2012-13 May Revision and CCC Budget

INSTRUCTOR: Good morning. I would like to welcome you to the 2012 --
13 budget revise webinar put on by the
community college chancellor's office. I wanted to go through a few
of these slides and get you oriented in terms of how we are going to
proceed and then we will start off with the
agenda.
We have a short presentation that we are going to run three.
And then we will take questions. I encourage you to submit questions. We will
certainly keep tabs and follow up at the conclusion of the presentation. This morning we
have participants in the webinar and our chancellor, Jack Scott is
here. We have vice chancellor Chancellor Dan Troy. We also have Scott let
Lay president and CEO of
the community college league. I also want to run through some housekeeping slides. This is
going to be recorded. It will

be available later today on the CCC confer website.
I also want to note that there may be media reporters participating in the
call. All participants will be silenced so we can move through the material rather
quickly. All questions will be accepted via web chat
only. There is a capability for you to listen in on the computer
and there are folks logged on listening on the computer. There is the option on
the phone. This PowerPoint presentation will be available at the conclusion of
this.
Again, send your questions via text chat. This is also being
recorded for closed captioning
purposes.
With that we will jump into the
presentation.
>>: Good morning everyone first off we will talk about the current budget and then moved on to the proposal for
the 2012 -- 13 proposal year. While there is only 45 days left in the
current difficult
year the budget last June you recall we had a $400 million fund cut and
a fee increase to $36 per
unit. Additionally in January because state projections are under we had a cut
of $2 million that triggered a fee increase that will take effect this summer. $46
per unit. It is an effective ongoing cut at
$385 million.
Additionally we know about the February surprise we have the shortfall from both projections
of student fees and taxes -- actual revenues coming in below projection.
That started out at a surprise of $179 million. 30 million
we were prepared for and knew
about they got more local taxes than their portion required and that freed up
for other non- a community college districts.
However, in addition to this current year shortfall you may recall we talked about this redevelopment money
that the governor projects community colleges will collect in the current year and budget
here based on the line down of development agencies. The governor yesterday,
lowered their projection of the extra redevelop money for community
college $2116.1 million. The bad news is we have not seen any of this revenue
materialize and the governor is proposing the legislature take
away $116.1 million of
general dollars before this current fiscal year ends in 45 days. That could be an additional current
year cut. Moving on to the 201,213
2-13
you may recall there was a deficit -- the governor balanced that with (On the
Board) $5.1 million in temporary taxes. The
governor has recognized a $15.7 billion budget problem. He solves that
with 8.3 billion in cuts. The biggest cuts hitting cow works, proposition
g cal
works. Proposition 98. The governor proposes a capture of assets that
local redevelopment agencies have in their wind down accounts, essentially. This is different
from the future prospects of increased property taxes from community colleges of the redevelopment
money. This is actually getting the cash assets that decent redevelopment agencies
have.
Additionally the governor proposes 5.6 billion dollars in temporary tax
revenue. You may recall a temporary tax is a compromise between the governor and the millionaire's tax will
bring in somewhere between 6.9 -- 9 billion.
However part of that goes to sales tax and fund realignment for
funds realignment for public safety. That is the sales tax piece of the package. Additionally
the governor proposed 2.8 billion other revenues and cash maneuvers. Getting into
accounting tricks again, like it or not. Some of which will
defer repayments of debt and borrowing from other state
accounts.
Just as a reference, the compromise tax proposal, you can see the old
and new. Some of these slides we won't talk much about them but when you download them you can get
more specific. You can see the sales tax for four years and a temporary personal income tax on
individuals that make over $250,000.
We cannot underscore the significance of the temporary tax measure would have for K14
education. The flight you see in front of you shows last year the proposition 98 funding
for -- the current year, was $47 billion. That would go
up to 53.7 billion in 2012 -- 13 and escalate all the way up
to 63.4 billion. Note the dotted red line. We all know we
have taken significant cuts. Think about the fact that even with the tax proposal we don't get
back
2007-2008 budget cuts until 2015. That is
essentially 12
years that schools receive less money than they received seven years ago. As you all
know 15.6 percent living adjustments, we have had so many program
cuts and price escalations. We cannot underscore how many cuts K12
has taken nor the longtime it will take before we can restore not only the cuts but the
quality that has been lost due to inflation over time.
If the tax measure fails 90 percent of the trigger cuts will be schools and community colleges for
a total of $5.5 billion. I apologize, it is hard to see that number on
the top line. $5.5 billion.
University of California, California State University will see their cuts go up to 258
million. However, the governor notes in his budget summary that
CSU would be expected to raise tuition which would be backfilled by
cal
money.
As you can see proposition 98, we have a big jump up
between current year -- I apologize the years don't show up on this slide. The blue column is
2011 -- 2012. With the tax measure it jumps up
to 53.7 billion. Without the tax measure it jumps down 248-point to billion dollars. However, it
looks as if we get an increase with are without a tax proposal. That is not the case
because you notice the yellow bar moves from the red column which is the 2012 -- 13
budget with the tax measure where it is
funded outside the proposition 98. $2.6 billion of
debt service outside community college funding. The governor would put that into
proposition 98 and therefore a loud that $5.5 billion in cuts
in K12 and community colleges.
