Budget Development & Issues 2007-2008 & 2008-2009

1. Budget Development & Issues2007-2008 & 2008-2009 Dr. Constance M. Carroll Chancellor San Diego Community College District CAMPUS FORUMS Terry Davis Vice Chancellor, Business Services

2. California Community CollegesBudget Process State Budget - Proposition 98 Governor - Legislature State Board of Governors & System Local Boards of Trustees & Districts 72 Districts Federal & Special Funds 109 Colleges • Allocations San Diego Community College District

3. Governor’s Budget(January 10, 2008) DEFICIT OF $14.5 BILLION STRATEGIES: • Reduce Expenditures • Align Expenditures/Revenue • Enhance/Restructure Revenue COMPONENTS: • Zero COLA • 1% Growth • 10% Across-the-Board Cuts • Categorical Program Cuts • No Increase in Student Enrollment Fee • Mid-Year Cuts • ($40 Million for CCC)

4. Legislative Analyst’s Office DEFICIT HAS GROWN TO $16+ BILLION • Zero COLA • 1.5% Growth • Categorical Block Grants • “Student Success” ($430 Million) • “Faculty Support” ($60 Million) • No Mid-Year Cuts • Increase in Student Enrollment Fee • (Back to $26 per unit) RECOMMENDATIONS: BREAKING NEWS: • Property Tax Shortfall ($76-80 Million) • In Current Year (2007-2008) • Projected for Budget Year (2008-2009)

5. San Diego Community College District PROCESS: Broad Consultation & Participation Board of Trustees Chancellor’s Cabinet District Governance Council (DGC) District Budget Committee Colleges/CE Shared Governance Groups Campus Forums VALUES & GOALS: • Avoid Negative Impact on Contract Faculty/Staff • Maintain Sufficient Classes & Services for Students • Increase FTES Revenue • Increase Average Class Size • Enact Cost-Containment Measures

6. 2008-2009Preliminary Budget General Fund Unrestricted Only San Diego Community College District

7. Preliminary Budget 2008-09 is based on the Governor’s initial budget proposals: • Reductions that range from 3.62 % to 10.90 % in Categorical Programs (Loss of $266,000 in GFU) • No COLA in 2008-09 (Normal inflationary costs = $3M-$4M) • 1 % maximum growth (Restricts our revenue options) • Assumes no Mid-year cuts of $1.4 million • Doesnotinclude loss due to Property Tax Shortfall (Potential loss of $2.8M) In addition, the Preliminary Budget includes the following: • A roll forward of 2007-08 budgets plus inflationary costs to selected operating expense accounts such as utilities and maintenance contracts • Employee class and step advance costs • $1.78 million in supplemental funding for additional class sections so campuses are funded at the same FTEF level in 2008-09 as in 2007-08 (Budget Model FTEF plus Supplemental FTEF) - Budgeted annual FTEF in 2008-09: City = 677 FTEF Mesa = 931 FTEF Miramar = 395 FTEF

8. 2008-2009 Budget ModelFTEF Allocations Pro-rating the 172.41 FTEF reduction to Colleges results in 2007-08 FTEF Allocations as follows : Note: Total reflects minimum FTEF funding levels if no other funds or budget savings are used to pay for additional class sections.

9. 2008-2009 Preliminary BudgetGeneral Fund Unrestricted Only

10. Reserves and Set Asides

11. Revenue and Expense Projections Continuous Revenue vs. Expenses Summary 2008-09 Preliminary:

12. Revenue and Expense Projections (cont.)

13. Reduce Continuous Costs • Reduce or eliminate programs or services, maintenance agreements or contracts, professional service agreements, etc. • Eliminate vacant positions (86 % of Districtwide expenses in 2006-07 in General Fund Unrestricted was for salaries and benefits). • Implement hiring delays and cost containment procedures. But there is an easier and more permanent way to balance continuous costs and continuous revenue …

14. Impact of Average Class Size on Funding Requirements

15. Result of Lower Class Size Revenue Change Due to Class Size ($28,120,000) 5.6 students per class x 1100 FTES per 1.0 student increase above 28.4 per class x $4,565 per credit FTES = $28,120,000 Note: 1.0 student increase above an average of 28.4 students in every class will generate 1100 FTES, or $5 million in credit apportionment revenue. Solution: Reduce number of class sections to stay within funding provided through the Budget Model formulas, while increasing average class size to maintain FTES base or to grow in FTES.

16. Distribute New Revenue to Cover all Current and Future Increasing Costs As new continuous revenue is received, it needs to be allocated to address several issues such as … • Economic improvements for employees • Eliminate structural budget problem and reduce reliance on one-time funds • Provide funds to cover $13.1 million (today’s dollars) in Proposition S & N continuous costs • Improve both academic and non-academic permanent staffing levels • Any issues not addressed at least in part from new revenue sources will become more difficult to solve in the future. 12

17. Summary • Based on the Governor’s initial budget proposal, a roll forward of the 2007-08 budget to 2008-09, and a potential “deficit factor”, requires $10.1 million in budget “adjustments” that need to be made between the 2008-2009 Preliminary Budget (February) and the 2008-2009 Tentative Budget (June). • Adjustments need to be made in both continuous costs and one-time costs to balance the 2008-09 budget and address the structural budget problem and reduce reliance on one-time funds. • How the 2008-09 budget issues are resolved will impact the magnitude of the budget challenges in 2009-10. • Class schedules need to continue to be adjusted to bring costs in line with Budget Model funding formulas, and increase average class size back to 2003-04 levels. • Future revenue needs to be allocated in such a way that all budget requirements are addressed.

18. Proposed Budget Adjustment Plan