1. Foothill-De Anza Budget Update November 6, 2009

2. Before the governor’s 09/10 budget was signed into law… Foothill-De Anza’s internal deficit was estimated at $6.7M (January 2009 estimates)

3. When the 09/10 budget was passed… The following increased Foothill-DeAnza’s deficit: Cuts to base apportionment Zero COLA Cash deferrals resulting in a reduction to interest earnings

4. FY 09/10 reductions that have been implemented: $6.7M has already been eliminated from 09/10 operating expenses: 68 filled/vacant positions eliminated (escrow funds were set aside to cover 35 positions through 6/30/10) Funding for 16 positions reduced or reassigned to different funding sources - Categorical Programs (Fund 121), Self-Sustaining (Fund 115) or Measure C (Fund 400) 4 positions restructured/reorganized due to retirement $312,655 in “B” budget reductions $200,000 reduction in faculty reassigned time funding $2.6M in part-time faculty costs reduced due to workload reduction (5%)

5. Where were we in July 2009? (Adopted Budget)

6. 2010/11 budget projections as of July 2009… IncomeExpenses $3.8M Existing Deficit $4.3M Step, Column, Benefits $7.9M Cuts to Categoricals Enrollment

7. Our resources … budgeted positions in the general fund for FY 09/10 Employee Group General Fund Certificated490 Non-Certificated540 Other (Board of Trustees Members)5 Total1035

8. Budget Challenges… Following needed to be addressed by November: How would we reduce the general fund by $8.1 million effective 7/1/10? ($3.8 current ongoing deficit plus $4.3M in anticipated fiscal year 10/11 expense increases) How would we reduce categorical programs by $7.9 million effective 7/1/10? How will FH, DA and CS use their ending balances to buffer expense reductions?

9. What are the results of this analysis? De Anza report (Brian) Foothill report (Judy) Central Services report (Andy)

10. What other changes do we know of at this point? Possible agreement on benefit restructuring to reduce our 2010/11 expenses by $5.3 million (remember, our last estimate for our 10/11 deficit without further state reductions and other operating cost increases is $8.1 million) Probable loss of about $1 million this year due to FTES audit, statewide recalculation of growth for last year and a slight shortfall in non-resident revenue Cover the cost of part-time faculty equity, office hours and health benefits payments for 09/10 due to the loss of categorical funding … approximately $1 million

11. What do these changes mean? We are trying to solve a $8.1 million deficit for 2010/11 – Good news is that this could be reduced by $5.3 million IF a benefits settlement is reached – Bad news is that our 10/11 deficit will increase by $1 million since there is no agreement yet to modify the part- time faculty equity program – In addition, our revenue estimates for 09/10 and 10/11 may have to be adjusted for lower than anticipated non-resident revenue ($350,000) In summary, our recalibrated unresolved deficit for 10/11 is approximately $4.1 million (assuming negotiated benefits change implementation)

12. What about the “staff protection reserve” for 10/11 of $7 million? In 09/10 this $7M will be reduced by $1 million in revenue reductions noted earlier, and $1 million in expense increases for part-time faculty equity expenses – Leaving only $5 million for FY 10/11 Many things will continue to change throughout the year – staff protection fund could increase if we have float dollars available at year end or benefit savings – staff protection fund could decrease further if there are mid-year cuts from the state

13. Key Points General Fund Even with a negotiated change to benefits we still have an internal deficit of approximately $4.1M estimated for 10/11 Best case scenario – no more cuts to state revenue in 10/11 Worst case scenario – additional cuts $??? Categorical Programs There will be no backfill (such as one-time ARRA funds) from the federal government, resulting in true a reduction for 10/11 of up to $7.9M Total projected deficit $12M (assuming negotiated benefits change implementation, no other revenue reductions, and no other expense increases)

14. Key Dates December 2009 – Outcomes of benefits negotiations will be known January 2010 – Governor’s 2010 proposed budget released – FHDA reviews and adjusts budget strategy for fiscal year 10/11

15. Plan of Action General Fund Work on solutions to balancing $4.1M deficit to be initiated in January 2010 Colleges and Central Services to conduct an analysis beginning January 2010 to determine if any new ongoing cuts (positions/B budget reductions) can be funded with one-time carry over for several months

16. Plan of Action (continued) Categorical Programs January 2010 Colleges to finalize analysis of programs to evaluate impact of cuts on students and staff Colleges to determine if any categorical program cuts can be deferred with their projected ending fund balance from 09/10

17. Many thanks to everyone for making it possible for our students to receive their education in these trying fiscal times