State & FHDA Budget - July 14, 2011
As you all know by now, we finally have a state budget signed by
Governor Brown. For community colleges, the news is slightly better than
we presented in the Tentative Budget to our Board of Trustees in June.
The state budget calls for a 5.5% revenue reduction for California
community colleges. That is a meaningful improvement over the 8.7%
reduction that the governor had proposed in May, which we used for
planning the Tentative Budget.
The 5.5% reduction translates to approximately an $8.5 million revenue
loss for Foothill-De Anza in 2011-12. In addition to having less
operating revenue this year, we project that the district’s operating
expenses will increase between $2 million and $3 million due to a rise
in general operating expenses, including negotiated step and column
increases and district contributions to PERS.
This means we need to cut our 2011-12 expenses by approximately $10
million to live within available state funding and balance our budget.
This projected $10 million deficit is still a rough estimate as other
factors may increase or decrease its size as we close the books for 2010-11.
What we do know with certainty is that the $8.5 million state revenue
reduction is a /guaranteed minimum/. Foothill-De Anza could lose as much
as $3 million more in state funding if California’s optimistic revenue
projections don’t materialize. If that happens, the state will impose
additional budget cuts in the middle of the fiscal year. These mid-year
cuts are based on triggers built into the state budget and tied to
whether state revenues are meeting projections. If the triggers kick in,
Foothill-De Anza could experience an additional cut in state funding of
between $2 million and $3 million mid-year. This would push our
deficit—our budget-cutting target—to between approximately $12 million
and $13 million.
Despite these complicated budget scenarios from the state, we believe
the district will have about $10 million available from our Stability
Fund, as well as carry-over dollars from the colleges and Central
Services, to take us through 2011-12. Because of these one-time dollars,
this will be a “transition year,” delaying until 2012-13 most of the
permanent budget cuts we must make and giving us more time to plan for
those reductions. In the meantime, we will keep tightening our belts in
2011-12 by eliminating vacant positions whenever possible and filling
only the most essential ones.
Over the next several weeks, budget and finance staff will finish
closing the books for the 2010-11 fiscal year. Then we will know our
final enrollment numbers and ending balances, which we need to finish
preparing the 2011-12 Adopted Budget. That budget will be presented to
trustees at the Aug. 29 board meeting for adoption in September.
As I have noted before, strategic financial planning has allowed us to
push back for several years the full-extent of the state’s unprecedented
budget cuts. Yet even with our considerable resources, we have not
escaped state-imposed reductions and have experienced the harsh
realities of offering fewer courses, turning students away and reducing
Now, as our financial safety net gives way, both colleges and Central
Services face the painful task of developing detailed plans to meet the
permanent budget-reduction targets that will take effect for the 2012-13
fiscal year. Sadly, when those plans are presented to trustees in late
fall, they will reflect the destruction caused by multiple years of
severe cuts to California public higher education.
These are undeniably difficult times for our community college system
and our Foothill De-Anza community of faculty, staff and students.
Please know that with your help, we are committed to developing the most
thoughtful, responsible plans possible to navigate through these
unprecedented cutbacks to our system.
At the department, division and college level, I hope you will join me
in celebrating all we are still able to accomplish with the considerable
resources we have, thanks to the commitment, depth and creativity of our
incredible academic community. Even as we are saddened by our losses and
fight to turn them around, let’s unite to celebrate our many successes.
I hope all of you will have an opportunity to relax and recharge this
summer. Despite the challenges, I am looking forward to the fall.
Linda Thor, Chancellor