This has led to scenario A. and B This
slide likely looks familiar because we did it in January. Not much has changed from
January. First a correction to the e-mail I sent out yesterday -- unfortunately it is
a worse number than reality for scenario B. We now project is
the tax measure passes we have 313.1 billion dollars the governor proposes to use
and a deferral buyback. We would also have a mandate of $28
per student. That is an increase from the January proposal. That would go out to all districts to
settle one mandate claim. However, if the tax measure fails we have
a 300 million-dollar triggered cut effective January 1st 2013. We projected that would be
a 6.4 percent workload reduction to all basic aid districts. The governor would
still propose the mandates blocked for scenario
B. And the categorical consolidation is still on the table under both scenarios.
I mentioned -- I talked a little bit earlier about redevelopment money. We will talk a little further
about our concerns related to this. It is important to note that the governor has
taken $3 billion for K14,
over $3 billion of the K12 and community college budget next year will be funded out of this expected
redevelopment money. $341 million is out of community colleges. Some
from the ongoing revenue and the redirection of tax increment to property
taxes. The 200.9 is one time
from a recovery of
cash assets that the cities and agencies have set aside for their ongoing benefit where their
future of development agencies. That is a significant issue because we are not sure politically,
practically, or legally, that money is all going to materialize. Also
note the final bullet -- the governor does want community colleges to have a little bit
of skin in the game so games that are dangling a 60 million-dollar ^-caret because our
officials served on the
redevelopment agency and the thought is giving people a
little bit of money we might look a little bit harder for money to send
up to Sacramento from the redevelopment agencies. There is also --
the governor takes away a little bit of the general fund money because of the change that was made administrative
leave because of the change in the Chancellor's office requiring a student to basically
have $1100 of need to get a full
bought waiver We
do not expect to have $50 million taken away from us.
Categorical flexibility, you have seen this before. It is same proposal as January 15
categorical programs would be made flexible and the districts or colleges would be able to use them for
any other categorical or student surfaces
projects. Disabled students foster care, telecommunications, technology. We have not seen
any significant interest in legislature for this proposal. All major community college
organizations are saying this is not the year. While flexibility, it should be
looked at
particularly in terms of promoting students. This year was so many moving parts
is not figure to do full scale categorical reform and community
colleges.
Here are the preliminary thoughts. We absolutely agree with the governor's call for new
revenue. I note that the Chancellor has spoken about this. The league
has contributed nonpublic funds to the governor's campaign. This is absolutely essential to
closing the state's budget problems while the overall deficit of $16 billion might sound
a smaller
than 25 or 30 billion that we had over the last ten years there really are no more options. If you look at the cuts in this budget, over 2 billion in cuts,
you have two realize we have gotten past the waist and we are really making
cuts to programs that affect real Californians. You know the impact
of those cuts in the local community colleges. 809 million cents
since
2008-2009. The tax measure would finally
restore the 2007 -- 2008, in three years from now.
That is significant. It has been a significant decade in cuts and it is time to reverse
that.
We have a few concerns about using the general obligation fund bond
service to allow for the $5.5 billion of cuts.
We are uncertain why K12 and community colleges who were not getting 90 percent of the revenue from the tax
measure are going to bear the brunt of 90 percent of the tax cut if the measure fails. We
also thank the reconfiguration of the referral by down to invest a positive trigger has a significant
merit. Being able to find some classes and surfaces so our faculty, staff,
students,
community, feel we are not just cleaning up the state's books but having access to our
colleges.
We
don't believe the wholesale consolidation categorical program this year is a good idea. I will turn it over to the Chancellor to talk
about his preliminary thoughts.
SPEAKER1: As usual Scott has done a superb job in outlining
what this proposed revised is. And how it will impact community
colleges. I would underline what he said about supporting the tax
initiative. I note you may have boards that are split on this but as far as community
colleges are concerned it will make all of the difference in the world if it passes. We are talking about over
a $600 million swing because we will get 300 million plus an additional revenue if
it passes. We will take an
additional 300 million-dollar cut if it doesn't pass.
All you have to do is think about your own district and what percentage of the state's revenue you receive
and you can quickly figure out exactly what kind of cut he will take. Let's say you get 2 percent of
the state's revenue, that means you will have a $1.2 million difference in what
you will have to operate on in the year 2012-13. There
is no time to quibble about exactly whether the
governor's tax initiative is exactly how it ought to be and you would change it a little bit here and there. The real point
is the state of California has taken a terrific hit in terms of its revenue.
It has badly hurt the community colleges. We know that thousands of
students who want education are being turned away. We just have to be behind
this tax initiative as far as the good of the community
colleges are concerned.
Just a few thoughts on some of the things that Scott outlined -- one is categorical
flexibility. Politically I would say it is very improbable. After all, I think many of the
legislators are opposed to the categorical flexibility. I don't think you need to waste a lot
of your energy fighting categorical flexibility because I think that is one battle
we would win in legislature. Of course we clearly oppose putting bond
obligations into the matter of our payment as part of our regular receipts. That is
something we will clearly oppose. Not long ago I said that using
a sports analogy, I do like the community colleges or in a position
of the opponent being on the 5-yard line and we are having to fight a defensive battle all the
time. In victory and a half years I have been privileged to be the Chancellor it has been nothing but
cuts, cut, cut, cut.
In my public statements I have constantly pointed out what a tragedy it is for the state of California to
suffer the way we have in terms of higher education in general and community colleges in
general. That is the news. I think one of the things we can complement the governor on
is he has been very realistic in his presentation. He has a no sense of
trying to gloss over what is happening. He recognizes that there has been tremendous revenue loss in the
state of California. I recently read back in
2008 we had 103 billion dollars in revenue and this year we will
have $86 billion. A simple energy gap collation will point out to you a tremendous decrease
. This tax initiative will not get us back to the days
of 2007 -- 2008. As Scott pointed out,
it will take several years before prop 98 is restored to the level that it
was in 2007 -- 2008. With that, we look forward to hearing your
questions.
