Introduction
One of the most significant responsibilities of a community college district is the preparation and presentation of the annual budget. A district’s budget not only serves as a planning document for the ensuing school year, reflecting the goals and priorities, but also serves as a report to our constituents regarding the utilization of available tax dollars and other funding sources. The State Center Community College District administration is confident that the enclosed budget documents reflect the effective utilization of financial resources to meet the educational goals of our District.
Overview
In January 2007 Governor Schwarzenegger presented his proposal for the State’s 2007-08 Budget. The District's Tentative Budget has been developed utilizing the January Budget Proposal since the May Revise will not be received in time to make changes to the Tentative Budget prior to adoption on June 5, 2007. The Legislative Analyst's Office has stated the Governor's January Budget Proposal will still leave the State with a $2 billion budget revenue shortfall in 2006-07 and 2007-08 combined. This shortfall results from over estimating tribal gaming revenue by $306 million, legal challenges to the issuance of $525 million in pension obligation bonds, $825 million in additional expenditures from Prop. 98, and an arbitration ruling involving correctional officers. In addition, the Community College System budget was developed using a 10% growth factor from the generation of local property taxes statewide. This growth is highly unlikely considering the housing market slowdown; hence, the System budget as it is currently proposed is jeopardized. In 2002-03 the over projections resulted in more than a 1% shortfall in funding with no backfill from the State. The current property tax effect could be equally devastating to our local budget should the projected increase not materialize.
Considering all aspects of the proposed budget, community college funding per FTES would increase $176 in on-going funds for 2007-08. The Governor’s Budget provides a 4.04% COLA for base apportionment and selected categoricals, 2% for growth and a 2% growth funding increase for selected categoricals. The Governor also included $42.0 million in one-time funds for three programs: career technical educational equipment, a Nursing initiative and CalPass. The proposal maintains student fees at the current level of $20 per unit.
The District’s Tentative Budget is being formulated based upon the Governor’s January 2007 Proposed Budget information. The significant issue remaining in the State Budget for the Community College System and the State is the economic slow down in the state. The May Revise is expected to be presented on May 14 and will contain only minor budgetary changes. The Final 2007-08 State Budget, which generally has differences between it and the May Revise, is not expected until after the June 30, 2007, State-adoption deadline; thus, the Tentative Budget, as presented, represents a fair evaluation of the State Budget until a Final Budget is adopted. It is anticipated there will be some changes for community colleges when these issues are worked out and the State Budget is finalized. The District will make adjustments to its adopted Tentative Budget should there be significant changes when the Final State Budget is adopted.
Major components of the Governor's January 2007 Budget Proposal under which the District's Tentative Budget has been prepared include the following:
| Base Apportionment -
$5.8 billion is proposed for the base apportionment. This includes folding growth, equalization, and COLA from the 2006-07 fiscal year and the COLA and growth from 2007-08 into the base. The State has many challenges to reaching this allocation. It must overcome overly optimistic revenue estimates in gaming revenues, legal challenges to bonding, and employee bargaining issues. The greatest concern to the Community College System is the over estimation of statewide property tax revenues (2005-06 at $1.8 billion; 2006 07 at $1.86 billion; with 2007-08 estimated at $2.05 billion, or a 10% increase compared to 3% in the prior year). |
SCCCD Impact -
The District is very cautious about this funding level. As of this date, a detailed analysis has not been fully developed of the impact of pending litigation, the over estimation of property tax revenues, and other revenue resources that appear to be questionable at best. Until such an analysis and the Final Budget are presented considering such shortfalls, the District’s budget may well be overstated, as will all district’s in the Community College System that rely on the Legislature and Governor to ultimately develop a fiscally prudent 2007-08 Budget. The P-1 report for 2006-07 indicated the current year would be fully funded, with a note that $53.1 million, or almost 10% of the general apportionment to districts, is stabilization funding for FTES decline in the System.
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COLA -
$224.9 million in funding has been budgeted for COLA. The statutory COLA is 4.04% and is being applied to the General Apportionment and to the following programs: Basic Skills and Apprenticeship, Matriculation, DSP&S, EOP&S and CARE. If this funding is compared to the property tax increase of $197.2 million dollars and the perceived over estimate, the System could see a significant shortfall in funded COLA or a deficit to the overall funding of State apportionment.
