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Mission College Budget Fall 2012 Update

Mission College Budget Fall 2012 Update. Sept 21, 2012 Mission College All College Forum Presented by : Rick Bennett, VP Admin Services. Agenda. National & State Context State of the District & College : 2012 /13 the most difficult budget year

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Mission College Budget Fall 2012 Update

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  1. Mission College BudgetFall 2012 Update Sept 21, 2012 Mission College All College Forum Presented by: Rick Bennett, VP Admin Services

  2. Agenda • National & State Context • State of the District & College: 2012/13 the most difficult budget year • November 6 & Mission College budget? • 2013/14-- a peak ahead

  3. Rocky Ground--National Perspective • Dec 2007 Great Recession • Most severe economic decline-Great Depression • Downgraded US debt • Officially over July 2009-hard times keep coming • Economy slow to recovery- 1st Qtr. Growth • 2010 3.9% 2011 0.4% 2012 1.9% • Public sector continues to shrink • Economy needs private sector employment to rebound, tax revenues will lag

  4. Economic Climate--National to State • US GDP near term weak, mirroring last two years • GDP growth 2.4% by the end of 2013 • Increasing to 3.4% in 2014 • US-- 2013 unemployment anticipated 7.7% • Real Main Street problem--inadequate workforce development for 21st century labor markets • CA-- 10.8% 3rd highest in nation • Worst state for business • Education system decline • CA Positive signals • Six months of rising home prices

  5. State Budget… • Assumes approval of Nov 6 Prop 30 tax initiative to raise new revenues • 0.25% increase in Sales tax for 4 years • Increase in personal income tax for wage earnings in excess of $250K for 7 years

  6. State Budget… • Cuts of $8.1B • Revenue increase of $6B • Shifts, payment delays $2.5B • Total Budget still $11B below 07-08

  7. District 2012/13 budget • Projected revenues $6M less than Unrestricted General Fund Budget • $5M one-time funding carry-over • $1M step/column and benefit increases. • Mitigate the shortfall--$3M reduction plan • $1.5M new revenues Land Corp • 3.5% salary concessions from all units placeholder for ACE • Reductions $1.3M in Associate Faculty • Mission’s component is $600,000.

  8. District 12/13 budget • $103M General Fund • Unrestricted $89M • Restricted $13M

  9. Mission--Total Budget 2009-2012

  10. Fixed Costs –District and College Overhead, including certain salaries, benefits, software, utilities, legal expenses, retiree benefits, etc…

  11. Associate Faculty Expenditures Budgeted vs. Actual

  12. Nov 6--Prop 30 and Prop 38Tax Initiatives on Ballot • CCC’s are held hostage • Polls show Prop 30 leading with uncomfortable majority • 51-52% • Prop 38 at 38% for K12 only • Competing initiatives

  13. 2012/13 Assumptions • No reduction to base revenues • SB 361 still in place…for now • Mandate Block Grant ($28 per FTES in lieu of claims) • Full hold harmless from shortages in RDA Revenues • Cash flow is a trickle in early 2012 FY • No COLA (last COLA was 2007-8) • No policy changes to categorical programs • Additional COSTS-unfunded reporting requirements

  14. If Prop 30 Passes • CCC System • $50 M restoration • $160M in deferral buy down • $961M to $801M • District Workload Increases 141 FTES • Mission 65 FTES • Snake in the Grass: Expect mid year reductions

  15. If Prop 30 does not pass… • State triggered reductions --$6B in total cuts • $5.4B in Prop 98 • $250M --UC and CSU each • $50M -- Developmental Services • $40M -- Police/Forestry/Fire • $17.6M -- other programs • Second consecutive year that CCC’s will face Automatic Budget Reductions Mid Year

  16. If Prop 30 does not pass… • More drastic Trigger Cuts than 11/12 • Lose $50M in restoration • Lose $160M in deferral buy down • System wide base apportionment Reduction • $338M • $5.3 M Funding Reduction to District • 1161 FTES Workload Reduction • Mission—546 FTES • 7.3%

  17. 2012/13 District Shortfall if Tax Fails Projected Available Funding $3.6M Budget Reduction $1.7M Additional Assoc. Faculty Reduction

  18. Locally Funded or Basic Aid • “A community college or K-12 district that does not receive state funds because its revenues from local property taxes and student fees provide more than it would receive under state formulas.” If Prop 30 passes, WVM estimate 2 years to Locally Funded or Basic Aid

  19. The Bucket Analogy • 2012/13 funding formula, District receives $5.4M in state apportionment • When local property tax/student fees exceed $5.4 in apportionment, enter Basic Aid

  20. If Tax Initiative fails WVM backs into Locally Funded or Basic Aid Status in 2012/13 • Lowest level of funding in last 5 years • Long term effect--Stable Funding • Local property tax is the source • No State Apportionment • Light at end of tunnel, but up to 5 years to climb out of the hole

  21. 2013/14 Shortfall PlanningStill in the woods either way Tax Fails: $5.1M One Time Carryover $1.0M Step/Column/Longevity $1.5M Bargaining Restoration $7.6M shortfall Projected Available Funding $3.0M Budget Reduction $1.5M LandCorp Funding $1.6M One time/Prop tax increase +$1.5M LandCorp • Tax Passes: • $1.5M One Time Carryover • $1.0M Step/Column/Longevity • $1.5M Bargaining Restoration • $3.5M shortfall • Projected Available Funding • $2-2.5M Budget Reduction • $1.5M LandCorp Funding

  22. Student Success…yes a pop quiz • Total budget for Mission College? • District General Fund Budget? • Will the District become Basic Aid? Describe 1 of 2 scenarios • How much did the Associated Faculty Budget decline from 2011/12? Why did it decline? • Are we out of the woods in 2013/14?

  23. Student Success… • Total budget for Mission College? $44.3M • District Budget General Fund? Unrestricted $89M; restricted $13M. Total $102 M • Will the District become Basic Aid? Describe 1 of 2 scenarios Yes, if Brown tax passes, 2 years; If Brown tax fails , immediately 2012-13

  24. Student Success… • How much did the Associated Faculty Budget decline from 2011/12? Why did it decline? $600K Reduction to help balance 2012 budget • Are we out of the woods in 2013/14? No, with Prop 30 passage or without

  25. Rise Up • Positive Signs in economy—GDP 2014 • Economist Steve Levy reported that half of all USA job growth in May 2012 was in CA • Prop 30 Tax Initiative • Increased Funding with passage • Basic Aid in two years • Silver lining with failure in the mid term • Basic Aid this fiscal year • Stable Funding • Chance to grow with local tax increases over time

  26. Links • Learn more about Prop 30 • http://ballotpedia.org/wiki/index.php/California_Proposition_30,_Sales_and_Income_Tax_Increase_(2012) • Prop 30 latest polls • http://www.excellence.dgs.ca.gov/CostEffectiveness/S2_2-5.htm • Link to this presentation: • P:\MC Administrative Services\Training and Presentations • Rocky Ground • http://www.youtube.com/watch?v=Uy30aOR0rYk

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