1. 1 Demystifying the Budgeting Process Pierce College AFT 1521 February 25, 2010 Ken Takeda Vice President, Administrative Services

2. 2 Presentation Outline  Budget Allocation Process  Funding of K-14 Education  Funding of Community Colleges  LACCD Budget  Pierce College 09/10 Budget  Budget Calendar  Questions and Answers

3. 3 Budget Allocation Process

4. 4 Funding of K-14 Education  California Community Colleges (CCCs) are part of state’s Master Plan for Higher Ed but are not funded same way as UC and CSU systems  For funding, CCCs are linked to K-12 districts  Minimum annual funding for K-12 and CCCs is determined by Proposition 98  Proposition 98: Amendment to state constitution passed in 1988 Purpose: Guaranteed funding source that grows each year with economy and number of students Source: General fund, local property taxes  One of three formulas (“Tests”) is used to determine funding each year; which test depends on how economy and General Fund revenues grow from year to year:

5. 5 Funding of K-14 Education Test 1—Share of General Fund. Provides 39 percent of General Fund revenues. Had not been used since 1988-89. Test 2—Growth in Per Capita Personal Income. Increases prior year funding by growth in attendance and per capita personal income. Operative in years with normal to strong General Fund revenue growth. Test 3—Growth in General Fund Revenues. Increases prior-year funding by growth in attendance and per capita General Fund revenues. Operative when General Fund revenues fall or grow slowly. Suspension: Legislature can suspend Prop 98 guarantee with 2/3 vote for one year and provide any level of K-14 funding.

6. 6 Funding of K-14 Education  By definition, Prop 98 sets maximum funding available to other state programs  Prop 98 general fund commitment = about 45% of state general fund  Weak economy and slow revenue growth create budget pressures for all programs; K-12 and CCCs are not insulated from this because of Prop 98  Declining Prop 98 guarantee due to ADA and economic trends

7. 7 Funding of K-14 Education Ongoing Proposition 98 Funding ($ in millions) Program2008-092009-102010-11 K-12 Education General Fund $30,260$30,844$32,023 Local property tax 12,72613,23711,950 Subtotals 42,98644,08243,974 Community Colleges General Fund 3,9183,7223,981 Local property tax 2,0111,9531,913 Subtotals 5,9295,6755,895 Other Agencies 1059485 Total Proposition 98 $49,019$49,851$49,954

8. 8 Funding of Community Colleges  Community colleges’ share of Prop 98 allocation = 11-12%; balance goes to K-12  State Chancellor’s Office allocates CCCs’ share of Prop 98 funding to local districts based on SB 361 (Scott, 2006), which: Replaced complex and outdated funding formula “Equalized” funding rates across districts Recognized fixed operating costs of colleges; fairer allocation to smaller colleges Established (in Ed Code) beginning funding rates for credit, non-credit, and career development and college preparation (CDCP) non-credit full-time equivalent students (FTES)

9. 9 Funding of Community Colleges 1 FTES = 525 Contact HoursStandard Measure Used Statewide for… 1 student, enrolled in 5 classes per primary term, at 3 hours per week, per class for 17.5 weeks per primary term, attending 2 primary terms, yields  Funding  Key performance indicator  Productivity measure  Program Review 525 hours per year

10. 10 Funding of Community Colleges Unrestricted General Fund  “Foundation” or “basic” funding per institution. For FY 2010-11: FTES=>20,000 (large college)$4,428,727 10,000<=FTES<20,000 (medium)$3,875,136 FTES<10,000 (small)$3,321,545  Revenue per FTES. For FY 2010-11: Credit$4,564.83 Non-credit$2,744.96 CDCP$3,232.07  Annual cost-of-living adjustment (COLA)  Above funding = Base Revenue  Enrollment growth and restoration funding

11. 11 Funding of Community Colleges ConceptExample  Base 100 FTES = prior year funded total (base + growth)  Actual 110 FTES = reported: projected or actual  Actual Growth 10 FTES actual above base  Growth Rate/Cap6% of Base = 6 FTES  Funded Growth 6 FTES actual growth to cap  Funded Total 106 FTES = base + funded growth  Over Cap 4 FTES not funded by apportionment, eligible for Over Cap funding

12. 12 Funding of Community Colleges Unrestricted General Fund (cont):  Other unrestricted General Fund allocations: Lottery Apprenticeship Non-resident tuition Part-time faculty compensation Other state  Local sources: Interest income Dedicated revenues

13. 13 Funding of Community Colleges Restricted General Fund  State separately funds 22 categorical programs that are part of CCCs’ “restricted” General Fund  Highest funded in 2009-10: Basic Skills, CalWORKS, CTE, DSPS, Economic Development, EOPS, Matriculation, Student Fin Aid admin  Other state support: block grants, SB1133 CTE  Federal: Perkins (VTEA), veterans ed, work study  Local: Community Services, Health Services, Parking