SPEAKER2: There are a few budget risks. We have highlighted most of them already. Right now the tax measure
is flowing about 64 percent yes, 38 percent
no. That is not something you go to the bank on. It will take an immense effort by
those affected by the tax measure whether they are in the schools getting direct funding or the other parts
of the general fund that are getting the benefit of the freeing up of dollars. They will have to
work very hard to convince the public that this is a good thing
to do. The Chancellor has enunciated that we have few options at
this point. We are going to have to work very hard and we are willing
to.
The revenues are highly variable. There is some talk in the last couple
of days, because of what is going on with J.P. Morgan Chase which is involved in the Facebook
IPO sum people say it should be an postponed until the fall. That is responsible for $2 billion of
the state revenue production over the next 18 months. If that gets postponed or the IPO
does not go off as planned that is a significant couple billion-dollar problem in the
budget.
Additionally, many of the governor solution are a problem
politically and legally. I don't know where the votes go from from this budget but
there were votes last year. Particularly with withholding lawmakers paychecks in the absence of a
balanced budget. There is a little bit more incentive for them to vote for a planned but
including this money from the redevelopment agency that will be very difficult for a lot of
lawmakers to have to take money away from their cities and other agencies.
Planning will be difficult. It was going to be difficult in the January proposal, now
that the good side and the down side of the tax measure passing or failing
has both amplified a little bit that means a little bit bigger workload reduction. We are now
saying 6.4 percent. That will be decided in November. That is equivalent of 12 percent.
If you have to do all of your work load reduction with only six months it would be difficult to do and
we understand that.
Additionally the redevelopment fund is adopted by the legislature -- that is a big if, we
don't know whether the funds will materialize or if they were
be legal challenges. Additionally student fee shortfall could escalate as we may see more
bog waivers go up to $46
a unit. They have been working closely with the Chancellor's office but frankly,
that's like predicting whether or not Facebook will go out with the IPO, it is hard to predict the behavior
over 2.7 million individuals as two whether or not
there going to apply for a bond in any given semester.
We are starting to see some sluggishness in enrollment demands. Mainly
in rural colleges and the governor is opposed to tripling fees from neighboring
state units. From $46 -- 138
units. We want to hear your feedback as you are seeing student enrollment
demands.
Moving on, I want to let you know a couple of things we are doing. I am uploading this
presentation in between comments here. It will be available at CCC
.org/budget and the next few minutes. Both in PowerPoint and PDF formats. Tomorrow at the
same website we will have a sample letter to legislatures available. We will also
have a revised resolution for your board, unit, student government. We will also
be preparing a bunch of material for any of you that want to talk to your community. Rotary
c
lub, chamber, political organizations, about the fax fax of community colleges
and the case for the temporary tax measure. That will be very important for us to
communicate and get our allies to understand. This is essential to
restore our community colleges.

>> we are kind of running off on a
speed here. They said they will start holding hearings tomorrow. We are in a bit of a
sprint. As the PowerPoint notes over the next four weeks we will be involved with budget hearings
and we expect a full conference committee to convene. We don't expect a budget
until after the June 5th primary election. Of course, we expect a budget to
be passed by the constitutional deadline. I am sure folks are well aware of the recent
cart case that was found in favor of the legislators
-- they could not deliver an unbalanced budget. There is still
an expectation that the controller can withhold if they don't deliver a budget by June
15th. It does not say anything about whether that needs to be balanced. They will deliver a
budget by June 15th. Of course, we will be embarking upon a campaign
in terms of educating folks in terms of what will happen to the community colleges if the developed
measure does not pass. Of course, we will
note the resolution of that after November 6. And if the triggered cuts will be
taken into effect it will occur after January 1st, 2013.
In a short time frame we have a lot of information to be communicated out.
SPEAKER2: Our final slide, we have simulations posted by about 3:00 p.m.
today. The positive and negative -- one
is that relieves a significant share of the current year shortfall to all nonbasic eight districts.
That will amplify the workload production in the budget year 2012 -- 13 if
the tax measure does not pass.
We are moving on to questions -- we have gotten quite a few. Please
send in your questions via web chat. We have a number
of them focusing around the trigger. I will ask Vice
Chancellor Dan Troy --
>>: I think one thing that is not broadly understood -- I live in Davis
and my neighbors say this all the time can we vote for [inaudible] initiative and brown initiative and get all
of those revenues? The answer is no. The initiative that gets more votes will override the
other. You can spend the same money
twice. Clearly the brown initiative is in the favor of community
colleges. I don't know if it is widely understood by the public but it is important to
mention. I think Scott, Teresa, and the
Chancellor did a great job of going over the issues. In terms of an on-time budget I will
say that I am hearing from the Legislature that that is a very big priority to them to get it
done as quickly and as close to June 15th as possible. Not only said that they can
get their paychecks but they also note the longer they quibble, bigger, and debate, that the worst it looks
toward the November election. I think
we can expect a budget that is reasonably on
time.
>>: One of the first questions is what is the amount of trigger cut for community
colleges?
>>: It looks like the trigger cut, we have $315 million
in new money that the governor proposes assuming the initiative
passes. If the initiative fails we take an additional base
production. I would estimate between 290 and $300 million.
