Budget Information

Budget Information

Vice Chancellor Skinner Explains Budget Developments - Aug. 4, 2010

Executive Vice Chancellor's Skinner explains yesterday's budget developments below. While we are still a long way from a final proposal, it is heartening that this version would provide more money for community colleges, including rejection of the Governor's proposed cut to EOPS, restoration of some child care funding and would provide $33 M to continue the backfill of last year's categorical cuts. See more details below.

Linda Michalowski
Vice Chancellor, Student Services and Special Programs
California Community Colleges


Dear Colleagues:
Yesterday, Senate leader Darrell Steinberg and Assembly leader John Perez announced a unified Democratic budget proposal that reconciles the differences between the two house versions. The new budget proposal rejects many of the Governor’s most severe proposed cuts to health, welfare, and education programs using additional tax revenues generated through a tax swap proposal. The tax swap proposal would raise Personal Income Tax (PIT) rates for most Californians as well as the Vehicle Licensing Fee (VLF) while at the same time reducing the State Sales Tax. Because the PIT and VLF are deductible from federal income taxes while sales taxes are not, this proposal would provide Californians with increased relief from federal taxes. As a result, this tax swap proposal generates additional tax revenues while not increasing the overall tax burden on Californians. The additional revenues are estimated at $1.8 billion in 2010-11 growing to $3 billion annually by 2012-13. In addition, the Democratic plan would delay implementation of various tax breaks currently set to take effect in 2010-11 ($2 billion in revenue) and imposes an oil severance tax ($1.2 billion in revenue).
In regards to education, the Democratic plan would provide approximately $3.4 billion more in Proposition 98 funding than is proposed by the Governor. These funds would largely be used to reject proposed cuts to K-12 general purpose funds ($1.5 billion), child care programs ($1.4 billion), and Class-Size Reduction ($250 million). While providing more resources for K-12 schools and colleges, the Democratic proposal would also suspend Proposition 98. We have been told that suspension, always a politically charged topic, is proposed in order resolve legal disputes regarding how the Proposed 98 guarantee should be implemented this year given a number of unusual technical complexities that currently exist.
For the California Community Colleges, the details are as follows:

  • $126 million for enrollment funding (2.21 percent)
  • Reject negative COLA ($23 million)
  • $35 million to backfill one-time federal ARRA funding (directed to categorical programs)
  • $25 million augmentation for the Economic and Workforce Development program to support workforce training enrollments
  • Reject Governor’s proposed $10 million cut to EOPS
  • Reject Governor’s proposed $10 million cut to Part-Time Faculty Compensation
  • Reject Governor’s proposed $20 million augmentation for SB 70 CTE programs
  • Reject Senate’s proposed language to revise Basic Skills categorical funding formula
  • Establish Joint Powers Authority to accelerate repayment of mandated cost reimbursements. More details are forthcoming, but it appears that this proposal would enable K-12 and CCC districts to borrow against the future stream of mandate reimbursements from the state. At this time the state owes colleges over $380 million for mandate reimbursements.

Upon its release, the Democratic plan was met with immediate criticism from legislative Republican leaders and the Governor’s Office who labeled the tax swap plan a tax increase and called the proposal “dead on arrival.” Time will tell whether this new proposal provides any fodder for more productive budget negotiations. For the moment, all that is clear is that the Democrats have aligned behind one proposal. While that in itself is a step forward, the general sentiment in the Capitol is that we are still a long way off from a budget deal. More updates will follow as the situation develops.

Erik Skinner
Executive Vice Chancellor for Programs
California Community Colleges,
Chancellor's Office
1102 Q Street
Sacramento, CA  95811-6549
direct line:  916-323-7007

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Last Updated: 8/4/10