Stop me if you’ve heard this before. California community colleges are facing a midyear budget cut. No, not the $102 million January trigger cut; that’s so last month. This one is being called the “February surprise,” and it triggered this tweet from California Community Colleges Chancellor Jack Scott:
The $149 million came about from two miscalculations: revenues from both property taxes and student fees were significantly lower than expected.
It turns out that when preparing the 2011-12 budget, the Department of Finance was overly optimistic in estimating how much money community colleges would bring in by raising student fees from $26 per unit to $36 per unit. Finance officials anticipated $110 million in increased revenues. The Community Colleges Chancellor’s Office figured that was about $25 million too high. They were both wrong. The shortfall came to $107 million.
The remaining $42 million deficit is almost entirely due to a shortage in property taxes. Unlike K-12 schools, there’s no automatic backfill for community colleges when property taxes come up short. Community college leaders said they’ve seen large decreases in property tax revenue before, but the student fees really caught them off guard.
“We’ve never seen an enrollment fee shortfall this large,” said Theresa Tena, director of fiscal policy for the Community College League of California (CCLC). “This is a new phenomenon that we’re seeing.”
What happened was something of a domino effect. When Gov. Brown and his finance department factored in the new revenues from the fee increase, they didn’t fully account for the corresponding increase in the number of students applying for Board of Governors fee waivers. As we reported here, even before the latest fee hike, waivers have been on the rise; this year 62 percent of students received them.
CCLC estimates that the $149 million amounts to an additional reduction of $135 per student.* That’s on top of the midyear trigger cuts, which were added to the $313 million decrease in the 2011-12 budget that kicked in at the start of the school year. If you’ve lost track, it amounts to $564 million this fiscal year.
Colleges did plan for some additional shortfall, but not this much. Los Rios Community College District, in the Sacramento area, expected to lose another $1.2 million; instead, it faces a $6.8 million cut. “We won’t absorb it all in this year,” said Jon Sharpe, deputy chancellor for finance and administration. “We think that it would be unfair to pull the rug out for some of the academic and student programs.”
Instead, Los Rios is reducing costs that don’t directly affect students. Openings in non-academic positions won’t be filled, they’re cutting back discretionary spending, and, said Sharpe, “a good portion of it will have to come out of next year.”
The tiny Lake Tahoe Community College – one of the four smallest districts in the state – is dipping half a million dollars into its reserves to get through the rest of this year. “We’ve asked everybody to be very prudent,” said superintendent and president Kindred Murillo. They’re cutting back on travel, putting equipment purchases on hold, and paring down technology, facilities, and human resources assessments that are required for accreditation.
They’re also appealing to Sacramento to stop the budget seesaw and create a reliable funding structure for future years so schools can plan their course schedules and hire people without worrying whether they’ll have to cancel.
“You offer a class to an adjunct professor and then two weeks later you’re saying, ‘I’m sorry, the budget’s been cut and we have to alter our schedule,'” Murillo explained. “Education needs a stable budget, one that we can count on from one year to the next.”
Over the past few weeks as the severity of the budget situation became clear, high-level conversations have taken place with the State Chancellor’s Office, the Department of Finance, and lawmakers. Community colleges are seeking agreement for an appropriations bill that would cover the losses.
Vice Chancellor for Finance Dan Troy said he doesn’t expect any action before the May revise, but it would be helpful to get a sign from the governor and Legislature that they’re willing to take action. That way, the colleges will have time to plan for cuts instead of having to make quick reductions.
“The problem comes where you have no idea whether it’s coming or not,” said Troy. “That’s why I’m hopeful the governor and Legislature will send a signal that they’re looking out for us.”
* Click here for list of how much each district will lose.