Budget Overview Board Retreat

1. Budget OverviewBoard Retreat Diana Keelen January 18, 2012 • “While the California budget is uncertain, there is one thing that is certain, it will change.”

2. Governor’s 2012-2013 Budget Proposal Highlights • State deficit has gone from $26.6 billion to $9.2 billion • $5.1 billion from 2012-2013 and $4.1 billion carryover from prior year • Proposes over $10 billion in revenue, expenditure and other actions to address the deficit and leave a reserve of $1.1 billion

3. 2012-2013 Higher Education Impact • Package includes $4.8 billion in “triggers” to K-12 & higher education if November tax package is not approved • Includes a tax package to raise sales tax by 0.5% from January 1, 2013 to December 31, 2016 • Also includes raising personal income tax on those making over $250K from 2012-2016 • LAO debates the Governor’s estimates stating that there is volatility. Estimates only $4.8 billion of the Governor’s $6.9 billion estimate • Includes a categorical consolidation block grant, except for DSPS, TTIP and Foster Care Education (even though BOG adopted student success task force recommendations to not consolidate these programs) • Reduces the Cal Works program & other significantly by $2 billion • Restructures the Cal Grants program by changing the award from $13K to $4K and the GPA requirements for Cal Grant A from 3.0 to 3.25, Cal Grant B from 2.0 to 2.75 and from transfer students from 2.4 to 2.75. Estimating savings is $301 million

4. Redevelopment Agencies Redevelopment Agencies: • On December 31, 2011, California Supreme Court upheld ABX1 26 & 27 eliminating redevelopment agencies • Will be replaced by “Successor Agencies” to ensure LEAs are still receiving entitlements such as: all pass-through payments including AB 1290, SB 211, Other Statutory, 2% and pass-through agreement payments. 7 Member Agency make up: • County Board of Supervisors • Mayor for the city that formed the RDA • Largest special district • County Superintendent of Schools • Chancellor of the California Community Colleges • Member of the public appointed by County Board of Supervisors • Former employee of the RDA • Governor proposes cutting $146.9 million in general fund apportionment as a result of expected increased property taxes from the elimination of redevelopment agencies. \

5. 2012-2013 Community College Scenarios SCENARIO B SCENARIO A • $218 million deferral buy-back (no new funds) • $12.5 million in mandates block grant • Will give community colleges 4% each out year beyond 2012-13 through 2016 (not sure how that will be allocated, deferrals, growth, COLA?) • $264 million base cut workload reduction % • Scenario A becomes obsolete Categorical Consolidation will occur in Both Scenarios = $411.6 million 2012-2013 State Budget Webinar, January 11, 2012

6. 2011-2012 Updates January triggers pulled: Tier 1 & 2 pulled with a few changes- • Tier 1 was expected to be a workload reduction to Antelope Valley College of 67.71 FTES. Now it’s a deficit-co-efficient • Tier 2 reduced base to 10,502.07 FTES • Borrowed 29 FTES from Summer 2011 to make base in 2010-2011. P1 estimates are at roughly 10,538 FTES. • Student fees shortfall even greater than originally estimated. Was $25 mil now $100 mil, which means added deficit co-efficient • Student fees went up from $36 per credit unit in the Fall 2011 • Student fee increase of $46 per credit unit effective in the Summer 2012 as opposed to Spring 2012 • Figures will not be available until the P1 report is issued around the end of January/beginning of February \

7. 2011-2012 New Basic Allocation Thresholds With the original $313 million workload reduction to Community College, the basic allocation thresholds were also reduced DistrictsWasNow Small College FTES Threshold < = 10,000 < = 9,379 Medium College FTES Threshold > 10,000 > 9,379 and and < = 20,000 < = 18,757 Large College FTES Threshold > 20,000> 18,757 Grandfathered CentersWasNow > 750 > 703 > 500 > 469 > 250 > 234 < 250 < = 234

8. 2011-2012 Estimated Actuals Beginning Fund Balance $ 8,766,920 Revenues $56,000,828* Expenditures $58,019,135 Ending Fund Balance $ 6,748,612 Surplus/(Deficit) $ (2,018,307) Reserve % 11.63% • Includes anticipated prior year recalculations and mid-year cuts • Includes estimated deficit co-efficient and student fee increase of 2.4%. Will not have figure until the P1 at the end of January/ beginning of February. Potential property tax shortfall not included in these figures. • This presentation contains estimates. For budget planning purposes ONLY.

9. Budget Risks • Budget triggers geared to education if tax package does not pass • LAO estimates only $4.8 billion of the $6.9 billion in tax revenues due to higher earner income volatility • 5.56% workload will not be decided until after November 2012, making reductions difficult since it’s the middle of the fiscal year • Property tax shortfalls are likely, especially due to RDA dissolution • 50% Law implications 2012-2013 State Budget Webinar, January 11, 2012

10. 2012-2013 AVC Budget Development • Staffing needs for TAF, H&S building, faculty retirements, etc. • Step and Column increases • No election costs in 2012-2013, but will have in 2013-2014 • Other expenditure increases unknown, STRS? PLAN NOW, PLAN EARLY!

11. 3 Year Projection-Taxes Pass • Includes anticipated prior year recalculations and mid-year cuts • This presentation contains estimates. For budget planning purposes ONLY. • 4% in 2013/14-2015/16 breakout not explained. Could deferral buy-back.

12. 3 Year Projection-Taxes Do Not Pass • Includes anticipated prior year recalculations and mid-year cuts • This presentation contains estimates. For budget planning purposes ONLY.

13. 2012-2013 Budget Timeline Jan – May: Legislative Hearings End of Jan 2012: LAO releases budget analysis Mar 1: DOF requests legislative action early on certain items-to include CCC redevelopment offset May 14: Governor releases May revise June 15: Constitutional deadline for Legislature to send budget to Governor Nov 6: General Elections Jan 1, 2013: Trigger reductions take effect if revenue targets are not met 2012-2013 State Budget Webinar, January 11, 2012

14. Questions?