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Budget Overview Board Retreat

Budget Overview Board Retreat. Diana Keelen January 18, 2012. “While the California budget is uncertain, there is one thing that is certain, it will change.”. Governor’s 2012-2013 Budget Proposal Highlights. State deficit has gone from $26.6 billion to $9.2 billion

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Budget Overview Board Retreat

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  1. Budget OverviewBoard Retreat Diana Keelen January 18, 2012 • “While the California budget is uncertain, there is one thing that is certain, it will change.”

  2. Governor’s 2012-2013 Budget Proposal Highlights • State deficit has gone from $26.6 billion to $9.2 billion • $5.1 billion from 2012-2013 and $4.1 billion carryover from prior year • Proposes over $10 billion in revenue, expenditure and other actions to address the deficit and leave a reserve of $1.1 billion

  3. 2012-2013 Higher Education Impact • Package includes $4.8 billion in “triggers” to K-12 & higher education if November tax package is not approved • Includes a tax package to raise sales tax by 0.5% from January 1, 2013 to December 31, 2016 • Also includes raising personal income tax on those making over $250K from 2012-2016 • LAO debates the Governor’s estimates stating that there is volatility. Estimates only $4.8 billion of the Governor’s $6.9 billion estimate • Includes a categorical consolidation block grant, except for DSPS, TTIP and Foster Care Education (even though BOG adopted student success task force recommendations to not consolidate these programs) • Reduces the Cal Works program & other significantly by $2 billion • Restructures the Cal Grants program by changing the award from $13K to $4K and the GPA requirements for Cal Grant A from 3.0 to 3.25, Cal Grant B from 2.0 to 2.75 and from transfer students from 2.4 to 2.75. Estimating savings is $301 million

  4. Redevelopment Agencies Redevelopment Agencies: • On December 31, 2011, California Supreme Court upheld ABX1 26 & 27 eliminating redevelopment agencies • Will be replaced by “Successor Agencies” to ensure LEAs are still receiving entitlements such as: all pass-through payments including AB 1290, SB 211, Other Statutory, 2% and pass-through agreement payments. 7 Member Agency make up: • County Board of Supervisors • Mayor for the city that formed the RDA • Largest special district • County Superintendent of Schools • Chancellor of the California Community Colleges • Member of the public appointed by County Board of Supervisors • Former employee of the RDA • Governor proposes cutting $146.9 million in general fund apportionment as a result of expected increased property taxes from the elimination of redevelopment agencies. \

  5. 2012-2013 Community College Scenarios SCENARIO B SCENARIO A • $218 million deferral buy-back (no new funds) • $12.5 million in mandates block grant • Will give community colleges 4% each out year beyond 2012-13 through 2016 (not sure how that will be allocated, deferrals, growth, COLA?) • $264 million base cut workload reduction % • Scenario A becomes obsolete Categorical Consolidation will occur in Both Scenarios = $411.6 million 2012-2013 State Budget Webinar, January 11, 2012

  6. 2011-2012 Updates January triggers pulled: Tier 1 & 2 pulled with a few changes- • Tier 1 was expected to be a workload reduction to Antelope Valley College of 67.71 FTES. Now it’s a deficit-co-efficient • Tier 2 reduced base to 10,502.07 FTES • Borrowed 29 FTES from Summer 2011 to make base in 2010-2011. P1 estimates are at roughly 10,538 FTES. • Student fees shortfall even greater than originally estimated. Was $25 mil now $100 mil, which means added deficit co-efficient • Student fees went up from $36 per credit unit in the Fall 2011 • Student fee increase of $46 per credit unit effective in the Summer 2012 as opposed to Spring 2012 • Figures will not be available until the P1 report is issued around the end of January/beginning of February \

  7. 2011-2012 New Basic Allocation Thresholds With the original $313 million workload reduction to Community College, the basic allocation thresholds were also reduced DistrictsWasNow Small College FTES Threshold < = 10,000 < = 9,379 Medium College FTES Threshold > 10,000 > 9,379 and and < = 20,000 < = 18,757 Large College FTES Threshold > 20,000> 18,757 Grandfathered CentersWasNow > 750 > 703 > 500 > 469 > 250 > 234 < 250 < = 234

  8. 2011-2012 Estimated Actuals Beginning Fund Balance $ 8,766,920 Revenues $56,000,828* Expenditures $58,019,135 Ending Fund Balance $ 6,748,612 Surplus/(Deficit) $ (2,018,307) Reserve % 11.63% • Includes anticipated prior year recalculations and mid-year cuts • Includes estimated deficit co-efficient and student fee increase of 2.4%. Will not have figure until the P1 at the end of January/ beginning of February. Potential property tax shortfall not included in these figures. • This presentation contains estimates. For budget planning purposes ONLY.

  9. Budget Risks • Budget triggers geared to education if tax package does not pass • LAO estimates only $4.8 billion of the $6.9 billion in tax revenues due to higher earner income volatility • 5.56% workload will not be decided until after November 2012, making reductions difficult since it’s the middle of the fiscal year • Property tax shortfalls are likely, especially due to RDA dissolution • 50% Law implications 2012-2013 State Budget Webinar, January 11, 2012

  10. 2012-2013 AVC Budget Development • Staffing needs for TAF, H&S building, faculty retirements, etc. • Step and Column increases • No election costs in 2012-2013, but will have in 2013-2014 • Other expenditure increases unknown, STRS? PLAN NOW, PLAN EARLY!

  11. 3 Year Projection-Taxes Pass • Includes anticipated prior year recalculations and mid-year cuts • This presentation contains estimates. For budget planning purposes ONLY. • 4% in 2013/14-2015/16 breakout not explained. Could deferral buy-back.

  12. 3 Year Projection-Taxes Do Not Pass • Includes anticipated prior year recalculations and mid-year cuts • This presentation contains estimates. For budget planning purposes ONLY.

  13. 2012-2013 Budget Timeline Jan – May: Legislative Hearings End of Jan 2012: LAO releases budget analysis Mar 1: DOF requests legislative action early on certain items-to include CCC redevelopment offset May 14: Governor releases May revise June 15: Constitutional deadline for Legislature to send budget to Governor Nov 6: General Elections Jan 1, 2013: Trigger reductions take effect if revenue targets are not met 2012-2013 State Budget Webinar, January 11, 2012

  14. Questions?

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