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AGENDA ITEM BACKGROUND
TO: GOVERNING BOARD
DATE
FROM: PRESIDENT
February 6, 2012
SUBJECT:
2011-12 through 2014-15 Budget Planning Parameters Update
REASON FOR BOARD CONSIDERATION
INFORMATION
ENCLOSURE(S)
Page 1 of 10
ITEM NUMBER
D.1
BACKGROUND
The Governing Board received a budget update on December 7, 2011. Updates have been received
since then on the status 2011-12 funding and the 2012-13 budget. The college spent the fall semester
reviewing Carryover and One-time funds allocated to departments. As a result of the review, over
$372,000 in give backs have been contributed to the operating reserve. A summary of the Carryover,
One-time (Critical Needs) funds is attached.
Tier one and two reductions will be implemented for 2011-12. Tier one cuts are considered one-time
reductions that apply to the current year; $315,000 for Cabrillo. Tier two reductions are permanent
ongoing cuts that total $755,000 and come with a workload reduction of 165 credit FTES. The
Chancellor’s Office notified districts in January that the student fee revenue shortfall anticipated for
2011-12 had grown significantly. The shortfall for Cabrillo was estimated at $250,000 in fall of 2011.
The updated reduction for 2011-12 is estimated at $1,000,000 or more. This change will require the
college to utilize additional one-time reserves of $750,000 for the current year. The state Chancellor’s
Office has not calculated final totals.
The Governor’s January Budget was released a week early; January 5, 2011. The Governor’s budget
assumes a deficit of $9.2 billion ($4.1 billion carried over from 2011-12 and $5.1 billion for 2012-13.)
The Governor’s Budget is considered the best case scenario. It is also important to note that the
Governor’s budget is built on the assumption that voters will approve personal income tax increases and
sales tax increases. The voters will vote on the tax proposals in November, 2012, four months into the
2012-13 fiscal year. If the tax increases fail to pass, the college will be forced to cut an additional $2.7
million (a 5.56% workload, 588.28 credit FTES).
Highlights of the Governor’s Budget for community colleges include:
No funding reductions for 2012-13
Student fee increase of $10 per credit unit bringing enrollment fees to $46 per credit unit
effective Summer 2012.
A reduction of deferrals to community colleges of $218.2 million.
Rebenching of proposition 98 for the elimination of other small tax and program reductions.
This should not impact overall funding to community colleges.
Administrator Initiating Item:
Victoria Lewis
Academic and Professional Matter
If yes, Faculty Senate Agreement
Senate President Signature
 Yes  No
 Yes  No
Final Disposition
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Consolidation of all categorical programs with the exception of the Disabled Students Program
and Foster Care.
Assumes personal income tax increases for filers with incomes over $250,000 and a sales tax
increase of ½ percent.
If tax increases pass, the Governor is proposing a minimum funding increase to community
colleges of 4% for 2013-14 and 2014-15. Several options for the funding allocation have been
discussed. Below are possible options being considered:
1) The increase in funding could be used to reduce the funding deferral to the community
colleges. This option does not increase funding to colleges but would reduce the level of
borrowing and associated costs colleges are incurring.
2) The increase in funding could be tied to student success initiatives with new accountability
measures attached.
3) The increase could be in the form of a COLA or unrestricted revenue.
The 2012-13 budget will mark the sixth year that the college has reduced its base operating budget. The
Governor’s budget, while optimistic for Cabrillo comes with significant downside risk for the college.
The College Planning Council received all state budget updates via email from the California
Community Colleges Chancellor’s Office and the Community College League of California. The
budget planning documents attached were reviewed with CPC on Wednesday, January 25, 2012.
The college’s budget planning information has been updated to reflect information discussed above. As
is noted on the multi-year planning documents, the college is using the Governor’s budget to plan for the
2012-13 budget year.
The following attachments were reviewed by the college planning council on January 25, 2012 and are
included for the Governing Board’s information:
A summary of the Carryover and One-Time/Critical Needs balances as of 1/9/12
California Community College League Budget Simulation for Cabrillo
Updated Base Budget Planning Parameters for 2011-12 through 2014-15
An updated estimate of Cabrillo Operating Reserves for 2011-12.