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SCCCD Impact -
State Center will receive COLA, which represents a $4.5 million increase to the District’s overall general operating budget with increases to the specified categorical programs stated above. These COLA increases are included in the Tentative Budget and detailed in the following narrative. |
| Growth –
$109.1 million has been budgeted for growth. This represents an estimated 2% increase in projected FTES statewide. The Community College System has had significant growth challenges since 2004-05 with a decline in funded FTES in 2005-06 and restored FTES from prior-year losses accounting for the increase in FTES from one year to the next. |
SCCCD Impact-State Center Community College District has grown significantly through fiscal year 2004-05. The 2005-06 fiscal year saw growth at less than 0.5% with all indications that the 2006-07 fiscal year growth will be minimal. The District budget is projected on full funding of a 1.2% growth rate. This translates into an estimated $1.4 million increase to the District’s base apportionment, which has been allocated to the Colleges, Centers, and District Operations to cover increased operating costs for new staff, salaries, benefits, operational costs and growth. |
Part-time Faculty Compensation -
$50.8 million for the continuance of part-time faculty compensation to be paid on a full-time-equivalent basis. This allocation remains the same as in 2005-06.
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SCCCD Impact -
Based upon State allocations, the District will continue to receive an estimated $1.1 million in 2007-08. Final appropriation for this category is passed on to part-time faculty, resulting in a $0 increase in discretionary funding for the District. |
| Part-time Faculty Office Hours and Health Insurance -$8.2 million to partially fund part-time faculty office hours and health insurance to be determined on a voluntary basis by each district. This allocation remains the same as in 2006-07. |
SCCCD Impact -
Because the programs have not been fully funded, the District has historically declined to participate in the programs, resulting in a $0 impact. |
CalWORKs -$43.6 million for statewide CalWORKs Programs. This proposed allocation remains the same as in 2006-07.
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SCCCD Impact -
Based upon a prorated share of CalWORKs funding, it is estimated that the District will receive approximately $1.1 million. This funding remains the same as in 2006-07. |
Matriculation - $134.4 million statewide for Matriculation-related services up from $95.5 million in 2006-07. This allocation has increased by COLA and growth of approximately 4.04% and 2.0%, respectively, plus a $33.1 million funding augmentation with two required focuses. From the $33.1 million, $14.0 million is directed at additional core Matriculation and $19.1 million is targeted at counseling services to help assess career options, evaluate aptitudes and form an academic plan of study for at-risk students, including tutoring.
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SCCCD Impact -
Based upon a prorated share of Matriculation funding, it is estimated that the District will receive $1.8 million in 2007-08, which is an increase from $1.73 million received in 2006-07. An estimated $660,000 is provided for the additional services as required by the funding augmentation. The 2007-08 Tentative Budget has been prepared considering the increase in COLA only. The proposed $660,000 funding augmentation has not been included in the 2007-08 Tentative Budget. |
Instructional Equipment and Library Materials, Hazardous Substances and Scheduled Maintenance and Repair-
$27.3 million statewide for the three programs. Projects eligible for funding in any of the three programs identified may be funded from these funds along with the District funding match requirement. The three categories each had a separate funding basis until the 2003-04 State Budget Act when the allocation was cut from the 2002-03 funded level of $106 million to $29.3 million. The funding is now allocated as a block grant to districts and is distributed to the various categories at the district’s discretion. The 2006-07 funding level was $27.3 million.
