Budget Information

Budget Information

LAO Forecast - Nov. 16, 2011

 

From: Troy, Dan [mailto:dtroy@CCCCO.EDU]
Sent: Wednesday, November 16, 2011 11:31 AM
To: SO2CBO@LISTSERV.CCCNEXT.NET
Subject: LAO forecast

Colleagues,

Below is a link to the full LAO Fiscal Outlook that was just released.  As feared, the revenue outlook is quite bad for both the current year and for the 2012-13 fiscal year.  As the LAO forecasts current year revenues to be about $3.7B  below budget assumptions, this would indicate that both Tier 1 and Tier 2 triggers would be pulled by the Department of Finance, assuming DOF’s forecast is similar. 

According to statute enacted in conjunction with the 2011 Budget Act, by December 15th, the Director of Finance is to use the higher of the LAO or DOF current year revenue projections to determine whether or not specified current year reductions shall be automatically triggered.  If the higher of the two estimates is $87.5B or less, Tier 1 cuts are triggered.  If the estimate is $86.5B or less, both Tier 1 and Tier 2 reductions are triggered.  Tier 1 ($30M) and Tier 2 ($72M) reductions for CCCs equal a combined $102M (the Tier 1 trigger also enacts a fee increase to $46 per unit, effective with the summer of 2012). 

The LAO forecast estimates revenues at $84.8B, so, if DOF’s forecast is similar, both Tier 1 and Tier reductions would be enacted, absent action by the Legislature and the Governor to adjust the triggers.  Further, the LAO also projects a 2012-13 budget deficit of almost $13B, signaling that the current year triggers may not be the end of the bad times.  Below is a link to the full LAO forecast.

http://www.lao.ca.gov/reports/2011/bud/fiscal_outlook/fiscal_outlook_2011.aspx

The next step is to await the Department of Finance’s forecast, which is traditionally completed in early December.  

Regards,

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




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Last Updated: 11/28/11