1. 2013-2014 Governor's January Budget Proposal

2. Budget Assumptions Balanced Budget, no structural shortfall in 2013-2014 and beyond Modest, steady growth in next five years Lower debt service with repayments to special funds Higher revenue projections of over $6 billion Prop 30 (temporary) Prop 39 (permanent) 5% spending increase in education and Medi-Cal

3. Affects on California Community Colleges Increase in Prop 98 spending by $587 million Increase of 5% over 2012-2013 Funding to grow over next several years Increases in percentage of Prop 98 fund due to shifting of Adult Education to Community Colleges

4. Affects on California Community Colleges Multi-year Education Plan Pushes down decisions to the local level Decrease in student completion time Continue to pay down the “wall of debt”

5. Reforms for rebuilding the system 90 unit state subsidized cap on credit units Reinvest apportionment funds based on completion Require BOG Fee Waiver applicants to complete a FAFSA Increase number of online courses Continue to pay down “wall of debt” Implement Prop 39

6. Implementation issues still to be resolved

7. Theme of the budget: Build an efficient educational system

8. Threats Revenue Volatility Percentage of state revenue from income taxes has risen from 33% to 61% Top one percent of income earners pay approximately 40% of income tax revenue Capital Gains has historically fluctuated between $29 billion and $100 billion Prop 30 (2012) raises incomes taxes for high income earners through 2018 only

9. Threats California economic recovery sputters Rising health care costs Sequester/Debt Limit fight Local revenue shortfalls

10. Timeline for State Budget January – May: Legislative Hearings End of January: Legislative Analyst Office (LAO) releases its analyst of this budget May 14: May Revise June 15: Constitutional deadline for Legislator to send budget to Governor