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SCCCD Impact -
The District is allocating $350,000 to Scheduled Maintenance and Repair projects and $300,000 towards Instructional Equipment and Library Materials funding. This funding remains the same as in 2006-07. |
| Student Financial Aid Administration -
$51.3 million to provide funding for Student Financial Aid Administration. The 2006-07 funding level was $52.6 million. |
SCCCD Impact–Unknown. This funding source is based upon eligible student criteria and, therefore, actual funding is unknown. The District received $1.3 million in 2006-07. The 2007-08 Tentative Budget has been prepared at the 2006-07 funding level pending adoption of the Final State Budget. |
| Extended Opportunity Programs and Services (EOP&S) and CARE- $119.8 million statewide for EOP&S and CARE. This program increased in funding by COLA (4.04%) and growth (2.0%) from a 2006-07 funding level of $112.9 million. |
SCCCD Impact -
Based upon a prorated share of EOP&S and CARE funding, it is estimated that the District will receive $2.98 million in 2007-08, which is an increase from the $2.86 million received in 2006-07. The 2007-08 Tentative Budget has been prepared considering the increase in COLA only. |
| Disabled Students Programs and Services -$114.5 million statewide for DSP&S. This program increased in funding by COLA (4.04%) and statutory growth (2.0%) from a 2006-07 funding level of $107.9 million. |
SCCCD Impact -
Based upon a prorated share of DSP&S funding, it is estimated that the District will receive $1.80 million in 2007-08, which is an increase from the $1.73 million received in 2006-07. The 2007-08 Tentative Budget has been prepared considering the increase in COLA only. |
| One-Time Funding – $42.0 million for various identified programs: $32.0 million is designated for Career Technical Education Equipment; $9 million is designated for five new nursing programs to assist with start-up costs ($5.0 million) and the development of four regional clinical simulation laboratories ($4.0 million); $1.0 million is designated for the CalPASS program. |
SCCCD Impact – Based upon the District’s share of the State's $40.0 million allocation to the System in 2006-07 for Career Technical, the District may receive up to $750,000 but the funding has not been included in the Tentative Budget. The Final Budget will be adjusted accordingly. It is anticipated the other one-time funding will be provided on a competitive basis following the budget adoption during the summer. |
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Local Issues –
Merit District Costs
Currently, State Center Community College District is one of six merit districts in the California Community College System. As such, the law is very prescriptive regarding the employment of classified employees, as well as the recruitment process for said employees. For 16 years the District operated under rules adopted by the Personnel Commission, which allowed the utilization of "extra help" employees. During 2001 it was determined that utilization of extra help was, in part, inconsistent with merit district regulations; therefore, the Personnel Commission directed the District to transition out of the utilization of extra help by replacing these positions with permanent part-time, full-time, or limited-term employees. Due to the number of classified positions affected and the significantly greater cost of permanent employees, it was originally projected that the transition from extra help to a more-permanent classified employment force would cost approximately $6.5 million in categorical and noncategorical monies. Because it was simply economically unfeasible to make this magnitude of a transition in one year, both in the labor force and available dollars, the District and Personnel Commission agreed to implement a three-year transition plan in compliance with Merit System regulations. After several poor budget years the District was finally able to implement the third and final year of the transition plan with the 2006-07 budget.
2007-08 Outlook
The final outlook of the Governor's State Budget remains uncertain since the State’s Final Budget has not yet been adopted. Further complicating the State Budget development process is the Legislative Analyst's analysis that there will continue to be a multi-billion-dollar deficit between revenue and expenditures over the next several years.
There has been speculation regarding the timing of the State Budget. All the politics aside, it is evident that education and the community college sector continue to make gains with the January Budget Proposal. Local community colleges still receive a disproportionate per-student funding allocation when compared to other California higher education systems, but great strides have been made with the full implementation of equalization funds during 2004-05, 2005-06 and 2006-07. Student growth continues to be the challenge for the Community College System. With 40 of the System’s 72 districts showing some level of decline in 2006-07, it is evident that the System and each district must re‑evaluate their programs and outreach services to determine the best method to reach all potential clients.
2007-08 Goals
Following are the goals established by SCCCD for the 2007-08 fiscal year and the significant changes included in the Tentative Budget:
- Continue to fund current, permanent academic and classified employees.
- Develop a GASB 43/45-compliant investment program.
- Continue to evaluate and increase classroom efficiencies (students per full-time faculty [WSCH/FTEF]).
- Develop student recruitment plan(s) which enhance the District/Colleges/Centers enrollment results in recruiting new students to a College or Center.
