Coping with the Fiscal Crisis December 10, 2008

Overview Budget Picture Legislative Analyst’s Office (LAO) Impact on Community Colleges Budget Reduction Process Budget Fundamentals Timelines

Budget Picture State faces a $25 - $28 billion problem over the next 20 months Governor proposes $9.2 billion budget solution for –$4.7 billion in new taxes Temporary 1.5% sales tax increase Expanding sales tax base to include some services Other targeted taxes –$4.5 billion in budget cuts - $2.5 billion to K-14 Legislature in special session – ending November 30 – no action taken December 1 – Governor declares fiscal emergency

Legislative Analyst’s Office (LAO) California Nonpartisan Fiscal and Policy Advisor Comments on Governor’s Budget Plan –Realistic numbers –No borrowing –Long lasting solutions –Balanced approach – no longer just a spending problem Early Action is Critical –Maximize options –Allow agencies to prepare for cuts –Allow time for necessary ballot measures

Impact on Community Colleges Governor’s Proposal mid-year budget reductions of $332.2 million –$39.8 million for the COLA reduction –$292.4 million reduction for apportionment No reduction of workload measures proposed Allows districts to backfill apportionment cuts by shifting cuts to categorical programs

Impact on Community Colleges LAO Proposal Weighted less towards mid-year cuts – most of the cuts occurring in No reduction to apportionment – recommends targeted cuts – Approximately $100 million Fee increases –$26 dollars per unit – effective January 1, 2009 –$30 dollars per unit – effective July 1, 2009 Reduced funding for Certain Courses –Physical Education –Enrichment Courses

Legislative News Previous Special Session fails to reach agreement –Last vote - $200 million cut to community colleges 25 new Legislators –15 Democrats –10 Republican Special Session with new Legislators $55 to $60 million Property Tax Shortfall Joint Legislative Meeting –Cash flow crisis –Numbers could be 50% higher - $40 billion Senate Budget Committee today

Budget Reduction Process District will attempt to absorb mid-year cuts estimated at $10 million for Time to make planned reductions and will allow time to better evaluate the budget situation – Things will change! Campuses and constituent groups are asked to start looking for ways to reduce expenditures Things to do now: –Evaluation of all vacant positions –Review of all expenditures – including travel & non essential exp District Planning Council will discuss various options and can make recommendations to the Chancellor Chancellor’s staff will also provide recommendations Recommendations involving collective bargaining or academic and/or professional matters will go to appropriate groups for consultation

Budget Fundamentals Planned reductions instead of reactionary reductions Value focus on people 5% Board Required Reserve will remain intact Everything else is on the table Target Reduction of $15 million for

Current Budget - Ongoing Personnel$ 112,979, % Retiree Benefits6,244,5203.7% Extended Day26,876, % District-wide6,540,6983.9% Operating Allocation11,602,9026.9% Insurance1,221,0000.7% Other salary related benefits 504,0000.3% Subtotal $ 165,969,394 Unallocated538,6830.3% 0.68% 1,073,8110.6% Additional Growth 1,048, % Total $ 168,630, %

Carryovers/Reserves Contingency/Carryovers - Board Policy Contingency$ 9,313,751 - Budget Center Carryovers14,660,536 - District-wide 3,816,059 Subtotal $ 27,790,346 Other Funds - Self Insurance Fund - Capital Outlay Fund - Retiree Benefit Fund $ 23,840,454 $17,000,000 $47,014,498

Budget Timelines Meetings with the Campuses –SCE – 11/17/08 –Anaheim Campus – 12/2/08 –Cypress – 12/4/08 –Fullerton – 12/10/08 District Planning Council (DPC) Meetings Input from Constituent Groups – 1/9/09 Governor’s January Budget expected – 1/15/09 Governor’s May Revise expected – 5/15/09 Completion of Tentative Budget – 6/8/09 Public Hearing on Proposed Budget – 9/8/09

DPC Recommendations to the Chancellor Development of Budget Subcommittee –Evaluation of Recommendations from Constituent Groups –Recommendations to DPC

Areas of Focus Enrollments Productivity Vacant Positions Employee Benefits Salary Roll Backs