On a statewide level that is roughly 6 percent workload reduction.
I think Scott indicated in his presentation the workload reduction
that you would face in your district might be higher than 6
percent. But the bottom-line answer to bottom line answer to the question is if the trigger is
pulled we would lose about $300 million in base cuts. The
caveat to that is the Department of finance has not made a clear
breakdown and prop 98 with the K12 versus community colleges split is. They said the
trigger is about 5.5 billion they have not been explicit on that. If we do
the 11 percent calculation it looks like we are in the 200 and 90 -- 300
range.
>>: What set of solutions are being proposed is is tax initiative
fails? Or we hearing any legislative solutions?
>>: I think this question speaks to what flexibility the Legislature would consider to help colleges deal
with these cuts. If sew, I think we don't have a very clear answer
on the legislative response. This would be generally speaking it would be fair to say
that the Senate is a little bit more willing to look at flexibility options than the
then the Senate is. They prefer to protect
targeted programs and are not likely to loosen the purse strings to
much. I would not be surprised to see some proposals from
the Senate side of the house. That my look at, not the
governor's proposal for very broad but maybe some kind
of categorical -- they might be willing to go a little bit farther down the
road of freeing up the use of RDA funds and some of them can
only be used for preferred maintenance and capital outlay
expenditures. Increasing the flexibility there. We will just have to see how the Legislature absorbs the
governors and where they weigh in on the issues.
>>: I think it is important, he was talking about how we help you deal with
the cut. There are no other options in terms of revenue.
There are not votes in the Legislature, two thirds that would be required to pass a tax
measure. That will not happen. This Legislature is not going to tax the tax measure by this
year. The possibility is Democrats look like they will pick up the state Senate with two
thirds, that is 27 votes. The assembly, the Democrats won't get two thirds but may pick
up a seat or
lose a seat. If it got to a situation were next January, actually
in December, the new legislature comes in. Depending on who wins the seat a little
bit more moderate on the Republican side, facing three weeks of the K12
year there is a possibility that the Legislature could do something next
January. Although, I would not expect community colleges to be a big beneficiary of that. It would be focused
on K12 and trying to stop the three-week reduction in the school year.
>>: One thing I would like to add -- I think we noted in the power point, we have tremendous exposure
in our local revenue in terms of the assumptions being made for the current year and the redevelopment assumptions made for the
budget year. If those assumptions do not come to pass we have a deficit.
We will be pushing very hard for some type of language to address a local
revenue backfill. We do have a vehicle in the assembly appropriations --
2591 which provides a backfill. I think, even more so
with this year, knowing how little redevelopment money is being identified to
come to Sacramento, it is very important for us to try to get some kind of relief in that
regard. Particularly in a budget year because they have already put the numbers in the equation.
Another question we have is has the governor's initiative gathered the required number of
signatures?
>>: From what I have been told there are plenty and will probably move to the raw count
early next week.
>>: The point of no return -- it is going to be on the ballot.
>>: Another question early in the chat was is the base being fully
restored for the 2012 -- 13 fiscal year?
>>: Again, this is assuming the optimistic scenario where the tax package
passes. I think it is the governors governor's intent to fully restore the base. As you note in the current
year we have had a major problem in that the governor grossly
overestimated the fee to collect and that was a big current year deficit Windows materials did
not materialize. Those revenues did not materialize
as estimated. The governor has assumed a very high level of waivers for
the 2012 -- 13 year. I think he has addressed that
problem adequately.
The problem with issues that we have talked about with the assumptions regarding the
RDA -- if those dollars don't come in it is hard to see where the dollars from the general fund fall back on the
shortage. We are relying on the budget year in those RDA assumptions.
>>: Another question -- can you explain her further the
115.1 new development in the current year.
>>: With the dissolution of the redevelopment agencies
presumably, you have more property taxes allocated with the normal tax system came K14
colleges would have more property tax. So the administration in
January and same community colleges receive about $147 million more in property taxes due to
that dissolution of those agencies and there
may update on that figure is about 116 million. As
Teresa has pointed out, the problem with this assumption is we don't have accurate reporting
yet. They have not
fully determined how much revenue is actually there to be allocated to the
K14 current year. In our conversations with some of the local entities, we don't think they will have a
very good idea about that until June. The risk is they will
make the general fund cut assuming that the property tax will come in and
we will get a number less than that.
We are going to work very closely with the Legislature to make sure they estimate that number
correctly.
>>: I have a question relating to the mandate block grant with the recent
change to the mandate proposal from the governor's office -- the question is do you have any rationale behind the
$28 per FTES
proposed?
>>: The explanation I got is they try to even tried to even up the dollars between K12 and
the community colleges. K12 is getting a higher number of enrollment than we
were. They lump the dollars together. The K12 came down as ours came out to make it more
equitable. Another big change in the mandate block proposal is before you had the choice to enter into
that categorical mandate program if you wanted to common you could also have the option of the normal
claiming process. The governor is proposing to
eliminate the claiming process. Essentially if you want to mandate money you will be forced to
participate unless you perhaps want to file a lawsuit on the
state.
>>: We have a follow-up question relating to the
initiative. Am I understanding this correctly -- if the tax initiative fails the deferral buyback would no longer be
an option for the 313 million cut and then a programmatic reduction of approximately 300 million for
a total of 600 million?
>>: We have a 5.5 million overall cut to K12 and community colleges so it is
indeed a $1630 swing from best case scenario to
worst-case scenario.
