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So why a Preliminary Budget if it is not a legal requirement?

2010-2011 San Diego Community College District Preliminary Budget General Fund Unrestricted Only Information Item March 25, 2010. So why a Preliminary Budget if it is not a legal requirement?.

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So why a Preliminary Budget if it is not a legal requirement?

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  1. 2010-2011 San Diego Community College District Preliminary BudgetGeneral Fund Unrestricted Only Information ItemMarch 25, 2010

  2. So why a Preliminary Budget if it is not a legal requirement? It provides a status report on budget reduction efforts since 2007-08, which have been implemented in response to revenue reductions over a three (3) year period. It provides a status report on the relationship between continuous revenue and continuous expenses as of 2010-11( SDCCD Structural Budget issue). As the Tentative Budget, which is approved in June of each year, is too late to make decisions that impact the first half of the upcoming year, a Preliminary Budget provides time to review, plan, and implement budget revisions as necessary for 2010-11. It identifies the remaining budget challenges that exist as of 2010-11.

  3. No COLA in 2010-11 A net revenue increase from either Growth or other sources of $1.42 million No additional revenue reductions to General Apportionment or Categoricals Any funded growth FTES can be achieved through funding campuses at the same FTEF levels in 2010-11 as was funded in 2009-10 (Requires a continuation of 2009-10 FTES productivity levels) Total Categorical backfill from GFU will be limited to $1.5 million. In 2009-10 $2.6 million was required to cover Categorical costs The current $30.28 million reduction goal is attained by July 1, 2010 A roll forward of 2009-10 adjusted budgets (after budget reduction decisions) plus inflationary costs to selected operating expense accounts (utilities, insurance, maintenance contracts, etc) Increase funding to cover employee class and step advances, STRS & PERS and other mandated benefit cost increases Preliminary Budget 2010-11 is based on the following assumptions: In addition, the Preliminary Budget includes the following:

  4. Preliminary BudgetGeneral Fund Unrestricted Only 2010-11 * Continuous Expenses over Revenue 10,834,406 10,064,565(769,841) Budget Gap *Expenses Include: $3.5 million inflation costs $1.5 million Categorical backfill Change in Beginning Balance: 2007-2008 Beginning Balance 16,698,713 2008-2009 Beginning Balance 15,496,954 2009-2010 Beginning Balance 14,160,184 2010-2011 Beginning Balance TBD

  5. Reserves and Set Asides Set Aside for Position changes (interim assignments, reclassifications, etc) 100,000 Set Aside to fill 2 Deans at City, 4 at Mesa, 1 at Miramar, & 1 at DO 957,429 Set Aside to fill Classified positions at City (per cabinet 2-2-10) 428,685 Set Aside to fill behind # 001696 (AFT-OT 100% Release) 56,806 Set Aside to fill vacant Classified positions at Mesa (per cabinet 2-2-10) 226,022 Set Aside to fill vacant Classified positions at Miramar (per cabinet 2-2-10) 117,757 Set Aside to fill vacant Classified positions at CE (per cabinet 2-2-10) 149,463 Set Aside to fill vacant positions at District Office (per cabinet 2-2-10) 564,466 Set Aside for Employee Health Benefits through 12/31/20112,051,033 Set Aside for future Prop S and Prop N projects 3,982,494 Total $8,634,155 • Projected Projected • Budget Expenses Expenses • Item 2010-112010-112011-12 • RAF Health Benefits through 12/21/2011 $2,051,033 $1,290,600 $1,393,848 • Prop S & N Continuous Costs 3,982,494 1,204,251 2,081,074 • Staff 2,600,6282,600,628 - • Totals $8,634,155 $5,095,479$3,474,922 Projected Ending Balance $3,538,676 $63754

  6. Analysis of Structural Budget Issue Use of Beginning Balance (One-Time Uses) Beginning Balance $14,021,875 Prior Year Encumbrances 300,000 Campus Carryforward One-Time Ending Balance Fund 1,057,670 Districtwide Advertising 100,000 Recycle Account Carryforward 17,202 Carry forward Various Bargaining Unit Balances 1,033,045 Carry forward unused balance for Election Expense 175,000 Total One-Time $14,021,872 To Balance GFU Continuous Operating Budget (Expenses over Revenue) 10,064,565 Reserve for Economic Uncertainty1,274,390 Covering the Structural Budget Gap 2010-11 Expense over Revenue $10,064,565 Less Reserves for Economic Uncertainty (1,274,390) Unused Balance from Reserves & Set-asides (One-time) (3,538,676) Budget Savings in 2010-11 required to avoid deficit spending $5,251,499

  7. Summary of District Budget Reduction Plan Budget Reduction Goal (2008-09 through 2010-11) Original Budget Reduction Goal $36.00 million Eliminate 2009-10 Mid-Year Cut Projection (2.93 million) Reduce STRS & PERS Increase from 2.0% to .85% (1.07 million) Adjusted Budget Reduction Goal $32.00 million Potential New FTES Growth Revenue in 2010-11 (1.72 million) Revised Budget Reduction Goal as of 3/1/10 $30.28 million Budget Reductions as of March 1, 2010 (100%) Budget Reduction Goal $30,276,957 (87%) Reductions to Date from Non-Bargained Items (26,353,757) • Hiring freeze • Defunding positions • SERP - Gen. Fund Unrestricted (47.125 FTE / $1.50 million) - Gen. Fund Restricted (16.600 FTE / $1.29 million) • Cancelled SunGard/SCT contract • Campus reductions • Districtwide reductions • Class section reductions • Proposition S & N offsets (13%) Balance of reductions needed to meet current plan $3,923,200

  8. Potential Deficit Spending 2010-11 Budget Savings in 2010-11 required to avoid deficit spending $5,251,499 Fair share goal requested from employee units (3,923,200) Balance required to avoid deficit spending $1,329,299 STRS & PERS increased costs above .85% $1.25 million per 1% Additional Categorical backfill funds $300k - $800k Potential Running Potential Deficit Spending 2010-2011DeficitTotal 1. No further budget reductions implemented$1.3 million $1.3 million 2. If “Fair Share” goals are not met $3.9 million $5.2 million 3. If STRS & PERS increases to 1.90% $1.3 million $6.5 million 4. If Categoricals require additional backfill $0.5 million $7.0 million

  9. Summary & Budget Issues • Assuming new net revenue of $1.42 million in 2010-11, the $30.28 million reduction goal is reached, and no other losses in revenue or increased costs, the structural budget gap will be $6.14 million. Deficit spending will be avoided in 2010-11 through use of the ending balance from the Reserves & Set-asides and budget savings. • In 2011-12, the structural budget gap will be $6.14 million (carryforward from 2010-11) plus increased costs from inflation (approximately $3.3 million). This $9.44 million gap will need to be addressed through a combination of expense reductions and/ or revenue increases. • Once the structural budget gap is eliminated, normal inflationary costs should be covered through attrition savings, growth revenue, and small percentage of COLA. • Balance of unfunded future Prop S & N continuous costs needs to be indentified for years 2012-13 forward (approximately $6 million will be needed in today’s dollars). • A continuing restructuring of instructional and non-instructional expenses needs to take place to be in compliance with 50% law (problem created primarily due to $6.5 million workload adjustment in 2009-10 which forced reductions in class schedules).

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