14. 14 Funding of Community Colleges Other Funds  In addition to the General Fund, community college districts maintain other funds: federally-supported, state-supported, locally-funded  Federal: Student financial aid, building  State: capital outlay/special reserve, child development (CDCs), student financial aid  Local: Bookstore, capital outlay, cafeteria, debt service, general obligation bond/building

15. 15 LACCD Budget—All Funds FUND2008-09 Budget2009-10 Budget GENERAL FUND$ (in thousands) Unrestricted604,022574,052 Restricted87,33197,538 TOTAL GENERAL FUND691,353671,591 BOOKSTORE38,81840,211 CAFETERIA3,7263,303 CHILD DEVELOPMENT4,1533,864 SPECIAL RESERVE136,303153,910 BUILDING1,037,917825,864 FINANCIAL AID115,995156,029 DEBT SERVICE4107,310 TOT APPROPRIATIONS2,028,6751,862,082 Less Interfund Transfers6,67612,591 TOTAL AVAILABLE2,021,9991,849,491

16. 16 LACCD Budget—Allocation Model  Uses SB 361 funding formula to distribute state general revenue to colleges as part of Unrestricted General Fund  Each college receives base allocation based on college size + funding for credit, noncredit and enhanced noncredit FTES at state-funded rates  Small colleges received supplemental basic allocation of $500,000 to its basic allocation in FY2006-07, adjusted by COLA in future years; Trade-Tech receives $500,000 for high-cost programs  Colleges are assessed for District Contingency Reserve at 5% of unrestricted General Fund; college reserves additional 1% of its unrestricted General Fund  Each college is assessed for centralized and District Office services based on share of total FTES  Balances are retained by colleges and District Office

17. 17 LACCD Budget—Unrestricted GF College2008-09 Budget2009-10 Budget City60,736,47355,885,265 East110,398,061102,973,680 Harbor28,910,98228,080,909 Mission26,661,62525,718,121 Pierce69,619,56764,828,425 Southwest22,277,74621,011,252 Trade-Tech50,789,83848,062,358 Valley52,229,54049,659,130 West31,464,97228,911,467 ITV1,458,6441,493,111 College Total454,547,448426,623,718

18. 18 LACCD Budget—Unrestricted GF Location2008-09 Budget2009-10 Budget College Total Forward 454,547,448426,623,718 District Office26,375,29722,765,233 Information Tech--10,761,712 Centralized Accounts67,563,26547,254,793 Contingency Reserve27,182,61325,690,166 Sheriff’s Contract13,000,00012,951,047 Categorical Support--12,951,536 Restricted Deficit1,243,597888,672 College Reserve13,868,98114,119,402 Total Unrestricted604,022,201574,052,479

19. 19 Pierce College 09/10 Budget Revenue Source#FTESRateAmount Basic Allocation $ $ 3,875,136 Credit 14,775.16 4,564.83 67,446,006 Non-Credit 296.83 2,744.96 813,695 CDCP - 3,232.07 - Total Base Revenue $ 72,134,837 Less: Workload Red (2,714,406) Net Base Revenue $ 69,420,431 Non-Resident Tuition 1,524,843 Dedicated Revenues 719,318 Lottery 1,974,584 Interest/Other 641,651 Total Revenues $ 74,280,827

20. 20 Pierce College 09/10 Budget Adjustment#FTESRateAmount Total Revenues $ $ 74,280,827 Assessment--DW, DO: Total Credit 15,366 1,030.65 (15,836,928) Non-Credit 296 606.82 (179,881) Sheriff's Contract (1,583,948) ITV redistribution 22,290 08-09 Balance Forward 8,488,659 Additional Reduction (362,594) Revised Allocation $ 64,828,425

21. 21 Pierce College 09/10 Budget Description2009-10 Final% of Total Certificated Salaries$35,142,51554.2 Non-Certificated Salaries12,438,22719.2 Benefits11,053,07517.0 Printing & Supplies991,2221.5 Operating Expenses2,191,9333.4 Capital Outlay479,3770.7 Other2,532,0763.9 Total64,828,425100.0

22. 22 Pierce College 09/10 Budget Description2009-10 Budget Projected Expenditures Certificated Salaries35,142,51530,710.336 Non-Certificated Salaries12,438,22712,193,328 Benefits11,053,07510,952,167 Printing & Supplies991,2221,172,094 Operating Expenses2,191,9333,441,690 Capital Outlay479,377408,088 Other2,532,07640,059 Total64,828,42558,917,763

23. 23 Budget Calendar for FY 2010-11  Jan 8:Governor’s Budget  Mar 5:Preliminary Budget  May 14:Revised Governor’s Budget  Jun 30:Tentative Budget  Sep 15:Final Budget

24. 24 Questions and Answers Thank you for your time and attention Contact information: Bill de Rubertis, retiree Budget Committee Co-Chair Emeritus Pierce College 6201 Winnetka Avenue Woodland Hills, CA 91371-0002 deRubeWA@piercecollege.edu