>>: Another follow-up question relating to the initiative -- the deferral buyback is set
at 313 million but that assumes the governor's revenue projections are on target what would be the number that the L. E.
o estimates?
>>: I have not calculated that. Keep in mind the budget will appropriate the dollars.
If the Legislature agrees to go with the governor's earnings assumptions that is what will be in the budget.
If the governor is overestimating the revenues we could have a potential issue where there needs to be a budget
correction. There certainly are risks they are. The
LEO Does not agree with the governor's revenue assumptions.
>>: Although I think his assumptions yesterday are probably closer than they were in January.
>>: Maybe, I think the governor
brought down his revenue assumptions based on the lower tax receipts this
year.
>>: Follow-up question -- I understand that
CFT is supporting Ungar while AFT the supporting
Brown. I don't think the acronyms are correct.
>>: I think that is incorrect because a CFT is a branch of A. FT and
CFT is part of the compromise because it was there original proposal that Brown was able to reach
a compromise with CFT and bring together finally a tax initiative
that would increase the amount of money that we would receive with a little
heavier emphasis on income tax with those with high income. But the
Molly Monger proposal is not good for community
colleges. Dan has pointed out the fact that if they both pass it will simply being
a matter of determining which one had the greater number of votes. If you remember,
the original term limits initiative sum years ago, both initiatives passed and the one that got the
greater vote was the one that was implemented.
>>: It is pta
statewide education Association supporting the Monger
initiative.
>>: General questions what is the marketing of the tax
initiative. This is more in terms of what is the advocacy planned?
>>: Do you want to cut the school year by three weeks? That and secure local funding
for public safety because the sales tax money to local governments for
the realignment of public safety and Sacramento can touch that.
>>: I think part of the discussion we are having has to do with whether the deferral buyback is
the Wright sales pitch. I think the governor looks at bat in that and his argument is
we are not spending new money before we fix our problems and address the
debt. I have to wonder if a better argument is look at the group -- we are going to restore and
support more students rather than just pay accounting.
>>: It is very clear that the legislature is not terribly enthusiastic about the
governor's deferral buyback plan. I am talking about the Democrats in the
Legislature. The state of California is in a strange position. It only takes a majority vote to pass
a budget but it takes two thirds vote in order to raise taxes. You can pass a budget
without the support of the minority party but you cannot raise taxes without the support of a minority
party.
>>: Maybe
Dan can address what is being done to get the consolidation
language out.
>>: I think the Chancellor spoke to this earlier. You may recall
the work at the student success task force, there was at one point a
recommendation to do categorical block grant in some
form. I think it is fair to say we got 80 percent of complaints about the tax force
recommendations in regarding the categorical proposal. The task force agreed to remove that proposal
from the task force recommendations. In the spirit of that decision we decided we are not
going to turn right around and endorse
categorical consolidation in the budget proposal. We feel that would sound like double dealing and we are not going to do that
at this point.
In terms of actions, the assembly has already rejected the governor's
proposal to consolidate categorically. The Senate has not taken formal action but I don't think they think that is a good proposal and
I would be very surprised if they went along with it. I think along
any categorical consolidation that the governor has proposed is about
zero.
>>: We have a follow up question -- is this correct the governor's tax initiative doesn't
grasp the Monger's initiative will? How will it help community colleges in crisis?
>>: The two are not connected. However under the state constitution if tax
measures have conflicting provisions than the one that gets the higher number of votes takes
effect. There is one issue in terms of -- the
governors personal income tax and sales tax for local public safety, mongers is personal income
taxes for K12 my education. There is some thought if they both passed the
sales tax fees and personal public safety and Monger's fees only for K12 education would
take effect. The Monger's is
$10 billion for K12 schools. The station put on prop 98.
It basically takes away about $5 billion in budget solutions that are pulling this
budget together and avoiding deeper cuts. Health and welfare programs, and community
colleges.
>>: Me clarify a point -- the scenario is the Monger initiative gets 55 percent of the boat
and the Brown gets 53. They both get over the 50 percent hurdle but one initiative got
more votes and in my example it will have ranked. Most of the initiatives of the Brown proposal, Scott
has talked about how the court my find that would go into effect
in some way shape are form. I think it is not 100 percent clear. There
is a provision in the Monger initiative that would reserve the realignment dollars in
the Constitution that Brown would propose if the Browns initiative clears the 50 percent
hurdle. There is a lot of things to be worked out here. The bottom line for us is the Brown initiative is way
more beneficial to community colleges than the other initiative. That is the one we should be putting our weight
behind.
>>: The Monger initiative is focused primarily on early childhood education. There could be a
benefit to some of our colleges that have contracts with the Department of Education or childcare
provision. As Dan noted the Brown
initiative is certainly more beneficial in the bigger picture to the community
colleges.
>>: The bottom line is the Monger initiative is a new tax for new spending and and the Brown initiative is to address the budget
gap.
>>: A follow-up dealing is has the Chancellor's office developed a contingency budget
and assuming the worst case scenario and where the program cuts will occur?
>>: That is a local decision. We don't come up with an overall budget and
say this is exactly the way that each local district should budget its
money. I would advise caution. In other words it would do
well to not bank on the fact that the tax initiative is going to pass and then suddenly being
faced with some dire circumstances if indeed it does
fail. I guess as a former college president I always found it
wise to perhaps overestimate your expenditures and under estimate your revenue. And then
when do it the other way around you will be in a really difficult position come November if that tax
initiative doesn't pass.