Projected Operating Reserves for 2011-12 and 2012-13
Updated Budget Development Timeline
The planning assumptions for 2011-12 have been updated to include the ongoing Tier 2 permanent
funding reduction of $755,000. The student fee revenue shortfall for 2011-12 is treated as a one-time
reduction for state purposes. The assumptions going forward are that the shortfall will continue into
2012-13 with a minimum loss of funding of $500,000. The 2011-12 funding reductions are still
estimates. The first principal apportionment calculation will be released in March and will include
updated revenue estimates for Cabrillo. The 2012-13 revenue is projected at the same level as 2011-12
with the exception of the student fee revenue shortfall. The 2013-14 and 2014-15 revenue estimates
show an increase in revenue of 4%. Although this increase is highly unlikely, it is included in planning
to demonstrate the continued structural deficit which exists even when increases in revenue are assumed.
The ongoing structural deficit for 2012-13 is currently projected at $5.5 million. One of the major
components of the structural deficit is the built in increases in expenses that the college must budget
each year. It should be noted that Cabrillo reduced the number of full-time faculty positions in the
budget to the minimum number required by the state; 196. The reduction of faculty positions has
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yielded significant savings in the budget to date. The college is planning to utilize $2.3 in operating
funds to bridge the deficit for 2012-13 leaving a deficit balance of $3.2 for 2012-13. The amount of
reserves available for bridging the 2012-13 budget was reduced due to the unexpected student fee
revenue shortfall for 2011-12. The college has set a budget reduction target of $2.5 million for the
first phase of 2012-13 budget planning. The first phase of planning will be complete by May and all
permanent reductions identified in the first phase will be included in the 2012-13 Preliminary Budget
approved by the Governing Board in June 2012.
There are concerns student fee increases, the continued reduction of funded enrollment, changes in
Title V regulations such as repeatability, changes in Financial Aid regulations, etc. will continue to
impact Cabrillo’s long term fiscal stability. Built in expenditures continue to rise at levels that are not
sustainable over the long term. Fiscal stability and student success are of the utmost importance to all
constituents of the college community.
The last document in this update includes a timeline for the development of reduction plans and the
Governing Board approval.
College-wide dialogue will continue throughout the year. CPC has scheduled special meetings and will
continue to meet regularly. Component Vice Presidents and the President held open neighborhood
meetings with staff January 20-27. Managers are meeting with staff to develop and discuss budget
reduction plans. The Services and Program Reduction Advisory Committee (SPRAC) will review
reduction plans once they are completed and provide suggestions for how to improve the plans.
The Governing Board will continue to receive monthly updates and take action on budget planning
decisions that are required to move forward.
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Board
February 6, 2012
Carryover and One Time/Critical Needs Balances as of 1/9/2012
Carryover - Fund 14
Encumbrances
231,286
1,133
35,232
64,473
13,070
345,194
Give Backs
71,489
24,887
70,751
9,000
21,992
198,119
Balance
449,181
512,756
560,527
540,582
41,767
241,437
326,976
2,673,227
(754,193)
1,919,034
Expenditures Encumbrances
Budget
Admin Services
175,570
22,955
13,814
Districtwide
4,621,944
274,804
60,937
Instruction
59,822
702
1
President
61,015
4,478
Reserves
3,377,895
296,949
35,000
Student Services
Total
8,593,195
337,939
74,752
Less Reserves and Less $3,478,192 Bridge Funds for 2011-12 Budget shortfall
Total Fund 17
Give Backs
4,530
154,711
15,333
174,574
Balance
134,271
4,131,492
59,119
41,204
3,377,895
261,949
8,005,930
(6,856,087)
1,149,843
Budget
Admin Services
1,122,788
Contract Commitments *
638,123
Districtwide
555,823
Instruction
637,715
President
53,755
Special Programs**
326,871
408,956
Student Services
Total
3,744,031
Less Contract Commitments & Special Programs
Total Fund 14
Expenditures
370,832
125,367
(30,723)
(8,851)
2,988
20,961
46,918
527,492
One-time - Fund 17
Grand Total Carryover & One-time
372,693
* Contract Commitments:
CCFT Conference Stipends
Critical Needs- (Examples)
Classified & Confidential Staff Development
Classroom Remodels
Public Safety In-Service Funds
CCFT-conference funds
Accreditation
** Special Programs:
Green Technology Center-start up
Dental Hygiene Clinic (4160)
Health Services- Bldg Remodel
Horticulture Center (4110)
DSPS/Matric- shortfall
Sesnon House (2119)
Retirement Incentives- faculty/classified
Student Printing Program (#188)
College Emergency Fund
3,068,877
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Board
February 6, 2012
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2011-12 through 2014-15
Base Budget
Planning Parameters
Difference between ongoing Revenues & Expenses (Structural Deficit)
Increase in State Revenue Anticipated
General Apportionment adjustment 2011-12 Tier 2 Permanent Reductions
2011-12 State
Enacted Budget
2012-13
Mid-Range Projected
2013-14
Projected
2014-15
Projected
(145,000)
(4,233,200)
(5,560,200)
(4,981,700)
(755,000)
Gen. Apportionment reduction- $400 million net of student fee increase
(4,412,000)
Increase in Student Fees $110 mil to offset apportionment reduction
2011-12/ 2012-13 Student Fee Revenue Shortfall
Possible 4% Increase in CCC Prop 98 allocation- if tax proposals pass
Net change in revenue
1,097,000
(250,000)
(250,000)
(4,465,000)
(4,483,200)
2,100,000
(3,460,200)
2,200,000
(2,781,700)
150,000
(395,000)
200,000
(320,000)
(112,500)
(345,000)
(112,500)
(345,000)
(230,000)
(575,000)
(66,000)
(85,000)
(62,000)
?
