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Budget Update: August 27, 2012

August 27, 2012

Greetings to the Southwestern Faculty, Staff, and Management Team,

This message is intended to provide you with a summary of our current budget development and issues associated with the budget outlook for 2012-13.

We are in the last stages of our 2012-13 budget development and will be presenting to the Governing Board a final budget for their vote to adopt on September 12, 2012.

A special meeting of the budget committee was held Friday, August 17, where many questions were addressed.  I encourage you to work closely with your constituency representatives who can answer questions you may have about the development of the new adopted budget.  The members of the committee are listed below for your convenience.

As you are aware, 2012 has been a year of continually changing budget forecasts.  We have experienced trigger cuts at mid-year and projections of significant Redevelopment Agency (RDA) funding reductions. We are now preparing for the outcome of Prop 30 which will also significantly impact our funding in 2012-13.  

The following is a recap of key assumptions used to develop the 2012-13 budget. On March 28, 2012 at the special Governing Board workshop we presented budget scenarios based on our best information at that time. These previous assumptions are no longer valid.  The table below compares where we were in the spring to where we are now.

Previous Assumptions

Current Reality

Projected a possible ending balance of $8.5 million.

Current projection is $7.3 million.

Projected $1.7 million reduction due to RDA funds.

Anticipating backfill, worst case scenario is a $475,000 repayment.

Projected the need for a $1 million one-time draw from the ending balance to cover our projected deficit.

Projected deficit is now more than $2.2 million, which means we will need to draw more money from the ending balance.

CCLC Scenario if Prop 30 failed was a projected revenue reduction of $3.6 million.

The current projection is a revenue reduction of $4.8 million.

In preparation for the possible failure of Prop 30, we had planned to budget $1.8 million in order to cover half of the revenue reduction of $3.6 million.

We only have a $1.1 million projected ending balance (beyond a 5% GB reserve) to mitigate the projected $4.8 million revenue shortfall for 2012-2013.
Therefore, we would need to address a net decrease in revenue totaling $3.7 million during the current year.

 

What has NOT changed?  First and foremost, our negotiated Big Table solution stands.  All employees have agreed to a 5% decrease in salary this year.  Additionally, we agreed and have reduced the instructional Part Time Overload (PTOL) by $1 million and supply accounts by 5%. The agreement to reduce PTOL by only $1 million does provide more course sections and therefore more part-time instructional employment then we would have been able to assure had we not agreed to the 5% solution.  

As part of our Big Table agreement, and shown above, we had projected a one-time draw down on the ending fund balance of $1 million to cover our projected deficit for 2012-13.  However, the projected deficit now exceeds $2.2 million.  We will use ending funds to cover this deficit but it must be emphasized that we are operating with a structural deficit which is not sustainable and must be corrected. Simply put, our expenses exceed our revenues.  We must correct this imbalance and we must do so now.  

As we begin the negotiation process, we must develop realistic and viable solutions that address: 1) correction of the structural deficit to align our expenses with our revenue; and, 2) development of specific scenarios -- worst case scenario (failure of Prop 30) and best case (passage of Prop 30).  It is important to note that even with the passage of Prop 30, we must address the structural deficit this year.

In our continuing improvement efforts to increase transparency and understanding of our budget, we have two important resources for you.  First, on our public website, we have created “Budget Central”: swccd.edu/budgetcentral, under the Faculty & Staff tab.  This site allows anyone quick access to all public budget-related documents.  Second, please refer to the Budget Committee portal site on SharePoint as another resource to budget documents, including the committee’s agendas, minutes, and supporting documentation.

As Southwestern College employees, we take great pride in our ability to work together during challenging times to serve our students.  We must keep our focus on student success as we now come together to resolve our budget issues.  We are a strong and resilient organization with the resolve necessary to overcome obstacles together.  We must use this challenge to find the opportunities that will make our college even stronger so that student achievement remains our number one goal. 

I trust that we can work together to seize the opportunities that will come from collaboration and creativity as a true Southwestern community.  

Melinda A. Nish, EdD
Superintendent/President
Southwestern Community College District
619-482-6301
mnish@swccd.edu

Budget Committee

VOTING MEMBERS

2 SCEA

  • Eric Maag
  • Vacant
2 Academic Senate
  • Randy Beach
  • Vacant
2 CSEA
  • Linda Hernandez
  • Bruce MacNintch

2 Administrators Association

  • Terry Davis
  • Aaron Starck
2 Vice Presidents (rotating)
  • Kathy Tyner, VPAA
  • Angelica Suarez, VPSA

1 ASO Student:

  • Melody Sycks
  • Bazz Khurshid
1 Confidential
  • Kim Rader
Non-Voting Members
  • Melinda Nish, S/P
  • Albert Roman, VPHR
  • Steve Crow, VPBFA
  • Wayne Yanda, Director of Finance
Resources
  • Rizza Dela Cuadra, Accountant
  • Olimpia Reyes, Accountant