>>: The question was on where the cuts will occur. We do believe it will be workload production.
We could zero out all categorical programs but I don't think there is any support politically at the Capitol or
among community colleges to do that.
>>: For years we have argued over the fact that when the state gives us less
money they cannot call upon us to do the same amount of work. So far whenever we have had to
take pay cuts we have gotten workload production. Which sadly means we serve fewer students.
On the other hand, you can serve the same number of students with considerably less money.
>>: We have a follow-up question relating to the initiative -- Monger has admitted it to weeding
out community colleges. Another governor is reaching out to cut some kind of
deal, what can community colleges do to put due to put measure on Monger?
>>: No. I happen to
live in Pasadena and know her very well. I remember having a conversation months ago with her and she
was rather adamant. There is no hope of her of abandoning her position. As you well
know she has inherited a great deal of money from her
father who was a millionaire second to the Warren Buffett empire. It is going to go
ahead. A considerable amount of money will be spent in marketing the Monger initiative. There were attempts
made to try to bring either a
compromise or to get her to abandon her proposal but she has not done sew. The real issue now is whether or
not she will choose to attack the Brown initiative, which we hope she does
not.
>>: Now we will move on with questions related to the technical aspects
particularly related with the property aspect. Did the earlier projection of
the $25 million shortfall for community colleges include a shortfall in redevelopment tax
revenue with the 150 million-dollar issue on top of that? I don't recognize
the 25 million-dollar number.
>>: I think it was a 25 million that I recall may have been the fee
shortfall that we had anticipated at the close of last year's budget. There were
some scenarios involving to $25 million shortfall when we did our workshops last
summer. Of course those lead to a much larger shortfall, about $100 million as we
saw. The RDA is entirely separate. That is the governors estimate of
the property tax windfall, if you will, that will come in due to the dissolution of the
RDA. That is new -- when they come
in and dropped our budget by a like amount, it is neutral. We need to make sure
that we have the extra property taxes before we adjust our current year budget any
further.
>>: Is there any consideration of reflecting the workload reduction in
the advance workshop for 2012 -- 13? I think there looking for a scenario in
which scenario A. if the tax measure passes and scenario B if the tax measure fails.
>>: Yes, absolutely. We will try to model that
in our budget workshop.
>>: This is a very troubling budget from a planning perspective. If you take
all of those classes out of your schedule and the tax measure passes, if you don't rebound within that
year you are going to go on disability and you may not recover those
students next year. We will be providing very cautious advice on both ends. Don't
be too optimistic and don't be too pessimistic. This is why cash reserves are important.
I think some districts would probably use cash reserves and not do the full load
work reduction.
>>: I cannot emphasize enough that the Department of finance really do these budgets at a very high
level and they don't really have an appreciation for administratively how you have to pull off these budgets,
what it means to plan a budget or you could be 300 million up or down depending on a
late reaction you get in the middle of the year.
>>: The follow-up technical question -- can you clarify where they revise fully eliminate the
property tax portion of the shortfall?
>>: Not the May revise. We believe that the current
year property tax shortfall has been resolved because of San
Matteo turning into a status. That brings in a lot of property taxes in
the community college system and it leaves a hole on the K12 side within San Mateo County which were general
fund back feels by statute.
We think the property tax portion of the current year deficit has likely been
resolved. We still have the fee revenue shortfall in addition
to the 30 million-dollar trigger cut. We
still have a very old deficit that we think will be about 125
125 for 130
million. It is a very sizable
deficit.
>>: Piece deal with the full-time faculty obligations. When will
the new full-time faculty obligations number be
published?
>>: The new numbers -- generally for the fall of 2013
we will put that number out in late summer or early fall after we do the
calculations. In terms of whether there will be another freeze or not, that will be determined
at the November meeting. Obviously this will be a tricky issue because we will have to be dealing at the same time
with the boundary initiative. My recommendation to the board given all uncertainty and
cuts to be very mindful of the risks that districts are
facing.
>>: Legally under regulation the board of governors can only pull the trigger if [inaudible] is provided and it
is new full-time positions based on enrollment. It is nowhere
in this discussion for this year for either community colleges or K12.
>>: The board has been very sympathetic with districts in terms of putting a freeze
on. That will be a would be a change of opinion -- it is the dire circumstances that districts are
in and will be very low not to
freeze. As you know you can meet your obligation by percentage. That
simply means because of the fact that fewer adjunct faculty argues
that even sometimes when you are number goes down you still or holding to the
percentage of classes that are taught by full-time faculty. We know that
in the future
perhaps as funds began to increase we may have a problem. I think in planning for
the 12 -- 13 year, you need not have to calculate that you are going to have to be adding full-time
faculty. That if you maintain the percentage that is necessary in order to show that you are maintaining
the same percentage of classicists taught by full-time faculty that that will be
sufficient.
>>: Another question related to the situation of the ballot measure not
passing. Or there going to be any cuts to districts who fall below their [inaudible] lowering their
guarantee -- if there is going to to be reductions for
districts who are going to fall into disability provision question
? know
if there is any discrimination or provision that would protect the district.
>>: From the state perspective, if we have a 6 percent workload
reduction if everyone goes on disability the state does not save any money. I think in that case it would only apply for those who
fell below the 6 percent margin in that increment.
If this question is referring to the base allocation what we did in 12 is we brought down the
threshold by the amount of workload production so that districts would not automatically
lose a lot of that threshold dollars through that artificial state imposed
production. We will apply the same reduction to any 12 --
13.
