1. State Budget Update May Revise May 27, 2003

2. The Budget How the State landed in this position What is the shortfall Governor's Budget Plan Community College Funding Budget Outlook Impact to NOCCCD Tentative Budget Next Steps

3. General Fund: Decline Almost Entirely Caused by Personal Income Decline Assumes May Revise Tax Proposals

4. Understanding the Mountain Stock options/capital gains “pushed” tax revenue to historic levels.

5. Understanding the Gap $38.2 billion – a bigger “gap” Tax Shortfall, “Scheduled Spending Increases,” Tobacco Securitization One-time reductions/deferral Loans Fund shifts Miscellaneous Increases from $34 billion in January: $2 billion lost tobacco securitization $1.7 billion spending increases (workload programs)

6. Governor’s Budget Plan $10.7 billion “deficit financing bond” –Borrows money securitized by ½ cent sales tax (using special fund exempt from Prop 98) $18.9 billion in cuts and savings $6.8 billion in fund shifts, transfers & loans $1.7 billion in program realignments to local governments Tax increases

7. Tax Proposals $7.2 billion$8.3 billionTOTAL Increase by 0.23 per pack in 2003- 04 and 0.40 per pack in 2004-05 to fund realignment ($0.4 billion in 2003-04; $0.7 billion in 2004-05) Increase by $1.10 per pack to fund realignment ($1.2 billion) Tobacco tax Create a 10.3% (taxpayers over 150k/300k) to fund realignment ($1.3 billion) Create 10% and 11% tax brackets to fund realignment ($2.6 billion) Personal income tax 0.5 cent “temporary” increase to pay deficit bond, beginning 10/1/03 ($1.7 billion) 1 cent proposed for realignment ($4.6 billion) Sales Tax Full restoration to 2% (Revenue/decreased backfill): $3.8 billion No increase (although eliminated backfill to local government) Vehicle License Fee May ReviseJanuaryTax

8. Governor’s Community College Proposal Cuts of $285 million (5.6%) from the enacted 2002-03 budget Enrollment: Provides a net decline of 6,500 FTES (-0.60%): –Cuts $125 million from the general apportionment for attrition/downsizing. (~32,500 FTES) –Cuts $25 million from the general apportionment for concurrent enrollment. (~6,500 FTES) –Funds 3% enrollment growth (32,500 FTES) Cuts Partnership for Excellence by 50% (to $150 million). Increases fees to $18/unit.

9. 2003-04 Budget Outlook Arguments for on-time: –Governor’s May Revise “requires” on-time approval. –Without cash infusion (through borrowing), state will be out of cash in mid-July. –White v. Davis – no payments will be made to many programs (incl. community colleges) without either a budget or emergency spending authority. State employees would receive minimum wage. Signs of possible delay: –Republican caucus: “not a single vote for the Davis tax increases” –Liberal Democrats still uneasy about the deep level of health, human services cuts.

10. Impact to NOCCCD Reduction for $11.6 to $10.2 million Categorical Programs Full-time faculty obligation moves to 542.79 for fall 2004 a reduction of 32.81 FTES would increase by 400 from January estimates

11. Revenue Decline Apportionment @ 3.88% - $4.4 million Partnership Funds @ 50% - $4.5 million Part-time Faculty Funds - $.2 million Total for these is $9.2 million

12. Expenditure Increases Medical @ 17% - $1.5 million PERS @ 10.42% - $1.9 million Step Increases - $.7 million Total Increase $4.1 million

13. Expenditure Decreases Extended Day reductions – ($.5 million) Schedule Maintenance Match – ($1.0) Cash Allocation – ($.2) Salary Holding Accounts – ($.2) Full-time faculty savings – ($1.0) Other reductions – ($.2) Total decreases - $3.1 million

14. Tentative Budget District model that reduces expenditures by $11.6 million Presented at the June 24 th Board meeting Development in Banner –Position Control –Non Position Control Simple format

15. Next Step Follow budget development at the State Level –Assembly Subcommittee – 3.36% increase –Senate Subcommittee – 4.15% increase State Budget Year End Closing – Carryovers Proposed Budget on September 9th