Budget Update Following Governor Brown's May Revise

May 17, 2016

President's Budget Update Following Governor Brown's May Revise

Dear Colleagues,

As promised, I’m sharing information about the budget following Governor Brown’s May Revise budget announcement on Friday, May 13, 2016. We expected the news to be positive with increased funding for higher education and although the budget is a reduction from the proposed budget released in January, there is still significant funding support for higher education, and for that, we are grateful.

You may have read Chancellor Carroll’s budget message (sent 5/16/16 and shown below) that the state budget encourages community colleges to explore more uses for technology. This is an area that is supportive of access to quality education for greater student success. This priority in the governor’s budget indicates a continued commitment to public higher education in California, which is good news. As Chancellor Carroll stated in her message: “Overall, the governor’s plan is very supportive of community colleges.”

Specifically, in addition to an increase in the base funding level ($2.5 million to SDCCD), the governor’s proposed budget includes additional continuous revenue in the form of 2% enrollment increase for apportionment growth ($4 million to SDCCD), and one-time revenues that amount to an estimated $10-12 million for SDCCD. The continuous revenue streams will be distributed as per the Resource Allocation Formulas (RAFs) and one-time revenues will be used for approved energy-efficient projects; deferred/scheduled maintenance; instructional equipment, and outstanding and current legal mandates (e.g. CalSTRS and CAlPERS retirement fund obligations).

The state’s budget does not include a COLA for this year. SDCCD and SDCE will support advocacy efforts in this area.

Specific to SDCE, the budget includes $500 million in ongoing funding for the Adult Education Block Grant, which is being used to restructure and improve coordination between regional adult education providers. SDCE is in a consortium with San Diego Unified School District, and our consortium will receive $2,752,360, which will be used for hiring staff, counselors and instructional assistants; upgrading and replacing equipment, and curriculum development.

Please let me know if you have any questions about the budget. We are hopeful that the legislative review and adjustments that happen between now and the end of June will lead to an approved budget by July 1, and I will continue to share important and changing information that impacts SDCE.

Sincerely,

Carlos O. Turner Cortez, Ph.D.

President

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May 16, 2016

Chancellor’s Budget Message: Governor’s May Revision

THE CALIFORNIA BUDGET 2016-17

AESOP’S THE ANT AND THE GRASSHOPPER

All of us know about Aesop’s fables and can recite one or two of them, but we don’t know much about Aesop himself.  Scattered references and occasional citations in Aristotle, Herodotus, and others indicate that he was at some point a slave in Samos who later prospered in mainland Greece and ultimately met a violent death somewhere near Delphi in the Sixth Century BCE.  We know him best as a fabulist, an ancient story teller, whose well-known fables offered political and moral advice.  I often turn to Aesop for both humor and counsel.

 I was therefore delighted when at his press conference on Friday, May 13, Governor Jerry Brown used Aesop’s Fable of the Ant and the Grasshopper as his underlying theme in presenting his May Revision Budget for 2016-17.  Aesop would have been pleased.  The fable is about a grasshopper who enjoys a happy and musical summer, free of responsibilities, while nearby industrious ants labor to provide food and supplies for the coming winter.  Inevitably, the harsh winter arrives and the grasshopper is desperate for sustenance. However, when he begs one of the ants to share his food, the ant refuses to help someone who would not help himself by preparing for the future.  The grasshopper eventually starves while the ant is comfortable with full stores of food. 

Governor Brown shared the entire fable with the press, commenting that “I’m trying, in whatever way I can, to indicate that getting ready for a downturn is something that people for thousands of years have thought about, and for thousands of years, people have made mistakes and not gotten ready.  So I’m really trying to frame the challenge in the long history of human beings and their foibles and their mistakes.”  The governor then stated his concern that California spending is once again outpacing revenue, a situation that will inevitably lead to an economic downturn of sizeable proportions in several years. This downturn will be intensified if voters do not approve an extension of the high-earner portion of the tax measure Proposition 30, which was approved in 2012 and is set to sunset in 2018.

