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Sonoma County Junior College District 2011-12 Budget Update Presented to the Board of Trustees August 9, 2011.

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Presentation on theme: "Sonoma County Junior College District 2011-12 Budget Update Presented to the Board of Trustees August 9, 2011."— Presentation transcript:


2 Sonoma County Junior College District 2011-12 Budget Update Presented to the Board of Trustees August 9, 2011

3 The 2011-12 State Budget Signed into Law June 30, 2011 Bridges a $26.6 Billion Budgetary Gap $15.0 Billion in Spending Reductions $ 1.0 Billion in Targeted Revenue Increases $ 2.9 Billion in “Other Solutions” $ 8.3 Billion in “Improved State Revenue Outlook” * * (We’ll discuss what happens if the revenue doesn’t materialize) Leaves the State with a $543 Million Reserve

4 Three Scenarios (Tiers) Impact on Community Colleges

5 Community College Impact (as Budgeted) Initially Reduces Community College Apportionment by $400 Million Adds back $110 Million in funding by increasing student enrollment fees by $10 per unit (from $26/unit to $36/unit) Assumes $23 Million reduction in student fees (from 2010-11 to 2011-12) Results in a “Net Reduction" of $313 Million

6 Community College Impact (as Budgeted) The Net Reduction will come to community colleges as a “workload reduction” A workload reduction does not reduce the State’s funding per FTES... but reduces the number of FTES that the State will fund On a system-wide basis, the reduction represents a... (system-wide)... 5.9% reduction in FTES funding

7 Community College Impact (as Budgeted) Due to the State Chancellor’s Office policy of protecting “small rural districts” from system-wide cuts... the actual cut that will be applied to all other districts is factored by 106%..., resulting in... a workload reduction of 6.2% For the Sonoma County Junior College District, the workload reduction results in a loss of $5.6 Million, and essentially forces a decrease in the number of students served by... 1,292 FTES

8 “Tier 0” The State’s budget “assumes” that within the budgeted $8.3 Billion in “improved revenues” (see slide #3)... there is specifically... $4.0 Billion in additional money that... prior to the “budget-passed-by-a-simple- majority-in-the-legislature”... did not exist! The current budget is referred to as being at... “Tier 0”... and the provisions of the budget will remain in place as long as... the State receives at least $3 Billion of the hoped-for $4 Billion

9 December 15 th “Trigger Date” Tiers 1 and 2

10 “Tier 1” The State has identified December 15, 2011 as the “Trigger Date” to determine just how much of the $4 Billion the State will actually receive. If the State only receives $2-3 Billion... of the hoped-for $4 Billion... there will be additional “Tier 1” cuts. The impact on the Community College System will be a system-wide loss of $30 Million

11 “Tier 1” Currently, the budget-plan is to offset this $30 Million loss by increasing Spring 2012 student enrollment fees by an additional $10 per unit... bringing the per unit fee to $46/unit Due to the “lateness” by which this determination would be made... with students having already enrolled... it is expected that the State Chancellor’s Office will request that the cut be taken as a further revenue reduction For SCJCD, this would increase the loss to $6.1 Million, equivalent to... 1,419 FTES

12 “Tier 2” If the State receives only $0-2 Billion... of the hoped-for $4 Billion... there will be additional “Tier 2” cuts The impact on the Community College System will be a system-wide loss of $72 Million (above the $30 Million Tier 1 cut) This additional loss would bring the system- wide net loss to $415 Million, of which SCJCD’s share would be $7.4 Million, equivalent to... 1,717 FTES

13 Hidden Reductions Deficit Funding and Weak Economic Outlook

14 Deficit Funding The state calculates the amount of state-funding needed by the Community College System as follows: Total Calculated Apportionment Needed (a dollar-total) - Estimated Property Tax Collections (state-wide) - Estimated Enrollment Fees (state-wide) = Required State Funding (a fixed amount) So, what happens if the fixed state amount isn’t enough?... DEFICIT FUNDING ! (i.e., funding at less than 100 cents on the dollar) For 2011-12, the District is budgeting a 1.5% deficit factor, which, if hit with the additional “non-rural district factor” would amount to an additional $1.6 Million loss

15 Weak Economic Outlook In March and April, the State saw a $2.8 Billion increase (above budgetary estimations) in Sales Tax and Personal Income Tax (PIT) The State projected this increase over a two-year period, and increased the “May Revise’s” projected revenues” by $6.6 Billion... (roughly half would be received in 2011-12) Inherent in this projection is the assumption that the forces that lead to the aforementioned increase in revenues... (like the 2009-10, 30-50% increase in stock values... and its affect on PIT)...will continue But what if they don’t ?

16 Weak Economic Outlook Given that: S&P recently downgraded the “rating” of the U.S. the fiscal problems of the Eurozone continue... (PIIGS) the 6 th worse, one-day-market-loss, was (8/8/11) there are real fears of a “double-dip” recession Half of the aforementioned $6.6 Billion... (to be received in 2011-12)... may not materialize The State could be looking at an additional loss of $3 Billion... of which the District’s prorated share would be $3 Million

17 Conservative Planning The District’s Budget for 2011-12

18 2011-12 District Budget In total, all of the aforementioned “revenue losses” add up to $12 Million Added to this shortfall is the re-instatement of $3.7 Million in 2010-11 concessions and $3.3 Million in 2010-11 revenue improvements To offset this net $12.4 Million Budgetary issue, the District, in negotiated conjunction with AFA, SEIU and the Management Team are utilizing: $5.2 Million in staffing reductions $3.8 Million in salary and benefit concessions $3.4 Million reduction of reserves

19 Fund Balance

20 On-going Efforts 2011-12 and Beyond

21 Ongoing Efforts The District will be bringing a “final budget” to the Board in September At that time, the books for 2010-11 will be closed, and we will have a better idea of our fund balance for 2011-12 Next week the State Chancellor’s is expected to officially announce their decision to reduce the apportionment “base allocation” thresholds, commensurate with the workload reduction... (the 20,000 FTES Threshold will be reduced to ≈ 18,760 FTES) Foreknowledge of this change in policy has allowed the District to re-evaluate its long-term enrollment planning and add-back courses for Fall and Spring... had the policy change been made sooner, the District could have added courses back to Summer as well...

22 Ongoing Efforts The District continues its efforts to contain costs To date, the District’s 18-month program of Repurposing / Reengineering, has seen work-reconfiguration of roughly 40 permanent staff...eliminating approximately 125 (former) STNC employees... and saving the District almost $700,000 The recent elimination of the bus-pass subsidy program will save the District approximately $120,000 annually And, these are just a couple of examples of the dozens of initiatives the District has undertaken And why are we doing these things?

23 Because 2012-13 Won’t be much better!

24 Questions?

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