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State Budget Update

June 20, 2012

Greetings Southwestern Colleagues:

On Friday, the state Legislature forwarded a budget to Governor Brown, meeting their Proposition 25 mandate that allows lawmakers to continue being paid. The budget does not include Brown’s request for an additional $250 million in savings and program cuts, so it is unclear today on whether Brown will veto the budget or request that additional bills be passed.

The proposed budget is a mixed bag for community colleges, and much of the budget is based upon voters approving the governor’s tax initiative in November.

The budget does not address the estimated student fee revenue shortfall of $100 million for community colleges. On the bright side, however, Southwestern College joined other community colleges across the state in asking for specific action on redevelopment revenues. We were successful in our efforts. As you know, the governor approved the dissolution of Redevelopment Agencies throughout California, with funding from the agencies to be distributed to education. Because this was a new process, and because we knew there would be a delay in distributing the funds to education, community colleges would have been required to bridge the funding gap until the funds were released. That meant a hit of more than $1.58 million for the 2011-12 year and more than $4.845 million for the 2012-13 year. This new budget proposal includes a “hold harmless” for colleges so that we will not be required to backfill that funding delay.

In my last update to you, I provided a couple of scenarios of what passage of the Governor’s November tax initiative meant for Southwestern. State budget analysts have been able to provide a firmer picture of the shifts in budget negotiations. One large change is the amount of funding the initiative would direct toward a deferral buydown. The state has been holding on to current year funding to be paid in the next fiscal year, which means the funding is “deferred.”  The tax initiative would provide more funding in the 2012-13 academic year, rather than waiting until the following July, therefore less funding would be deferred.  However, the amount to be used toward deferrals is now estimated to be $29 million LESS than expected statewide.

As a result, for Southwestern non-passage now means a $4.8 million reduction to our budget. That’s up from the original projection of a $4.26 million cut to the budget. That increases the workload reduction to 7.3% (up from 6.2%), or 1,057 fewer FTES. We have currently planned for a 5.6% workload reduction, with the majority of the decrease planned for Spring 2013.

There is still time for you to get additional information. The Governing Board meets on Wednesday at 6:30 p.m. in L238 N&S.

The Budget Committee met this morning to continue its work in addressing two primary goals: decreasing costs and increasing revenues.

If you have ideas for cost savings in office efficiency or increasing revenue, please communicate these to your constituency leaders.

While the budget picture is becoming clearer, it is still a difficult one to implement. Please continue to look for these updates throughout the summer. As always, I encourage you to continue providing your ideas and feedback.