- Develop student retention plan(s) for the District/Colleges/Centers which increase the retention rate for each College or Center.
- Analyze and maximize the use of technology to more effectively deliver instruction, student services, and business services to students.
- Continue to develop and implement the recommendations of the accreditation teams and planning agendas in the Colleges' Self Studies.
- Develop and adopt a new District Strategic Plan which, by design, will be an annually updated three-year plan which will provide for review, modification and development of renewed District goals, objectives and direction for the District/Colleges/Centers so that the needs of the community and students can be better met.
- Review and revise the occupational programs at all Colleges/Centers to meet the identified labor needs of the service region.
- Continue to finalize construction documents, obtain DSA approvals and bid Phase 1 of the Modernization Project(s) at Reedley College.
- Continue the implementation of a Capital Facilities Program for the $161.0 million in funds from the successful passage of a General Obligation Bond (Measure E) in November 2002. The District has thus far had two bond issuances for a total of $45 .0 million. A third issuance of $66.0 million is scheduled to be sold in the summer of 2007.
- Continue the analysis and implementation of programs to enhance the Fresno City College and Reedley College position on the Accountability Report for Community Colleges (ARCC) as prescribed by the State Chancellor’s Office (AB 1417).
- Complete the final portion of the Willow/International Phase 1 construction program (food service and bookstore building).
- Continue the development of construction documents and prepare to bid Willow/International Phase 2. This project was funded from the November 2006 Statewide Bond as a 50% match and is scheduled for completion in 2010.
- Continue to evaluate and modify as needed the District’s diversity programs, including staff development and recruitment.
- Continue with the external capital donor campaign for the Old Administration Building (OAB) auditorium renovation project.
- Obtain Division of State Architect approval of construction documents for the OAB and begin the demolition and construction phase of the OAB rehabilitation project.
- Obtain DSA approval of the drawings and bid the occupational shop facility at the Madera Center.
- Review programs/services/outcomes and modify/update the following areas as necessary for each College and Center:
- Career and Occupational Education
- Transfers and Degrees
- Enrollment Management
- Shared Governance Procedures
- Business Partnership and Outreach
2007-08
Budget Summary
The January Budget Proposal contains many unknowns and challenges which must be addressed prior to the final passage and signing of a 2007-08 State Budget. The items below detail in general concerns of the Community College System, as developed by the Legislative Analyst's Office or District staff in review of the budget:
- the District’s slow down in FTES growth;
- the Governor’s 10% growth projection for the System's property tax growth when prior-year growth has been at 3%;
- over estimation of the revenue from several sources but most specifically Indian Gaming;
- revenue shortfall of $2.0 billion for 2006-07 and 2007-08 combined; and
- legal challenges to the issuance of pension obligation bonds.
The Governor and Legislature continue to demonstrate a commitment to public education and the California Community College System. There is also continued commitment demonstrated for other important programs, such as DSP&S, EOP&S, and Matriculation by including funding for COLA and statutory growth in these programs.
While there remains tremendous uncertainty and the possibility of changes occurring during the legislative process before the adoption of the State Budget Act, the System is encouraged by the Governor's, Senate’s and Assembly’s commitment and the strong support to fund the System in the Governor’s budget proposal.
State Center Community College District has been successful in maintaining its financial stability and integrity and will continue to do so. With a General Fund budget of approximately $160.6 million and a total budget in excess of $237.0 million, including $24.6 million in capital expenditures (capital outlays and Measure E projects), the District recognizes the importance of its role as a shareholder in the educational opportunities of its various constituency groups. The District further recognizes the importance of assisting the communities in the economic development needed to provide employment opportunities and prosperity for the region.
As you review the District's budget documents, you will see that all funds proposed are balanced and that the District has positioned itself to continue to offer quality programs and services. As Chancellor for the State Center Community College District, I am pleased to present the District's 2007-08 Tentative Budget document, which I believe is developed with proper consideration for modifications to the State Budget proposals while still remaining educationally and fiscally responsible to our constituents and to you, the taxpayers.
Thomas A. Crow
Chancellor
State Center Community College District
chancellor@scccd.edu
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