(50,000)
(633,000)
?
(145,000)
(36,000)
?
?
?
(696,000)
?
(145,000)
(24,000)
?
?
?
(125,000)
(100,000)
(150,000)
(10,000)
(150,000)
?
?
?
?
?
?
(1,077,000)
?
(1,521,500)
?
(1,482,500)
?
(4,981,700)
(4,264,200)
Net Increases in Ongoing Expenses
Full-time Faculty Position changes (-3, -4, +3, +3) (net of adjunct backfill)
Step, Column, Longevity Increases, etc.
Classified Positions
Medical Plan Rate Increase-- 4%, 10%, 10%, 10%
Management Positions
Retiree Benefit Increase
PERS Rate Increase
STRS Rate Increase
Worker's Comp, Unemployment Insurance
New Facilities Supplies & Operating, Staff
TRAN Interest Expense
Utilities
Net Operating Increases
District Contribution- Bus Pass Program
Retiree Benefits- New Employees
Labor agreements
Reduction in Indirect Reimbursements from grants
Total Expenditure Increases
Budget Reductions
Budget Reductions Phase I, Round I
Budget Reductions Phase I, Round II
Ongoing Shortfall*
730,500
97,653
(4,233,200)
(5,560,200)
Allocation of 66 2/3% of operating reserves
3,478,200
2,300,000
Deficit net of One-time funds
(755,000)
(3,260,200)
0
(194,353)
(60,000)
174,000
100,000
?
?
(135,000)
(596,353)
Estimates will change as more information becomes available
The 2012-13 Preliminary Budget Reduction target for the June Board meeting is $2.5 million
If Tax Increases on the ballot do not pass, the deficit will increase by another $2.7 million (5.56%). This increase is not reflected above.
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Board
February 6, 2012
OPERATING RESERVE--2011-12 Update
Beginning Balance 7/1/11
$
8,593,195
Less:
FTES Reserves
(500,000)
Allocation for 2011-12 Deficit
(3,478,192)
Allocation to 2011-12 Mid-Year Reductions
(1,070,000)
'One Time' Allocation Carryover Balance from FY 2010-11
(1,051,713)
Allocation for 'One Time' Sub-Fund for FY 2011-12
(1,184,395)
Allocation to 2011-12 Mid-Year Reduction-Student Fee Revenue
Shortfall
(750,000)
2011-12 Give Backs from Carryover/One-Time Funds
Projected Ending Operating Reserve Balance 6/30/12*
372,000
$
930,895
* Does not include FTES reserve of $1,000,000 or the 5% general reserve of $3,209,000
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CABRILLO COLLEGE
GENERAL FUND BALANCE
Board
February 6, 2012
Projected Operating Reserves
OPERATING RESERVES
Beginning Balance (Mid Year-Bridge Fund Reserves, Final Budget)
ADD:
Carryover and One-time Fund Give Backs
Projected Ending balance
2012-13 Estimated One-Time Subfund Allocations
LESS:
2011-12 Increase in Student Fee Revenue Shortfall (January, 2012)
66.67% Allocated to 2012-13 Deficit
Projected Ending Operating Reserves
= (1,931,000+1,500,000) *66.67%
Projected
FY 2011-12
1,309,000
372,000
1,500,000
(500,000)
Projected
@ 66.67%
FY 2012-13
1,931,000
1,500,000
(750,000)
(2,300,000)
1,931,000
1,131,000
3,431,000
2,287,448
CABRILLO COLLEGE
FY 2012-13 Base Budget/Categorical Budget Development Timeline Draft
Board
February 6, 2012
September 7, 2011
September 21 & 22
SANTA CRUZ COUNTY COMMITMENT KICK OFF
BUDGET TOWN HALL MEETINGS
CPC MEETING
- Budget Planning Kick Off For 2012-13
September - December, 2011 FACULTY SENATE- Program Review Task Force meets to develop recommendations
October 3, 2011
BOARD MEETING
October 4/5, 2011
October 25/19, 2011
Information Items:
- Budget Presentation 2012-13
- Review of 6/30/11 Ending Fund Balance
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/CPC MEETING
Information Items:
- Budget Planning Parameters for 2012-2014
- Budget Development Timeline
ADMINISTRATIVE COUNCIL/CPC MEETING
October 4-December 1, 2011 Carryover and One-Time Fund review by Components, Cabinet, Admin. Council and CPC
October/November
Faculty Prioritization Process/ Determine FON requirements for Fall 2012