The Governor’s Overall Budget and Process    

The governor’s $122 billion spending plan for California makes fewer augmentations than in the prior two years and carries with it the governor’s admonition to curb spending wherever feasible.  As the report states, “No significant new ongoing spending commitments should be made.”  With regard to higher education, the governor is clear that he would like to see all institutions heed this advice.  He also calls upon them to adopt open educational resource systems to reduce the cost of textbooks for students; increase student access and success in the California Community Colleges; and increase transfer student admissions to the University of California and the California State University systems.  He also asks community colleges and universities to explore enhanced uses of technology.  Overall, the governor’s plan is very supportive of community colleges, motivating the California Community Colleges Acting Chancellor, Erik Skinner, to state, “This budget demonstrates Governor Brown’s continued commitment to public higher education and builds on critical efforts already underway to improve basic skills education, help close achievement gaps, and expand the use of technology to help more students succeed.”

The next steps in the process will include legislative review and conferences, which will lead to some modifications in the budget proposal and will be informed by local advocacy efforts.  In June, it is hoped that all budget differences will be resolved so that the governor can approve the budget and sign it into law on or before the July 1 deadline.

Many funds, such as the special student success and equity funds are ongoing at the current level.  Below are the key elements of change in the May Revision Budget that affect community colleges in general and the San Diego Community College District (SDCCD) in particular. 

Cost-of-Living Adjustment or COLA.  Unfortunately, no COLA is recommended in the May Revision Budget. This is an item that we will be addressing in our advocacy efforts.

Apportionment – Base Increase.  There will be a $75 million increase in base funding.

SDCCD Impact. The SDCCD will receive approximately $2.5 million (continuous funding), which will be processed through the District’s Resource Allocation Formula (RAF).

Apportionment – FTES Growth.  The May Revision includes $114.7 million for 2% enrollment growth (Full-Time-Equivalent Students = FTES).

SDCCD Impact.  The SDCCD will receive $4 million (continuous funding), which will be processed through the RAF.  City, Mesa, and Miramar colleges, and Continuing Education have done extremely well within the District’s enrollment management plan.  In view of more growth funding next year and the possibility of even more funding if many other districts do not achieve their growth targets, the SDCCD is planning an aggressive enrollment-management year, with an intersession in spring 2017.

Mandated Claims.  There will be another round of payment (one-time funding) of mandated claims at the rate of $28 per FTES.

SDCCD Impact. The SDCCD will be eligible to receive either $3.5 million or $1.2 million (depending upon the final calculation under the selected option), which we will be studying especially in view of the CalSTRS and CalPERS retirement fund obligation. 

Deferred/Scheduled Maintenance and Instructional Equipment.  The May Revision includes $219.4 million in deferred/scheduled maintenance and instructional equipment funds. 

SDCCD Impact.  The SDCCD will receive $7.1 million, which would be distributed in accordance with our internal allocation formula of 60% to facilities ($4.3 million) and 40% to instructional equipment ($2.8 million). 

Proposition 39.  Proposition 39 funds energy-efficient projects.  The May Revision includes $49.3 million for this purpose.

SDCCD Impact.  The SDCCD is eligible for $1.6 million for projects submitted and approved. 

The distribution of other funds within the May Revision Budget is still being discussed, such as whether the $200 million in Strong Workforce funds will be distributed directly to colleges or to regions.  Basic skills, a modest increase in the Adult Education Block Grant, funds for Institutional Effectiveness, and other system-wide items will be sorted out in the process leading up to the final budget. 

Let me close by saying that the Board of Trustees and I are optimistic about the May Revision Budget, although there are modifications that we and our leadership team will be seeking during the advocacy period.  The governor’s cautions about spending and about a possible future recession are important to take seriously, which we will do, so that we stick with the ant and not with the grasshopper. 

Stay tuned . . . . .

 

Dr. Constance M. Carroll

Chancellor

San Diego Community College District

3375 Camino del Rio South

San Diego, CA 92108

Tel.  (619) 388-6957

Fax  (619) 388-6541

Email ccarroll@sdccd.edu

Twitter @carrollsdccd

 

Mission: San Diego Continuing Education commits to student success and community enrichment by providing accessible, equitable, and innovative quality education and support services to diverse adult learners in pursuit of lifelong learning, training, career advancement, and pathways to college.