>>: Considering they are connected by prop 98 for the Monger Pass could it be challenged
in cart?
>>: My opinion on that is no. The way it is crafted the money never comes to Sacramento it goes
directly to local school districts at a supplemental appropriation. Similar to the lottery
fund. It never touches the opposition 98 consideration and never touches the general fund and I think it is
legally sound.
>>: Another question -- how many districts have enough
reserves to get past the fiscal year?
>>: I wish I had a very clear answer to that. I know as assistant vice insist that Vice Chancellor sent
out an e-mail survey to districts essentially asking for the projected levels of
reserves. We got a fairly tepid response. I think
only 25 or 30 districts responded. I am concerned after all of these years that the
well is running dry.
>>: I would also offer a caution on that. I mentioned some districts may choose instead
of if the tax measure fails to maintain some of those courses using reserves. But I would also
underscore what the executive director said a couple weeks ago, Cash is King right
now. In particular, if the tax measure fails and if the governor and legislature are
over optimistic on the revenue we very well could have a state cash crunch next spring. You may
recall there was a state cash crunch earlier this year
they differed not hundred million dollars, we got out of that because
we knew that community colleges or in bad shape with the current year shortfall. I don't know if we will be able to get out of that
next year. I can see this whole budget, if the tax measure fails, the whole plan could
unravel. The city redevelopment agencies could sue in court and block that money. The
health and human service cuts have been denied out of Washington DC. Having
cash in case the legislature does additional midyear cuts
are tries to move the cuts away from K-12 as they did this year, we could be facing
a cut bigger than $300 billion or a new deferral next spring if this thing
unravels.
>>: With redevelopment funds what happens if one RDA as funds that another
does not? Is there a plan to smooth the allocation across districts or will each district peers possible
for drafting its shares of the governors estimated RDA
fund?
>>: Essentially at the end of the thing we smooth out property taxes across the system.
The more property taxes we bring in to the system the more is spread out. You have seen this
with the
P1 current year deficit. Essentially the more taxes that come in the more it
benefits the state as a whole. When you are working on these
RDA boards community colleges really have an interest in assuring that these boards are not
overspending their
obligations. The less property tax we bring in the less there is to go around too find K14
education.
>>: I am going to try to bundle these questions about full-time faculty publication. Where will there be an adjustment or
waiver, or extension? And then a question about the materials
that would be provided by the Chancellor's chancellor's office, would they include a
calculation of scenario A and B in the material that goes out in this budget
workshop?
>>: I will enter the second question first. As you know when there is a workload production that does
bring the fund down. We will calculate that in the late summer and
fall when we have more information to work with as part of our normal process. The other
question is what is going to happen for the 13 -- 14 year, that will go to the board in
November. It is entirely their vote. They say they shall
consider the growth and categorical funding provided in the budget
and our office puts together that
information and makes a recommendation. It is up to the board's
discretion.
>>: I have a question that this deal specifically doesn't deal specifically with the budget but with
district action that was related to two-tier course offerings. Was there ever a response from the
attorney general on this proposed Santa Monica College contract
system?
>>: I think we only got a verbal response.
>>: We only got a verbal response and when Santa Monica abandoned its
attempt to have a two-tier system this summer then we have not received any written
response. As you note there is another bill that was
authored by Senator Rob Wright. It is different from the Santa Monica proposal. It is a
program to try to tear systems. two-tier systems. It is also in places a lot of
restrictions on those. It make sit very clear that before any of the colleges could
engage in this pilot program they would have to make sure
that they breathe themselves of courses that we call life long learning or
allocation.
There is a great deal of faculty opposition to the Rob Wright
bill. Senate Bill 1550. That is where we stand now. As you
know, the chancellor's office took the position that they did not feel that
the education code that dealt with contract education justified what Santa Monica proposed to
do area of course, obviously it would be Rob Wright bill passes then that would be
legislative justification for a very limited
proposal.
>>: Another question asking about any legislative proposals
relating to a second layoff
window.
>>: I certainly have not seen any specific proposals. That is something that the
LAO has brought up in some of their
write
ups. That is something that would be needed if the tax initiative fails. I don't know how they could handle that kind of
change. But looking at last year's
budget, the legislature went in the other direction. They restricted doing
layoffs. It is hard to know where the governor will land on this issue.
>>: Let's be candid if the tax measure passes the main funders behind the tax
measure are almost exclusively labor unions. We want the money from the tax measure
but also understand that the governor needs labor in order to pass the tax measure and will likely
be very politically tied to labor because of
that.
>>: Another question -- is it true that districts will not be held accountable for title V
hiring if they choose to collect their categorical funding which includes CEO
areas?
>>: We will have to follow up off-line about that. I do know that the language
on categorical flexibility also provides flexibility to statutory and regulatory requirements
related to those problems. Again we don't expect the categorical flexibility will pass
legislature.
>>: Follow-up question -- can you explain why the San Mateo changed the basic aid
uniquely providing influx
ofwith the potential increase in
property tax revenues as they're potential for more districts to qualify?
>>: When their property tax base grows faster than community
college. In this case the San Mateo's property tax base did not decline as
fast as the state funding for community
colleges. It is not necessarily -- it is
showing that we are shrinking these institutions and these institutions are legally
entitled to a certain amount of property taxes from their counties. In most
districts that does legally require a person
that they get to the state makes a general fund. San Mateo
crossed the threshold this year to be with the other basic aid districts. We don't think any other districts in the
next fiscal year will cross. A couple will
get close. Again, not because of the good news of property taxes growing fast but rather because as we do
more and more state determined that it is pushing them
closer.