November 7, 2011
BOARD MEETING
Information Items:
- Budget Planning Parameters for 2012-2014
- Budget Development Timeline
November 8/2, 2011
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
November 22/16, 2011
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
December 5, 2011
BOARD MEETING
Action Items:
- Budget Planning Parameters for 2012-2014
- Budget Development Timeline
- Review Faculty Obligation number for 2012
December 6/7, 2011
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
December 20/21, 2011
ADMINISTRATIVE COUNCIL/CPC
January 9, 2012
BOARD MEETING
Information Items:
- Budget Update
January 10, 2012
2012-13 GOVERNOR'S STATE BUDGET
13-Jan-11 STATE BUDGET WORKSHOP
January 10/4, 2012
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
January 24/18, 2012
ADMINISTRATIVE COUNCIL/CPC
February 6, 2012
BOARD MEETING
Information Items:
- Update Budget Parameters FY2012-13 and FY 2013-14
February 7/1, 2012
February 21/15, 2012
- Update Budget Development Timeline- FY 2013-14
- Review Budget Reduction Target for 2012-13- ALL Funds, $2.5 million for Base Budget
- Carryover and One-Time Fund review/Critical Needs
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
ADMINISTRATIVE COUNCIL/CPC
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CABRILLO COLLEGE
FY 2012-13 Base Budget/Categorical Budget Development Timeline Draft
Board
February 6, 2012
March- April 2012
April - June 2012
March 5, 2012
SPRAC Review of Program Reduction Plans for 2012-13
March, 2012
March 6/7, 2012
First Principal Apportionment 2011-12 Received
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
ADMINISTRATIVE COUNCIL/CPC MEETING
Continue to evaluate/revise Planning Parameters
March 20/21, 2012
April, 2012
April 2, 2012
April 3/4, 2012
April 24/18, 2012
May 2012
May 7, 2012
May 8/2, 2012
May 29/16, 2012
May 25, 2012
June 11, 2012
June 12/6, 2012
June 26/20, 2012
August 6, 2012
August 7/1, 2012
August 28/15, 2012
September 10, 2012
September 11/5, 2012
September 25/19, 2012
2012-13 Negotiations- All groups
BOARD MEETING
Information Items:
- FY 2011-12 Mid Year Cuts from the state
- Budget Reduction Plans (Base, Categorical Budgets & Other funds)
- Projected General Fund Ending balance as of June 30,2012
Action Items:
- March 15 Notices to Faculty- Reduction or Discontinuance of Services
- Resolution-Reduction or Discontinuance of Classified/Confidential/Management Service
BOARD MEETING
Action Items:
- Budget Reduction Goals (Base, Categorical Budgets & Other funds)
- Update Budget Development Timeline- FY 2013-14
- FY 2011-12 Mid Year Cuts from the state
- Budget Reduction Plans (Base, Categorical Budgets & Other funds)
Action Items:
- Resolution-Reduction or Discontinuance of Classified/Confidential/Management Service
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
ADMINISTRATIVE COUNCIL/CPC
Second Principal Apportionment 2011-12 Received
BOARD MEETING
Action Items:
- Final Notices to Faculty- Reduction or Discontinuance of Services
- Resolution-Reduction or Discontinuance of Classified/Confidential/Management Service
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
ADMINISTRATIVE COUNCIL/CPC MEETING
Governor's May Revise for 2012-13 released
BOARD MEETING
Action Items:
- 2012-13 Preliminary Budget
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
ADMINISTRATIVE COUNCIL/CPC MEETING
BOARD MEETING
Information Items:
- Update Budget Parameters FY2012-13 and FY 2013-14
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
ADMINISTRATIVE COUNCIL/CPC MEETING
BOARD MEETING
Action Items:
- 2012-13 Final Budget
ADMINISTRATIVE COUNCIL/MANAGER'S MEETING/
CPC MEETING
ADMINISTRATIVE COUNCIL/CPC MEETING
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