Budget Information

Budget Information

Fiscal Outlook - Dec. 3, 2010

 

Dear Colleagues:

I wanted to share with you some of the news we have received over the past few weeks about the state’s troubling fiscal situation and how it is likely to affect California community colleges.  We will have more information in January when our new governor presents his 2011-12 budget proposal, which may include mid-year budget cuts.

There is no way to put a rosy glow on what is happening in California: The fiscal outlook for our state is ugly.

The independent Legislative Analyst’s Office (LAO) is now projecting a $25.4 billion state shortfall over the 2010-11 and 2011-12 fiscal years. Of this total shortfall, $6.1 billion is projected in the current fiscal year.

Even more troubling is the assessment that because of California’s ongoing $20 billion annual structural deficit, funding for community colleges will not return to 2007-08 levels until at least 2015-16.

So what does this mean for community colleges?

The projection of a $25.4 billion shortfall over the next 18 months assumes a cut of $2.2 billion to K-14 education, divided proportionately between K-12 schools and community colleges under the Proposition 98 funding formula.

This would mean community colleges face a baseline cut of $230 million to $250 million over the next 18 months. That translates into a state funding reduction of

$7 million to $7.5 million for Foothill-De Anza.

There are a number of options related to community colleges that the state can pursue to close the budget gap. These include:

  • Eliminating funding for 2.21% growth that was provided in the 2010-11 state budget, for a savings of $126 million
  • Serve fewer students by enacting a workload reduction, a strategy that was used last year
  • Continue the trend of the past few years of reduced funding per student
  • Increase student fees

As challenging as these circumstances are, I do take some pride in reporting to you that our district has effectively positioned itself to withstand moderate state budget cuts, in the range of the $7 million to $7.5 million mentioned above, for 2010-11 and 2011-12.

Following is a summary of our current assessment of how Foothill-De Anza would withstand likely state budget cuts resulting from the projected budget shortfall:

  • Loss of growth funding in the current year would have no impact on the district because we did not include any growth in our adopted budget.
  • We currently project having $10 million in one-time stability funding at the end of the current fiscal year (June 30) as long as no mid-year cuts are imposed.
  • We project having enough one-time funds set aside to offset medical benefits rate increases.  In the adopted budget, we projected ending the current year with $10 million in the benefits fund, but this may be reduced if actual benefits costs exceed budget in 2010-11.

Thanks to strategic planning and the prudent budget management to which all employee groups have contributed, Foothill-De Anza should have at least a year to plan for how to balance the budget in response to additional anticipated budget cuts from the state.

Erik Skinner, executive vice chancellor of the California Community Colleges, offered this view recently of what we should expect in the next few years:

“Taken as a whole, the Legislative Analyst Office’s report offers a sobering assessment that suggests California’s biggest budget challenges are still ahead of us, “ Skinner said. “In any event, it is hard to imagine a scenario that does not include significant negative consequences for the community colleges. Accordingly colleges should be prepared for the likelihood of mid-year cuts in the current year.”

I wish I had better news to share. I do want to assure you that Foothill-De Anza has done everything possible to prepare itself for this difficult situation and deeply appreciates the critical importance of our employees in providing students with the highest quality education.

I want to thank each of you for all you have done to help the district position itself for these difficult times in a way that will cause the least damage to our students and your fellow employees.

Please feel free to contact me with any questions or suggestions.

Sincerely,

Linda Thor, Chancellor



Budget Information
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Pippa Gibson
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Last Updated: 12/9/10