>>: Question for the chancellor's office -- any further discussion or action
being talked about for repeating classes? Think
this was last year the chancellor's office curtailing the number of classes that a student could repeat
and force the subsequent impact on perhaps the funding of it?
>>: As you note we did cut back on
any times an individual could attend classes and repeat them. We are considering the possibility
of not allowing repeatability in classes -- this would impact largely physical
education and classes in the fine arts. In other words, we are saying that somebody can take
golf four times while we are unable to offer our basic math
and English and other courses. The first year in which we took a severe cut we turned away
133,000 fewer first-time students -- it is clear
that it is becoming questionable to continue avocational courses when
we are so desperately in need of transfer, career technical, and basic skills courses. That is the
issue on repeatability. You can keep failing a class and continue to
repeat it more than three times. Number two, you
can take avocational courses over and over again.
>>: A general question -- any relief from the 50 percent law being
discussed, any consideration?
>>: The 50 percent law is statutory. It is much stricter in that sense than the
faculty obligation number. It has more regulatory authority over. We fully expect to see
that there will be a continued flexibility for districts to count money they are
using to backfill categorical, to continue to backfill
that. The governor seems to be okay with districts, only four districts used that authority this
year. While we no districts are really having challenges with the 50 percent law, we thought hard to
get that flexibility backfill categorical but in the end only four districts needed that
need that authority. There are ongoing talks with our labor partners. I have been a part of
those. It is difficult for them to give on this issue. They do point to districts
that are showing larger reserves. Of course those larger reserves or largely because of
the deferral situation and the uncertainty on a cash basis that districts are having on an annual
basis.
>>: We have a follow-up question on the basic aid situation. Do basic aid districts get to
keep the excess property taxes from RDA or do they benefit the state?
>>: they get to keep the extra money.
>>: Although they get the extra property taxes, remember we talked about the two different numbers for the 12
-- 13 year. One was redirection of tax increment dollars and the other was cast development
agencies. They would not benefit from [inaudible] it
is not property tax money.
>>: Will the chancellor's office continued to approve more [inaudible]
for colleges?
>>: For now, we have had some discussions going on with Teresa and Scott and a work
group, with some district CEO's about some
approaches that need to be taken in this time. SB
361 Was not really constructed to deal with. I think it is a fair question and a fair issue in this
time of deficits whether we should be continuing to improve funding for new centers which comes
off the top of everyone else's portions.
>>: We are taking a couple more questions. We thought this might last only an hour but we
have gotten a lot of questions. We apologize if we were not able to get two
o yours We will be
holding this webinar again at 3:00 and if your question wasn't answered and you feel like you want
another bite of the Apple you can log on again and resubmit.
>>: Or just e-mail budget at CCC .org. or dtroy
@ccc.edu
>>: Will there be an effort to fight to way the categorical match element? To take I have not heard much about
>>: I have not heard much about that. Legislative
support for categorical programs I don't know if it would be high enough on their radar.
>>: Do we know the status of the CSDA
lawsuit?
>>: I think the court said the legislative action was
okay.
>>: Another question related to
the fine -- this is a bit of a technical one. Chancellor Scott said you could meet it by
rehiring a certain percentage, what does that refer to and what is that
percentage?
>>: While I was going to say was, let's
say you required you reach the level where 67 percent of your classes we're taught by full-time
faculty. Let's say the following year you had considerable
fewer part-time faculty and you had two or three fewer full-time faculty. If you're percentage
of classes that were taught by full-time faculty was still as high or
higher than it was when you met your
[inaudible] than you could meet it by the percentage of classes that were taught by full-time faculty.
That is what I meant by that. It wasn't saying that we don't have
a set percentage statewide because the requirement varies greatly from
district to district. But in meeting your obligation you could meet it through the
percentage, maintaining the percentage of classes that are taught by full-time faculty. Even though you might
have fewer full-time faculty because you also have fewer adjunct or part-time
faculty.
>>: A really good question -- the uncertainty about it if you are
going to have to meet the number or percentage next fall. When the board of governors says
we are waging it it there just really waiting for growth in it. We need to
make that determination either you will meet the percentage or number. The question at this year is when the board of governors comes
in in November and looks at it and says there is no growth and there is not enough to pull the trigger,
colleges are going to note that
point whether or not scenario B is going to happen in workload
reduction. The suggestion is in November that it should actually be lowered by 6
percent and if the tax measure passes it would go back up. That is a valid
question.
We will know.
>>: Couple of points -- just remember that it is different by the growth or
decline. If there is 6 percent reduction in the
number, it would vary by district, but that number does go down if there is a workload
reduction. Rest assured we will be well in informing the board of the
scenarios for the tax initiatives. Further, keep in mind
that we can revisit that decision. The board will make a decision based on the tax is passing
tax is passing and if it fails we can go back and revisit that.
>>: Thank you all very much. But sitting here and taking
notes -- thank you very much for joining us Paul. Chancellor, thank you very
much for coming over today. Vice Chancellor of Troy, you are ongoing
leadership. Thank you all very much. I believe this was recorded and will be available later. The
PowerPoint is available in both PDF and PowerPoint. It is a big file, 4.4
megabytes so have some patience. CCC .org/budget. We will do this againat 3:00 today.