1.0 or $1.1 billion in the same time frame, depending respectively on whether the tax measure does not pass or does pass.

Thank you to Theresa Tena, the League's Director of Fiscal Policy, my partner in budgetary crime, who has done an outstanding job on your behalf on a state spending plan with increasing complexity, and to our community college partners including system Vice Chancellor Dan Troy.

Sincerely,

Scott Lay
President and Chief Executive Officer, The League
Orange Coast College '94




Community College League of California
2017 O Street, Sacramento, California 95811
916.444.8641 . www.ccleague.org


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Last Updated: 6/15/12